Last November, the city raised the hotel bed tax to 5.5 percent, up from 2 percent, and committed funds from the increase — about $5.3 million in 2023 — to housing and child care initiatives, said Kara Franker, CEO of Visit Estes. Park, a local tourism group. That enhanced bed tax now combines with city, county and state sales tax to add a cumulative 14.2 percent to the cost of a night in the city, he said, helping to fund a range of public services alongside the new workforce. initiatives.
According to Colorado tourism officials, at least 17 municipalities have imposed a new bed tax or modified an existing one in the past year, many of them funneling the revenue into new types of projects.
Similar moves are happening in tourism-heavy areas of the US, said John Lambeth, CEO of travel company Civitas, reflecting a more expansive approach that is “more about managing the destination and giving back 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 consider whether wider social and economic policies “can be linked to tourism travel, either directly or indirectly, and as therefore to be paid out of bed tax”.
The more taxes states and cities impose on hotels, the greater the competitive disadvantage they create for local businesses.
Chip Rogers, CEO of the American Hotel and Lodging Association
Hotel taxes were first adopted in the U.S. by New York City in 1946, became commonplace nationally in the 1970s, and are what guests typically see on their hotel bills today, said Elizabeth Strom, associate professor at the University of South Florida. public relations. Public officials have long loved bed taxes because they generate revenue easily from city residents rather than 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.
Newer bed tax experiments, like the one in Colorado, are being driven as much by windfalls from a recovery in travel demand as by evolving citizen behavior.
Tourism revenue fell sharply during the pandemic, but in 2023, state and local tax revenues generated by hotels — which include bed taxes along with other levies contributed by lodging operators to government agencies — are expected to reach $46.71 billion nationally, up 13.6% from 2019, according to a study by the American Hotel and Lodging Association and Oxford Economics.
Bed taxes already account for nearly half of the taxes generated by U.S. hotels, AHLA said, and it expects bed taxes this year will likely surpass the $19 billion they generated in 2019.
In Florida, which has been hit by several hurricanes that hit beaches and islands, Broward, Collier, Lee and other counties are using 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.
This change has caused some concerns from the hospitality industry.
“In general, the more taxes states and cities impose on hotels, the more competitive a disadvantage they create for local businesses, as potential hotel guests may seek other destinations with lower tax burdens,” said Chip Rogers, CEO of Ahla.
As for the industry-imposed fees the Biden administration is scrutinizing, AHLA spokesman Curt Kasur said only 6 percent of hotels nationwide charge a “mandatory resort, destination or amenity fee, averaging $26 per night “, adding that it “directly supports hotel operations,” such as staff wages and benefits.
Cashour said AHLA continues to work with authorities “to ensure that the same standards for displaying fees apply across the entire accommodation booking ecosystem” so that guests are not caught off guard.
Bed taxes may send leisure and business travelers with lower taxes, Strom said, “but if you’re a unique location, I don’t think a few extra dollars a night in taxes matters.”
“If people want to see the Space Needle,” he added, “they don’t compare the cost of rooms in Seattle to the cost of rooms in Portland.”
Some top tourist destinations say they are not worried about turning away tourists right now.
We want visitors who align with our economic and community goals — who will shop at local businesses, eat at local restaurants, participate in “volunteering.”
Ilihia Gionson, public affairs officer at the Hawaii Tourism Authority
Hawaii, for example, is seeing a strong post-pandemic tourism recovery, even as state and county transient lodging taxes of 13.3 percent combine with 4.5 percent excise taxes to add nearly 18 percent to hotel nightly bills . State revenue projections expect Hawaii’s bed tax alone to bring in 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 relations manager for 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 accelerating 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, engage in ‘volunteering’ and be aware of their economic impact. So it’s less about “Come here” and more about “Here’s who we are and what we do.”
San Luis Obispo, along California’s central coast, also earmarks some hotel tax revenue for projects that officials hope will benefit the community.