It's Time to Stop Tax Abuse

Despite some hopeful signs, including a healthy hotel industry, the U.S. economy still isn't in the best shape, and the litany of economic ills sounds familiar: rising government deficits, shrinking manufacturing jobs, falling value of the dollar and widespread ennui over world events beyond our control. These tough economic times have put a tremendous strain on local, state and federal budgets. And when times are tough, at least at the state level, government often turns to the tourism industry for a bailout, usually in the form of higher hotel occupancy and car rental taxes or even more frequently, the shifting of these tax revenues from tourism promotion and into each state's general fund.

This persistent and worrisome trend needs to stop now, and only you have the power to make it happen. Recent press reports from a number of states, including Ohio, Illinois, Hawaii, California and others, reveal how revenue-hungry legislatures are once again looking at hotel tax monies to help fill their depleted state coffers.

In Ohio, for example, state officials want to impose a statewide one-percent bed tax, and while the proposal tentatively earmarks the money for tourism promotion, there's no guarantee the politicos won't change their minds and divert the money to other uses. Also, the tax would be levied on top of existing local sales and occupancy taxes, so in Cincinnati, for example, it would mean an 18.5-percent total tax on hotel rooms, not a very helpful tool for hotel salespeople trying to market the city's lodging properties to convention groups or leisure travelers.

California is one state that has found a different approach to the issue. State law there allows communities to create business improvement districts, which are local taxing mechanisms that permit cities, counties and regions to assess fees and taxes to support very specific purposes — and nothing else. Of the more than 100 California communities to establish these special assessment zones, a score or more use the system to levy hotel room taxes exclusively to fund local tourism promotion efforts.

The city council of Carlsbad in San Diego County is currently mulling the creation of such an entity to impose a $1-a-night fee on all occupied rooms in the city. Proponents say the tax could yield about $1 million annually for tourism marketing, more than double what it currently receives from its portion (about 4.5 percent) of the revenues generated by the city's occupancy tax.

The special assessment scheme isn't perfect, but it does ensure that room tax revenues are used as they should — only to promote and improve the tourism industry. Anything else is tax abuse, and it must be stopped.

The answer, of course, is for hoteliers and other tourism business owners to mobilize through their state and local hotel associations and with their campaign donations to educate lawmakers to the fact that hotel taxes aren't “victimless” crimes only endured by visitors who don't vote.

Sadness in Thailand

The horrible tragedy of the earthquake and tsunami that devastated south Asia in late December struck a personal chord in the U.S. lodging industry. A graduate student in the University of Denver hotel school is among the missing, and long-time Accor executive Reggie Shiu died in the tsunami while vacationing with his family at a beachfront Sofitel resort in Thailand. Reggie's wife and two of their three children perished with him.

Shiu, a U.S. citizen educated in Hong Kong and New York, had been with Accor for most of his nearly 30-year career in the lodging industry. In Asia since 1986, Reggie rose through the ranks to become senior vice president-Asia for Accor Asia Pacific.

Our condolences and prayers go to their families and to anyone affected by this horrible disaster.

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© 2014 Penton Media Inc.


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