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Biden’s ‘junk fee’ hotel tax crackdown won’t hit


Last November, the city raised its tax on hotel beds to 5.5% from 2%, and directed funds from the increase — about $5.3 million in 2023 — to support initiatives. housing and child care, said Kara Franker, CEO of Visit Estes Park, a local tourism group. This enhanced bed tax now combines with city, county and state sales tax to add a cumulative 14.2% to the cost of an overnight stay in the city, she said, helping to fund a range of public services alongside new workforce-related initiatives.

According to Colorado tourism officials, at least 17 municipalities have imposed a new bed tax or changed an existing one in the past year, many of them earmarking revenue for new types of projects.

Similar moves are happening in tourism-intensive regions of the United States, said John Lambeth, CEO of travel consultancy Civitas, reflecting a broader approach that is “more focused on destination management and contributing to the community”.

Jack Johnson, head of advocacy for travel industry group Destinations International, said the disruptions of the pandemic have prompted some communities to question whether broader social and economic policies “can be linked to travel in tourism. , directly or indirectly, and therefore paid”. tourist tax.

The more taxes states and cities collect from hotels, the more they create a competitive disadvantage for local businesses.

Chip Rogers, CEO of the American Hotel and Lodging Association

Hotel taxes were first adopted in the United States by New York City in 1946, became commonplace nationwide in the 1970s, and are what guests typically see itemized on their hotel bills. hotel today, said Elizabeth Strom, an associate professor at the University of South Florida school. public affairs. Officials have long loved bed taxes because they generate easy-to-collect revenue from out-of-towners, not local voters.

“Each state either has such a tax at the state level, or allows such a tax at the local level, or both,” Strom said.

The new generation of bed tax experiments, like those in Colorado, are driven as much by windfalls from rebounding travel demand as by changing civic attitudes.

Tourism revenues have fallen sharply during the pandemic, but in 2023 national and local tax revenues generated by hotels – which include taxes on beds as well as other levies that accommodation operators contribute to government entities – are expected to reach $46.71 billion nationwide, up 13.6% from 2019, according to research by the American Hotel and Lodging Association and Oxford Economics.

Bed taxes already account for nearly half of the taxes generated by hotels in the United States, the AHLA said, and it expects bed taxes this year will likely top $19 billion. they generated in 2019.

In Florida, which has been hit by multiple hurricanes that have affected beaches and islands, Broward, Collier, Lee and other counties are applying tourism revenue to rebuild and protect those travel assets, Johnson said. Bed taxes now help fund dune restoration, shoreline stabilization, erosion control and other coastal management activities, he said.

The change has raised some concerns from the hospitality industry.

“In general, the more taxes states and cities collect from hotels, the more they create a competitive disadvantage for local businesses, as potential hotel guests may seek out other destinations with lower tax burdens,” said AHLA CEO Chip Rogers.

Regarding the industry-imposed fees the Biden administration is reviewing, AHLA spokesman Curt Cashour said only 6% of hotels nationwide charge “mandatory resort, destination, or amenity, at an average of $26 per night,” adding that they “directly.” support hotel operations,” such as staff salaries and benefits.

Cashour said AHLA continues to work with authorities “to ensure the same standards for displaying fees apply across the accommodation booking ecosystem” so customers are not not caught off guard.

Bed taxes can send extremely cost-conscious leisure and business travelers to less-taxed destinations, Strom said, “but if you’re a unique location, I don’t think a few extra dollars a night is taxes are significant”.

“If people want to see the Space Needle,” she added, “they don’t compare the cost of rooms in Seattle to the cost of rooms in Portland.”

Some top tourist destinations say they don’t mind turning away tourists at the moment.

We want visitors who align with our economic and community goals – who will shop at local businesses, eat at local restaurants, participate in “voluntourism”.

Ilihia Gionson, public affairs manager at the Hawaii Tourism Authority

Hawaii, for example, is seeing a strong recovery in tourism post-pandemic, even though its transitional lodging taxes of 13.3% from states and counties combine with excise taxes of 4.5% to add nearly 18% off overnight hotel bills. State revenue forecasters expect Hawaii’s bed tax alone to raise more than $785 million this year, up from $645 million last year.

Since attracting more tourists isn’t the main challenge, said Ilihia Gionson, public affairs manager at the Hawaii Tourism Authority, the agency uses some of the funds it receives from hotel taxes to try to influence the types of visitors it attracts.

“The wheels were turning before the pandemic and accelerated during the pandemic,” he said. “We want visitors who align with our economic and community goals – who will shop at local businesses, eat at local restaurants, participate in ‘voluntourism’ and be aware of their economic impact. So it’s less about “Come here” and more about “This is who we are and what we do”.

San Luis Obispo, along California’s central coast, also earmarks a portion of its hotel tax revenue for projects officials hope will benefit the community.

Joanna Swanson

Joanna Swanson is Europe correspondent at the Thomson Reuters Foundation based in Brussels covering politics, culture, business, climate change, society, economies and inclusive tech. With specific focus in breaking news, she has covered some of the world's most significant stories.