Last November, the city raised its hotel bed tax from 2% to 5.5%, and the increase earmarked money — an estimated $5.3 million in 2023 — for housing and child care initiatives, said Kara Franker, CEO of Visit Estes Park. , a local tourism group. The beefed-up bed tax now combined with city, county and state sales taxes adds a cumulative 14.2% to the cost of a night’s stay in the city, she said, helping to fund a range of public services related to the new workforce. help. Initiative.
At least 17 municipalities have imposed a new bed tax or revised an existing one in the past year, according to Colorado tourism officials, many of them putting the revenue toward new types of projects.
Similar moves are happening in tourism-heavy areas across the US, said John Lambeth, CEO of travel consultancy Civitas, reflecting a more expansive approach that is “more about managing the destination and giving back to the community. “
Jack Johnson, chief advocacy officer for travel industry group Destinations International, said the pandemic’s disruptions have prompted some communities to consider whether broader social and economic policies can be “directly or indirectly linked to travel in tourism”. is, and therefore is paid for.” out of bed tax.
The more taxes states and cities impose on hotels, the more competitive disadvantage they create for local businesses.
Chip Rogers, CEO of the American Hotel & Lodging Association
Hotel taxes were first adopted in the US by New York City in 1946, became common nationally by the 1970s, and today guests commonly see the item on their hotel bills, said Elizabeth Strom, University of South Florida. An associate professor in the School of Public Affairs. Public officials have long loved bed taxes because they generate easy revenue from out-of-towners, not local voters.
“Every state either has such a tax at the state level or allows such a tax at the local level, or both,” Strom said.
A new breed of bed tax experiments, such as the one in Colorado, are being driven by a boom in travel demand by developing a civic approach.
Tourism revenue declined sharply during the pandemic, but in 2023, hotel-generated state and local tax revenue – which includes bed taxes as well as other levies lodging operators contribute to government entities – could rise to $46.71 billion nationwide is expected to reach, which is 13.6% higher than in 2019. According to a study by the American Hotel and Lodging Association and Oxford Economics.
The AHLA said the bed tax already accounts for nearly half of hotel-generated taxes in the US, and it expects the bed tax this year to exceed the $19 billion generated in 2019.
In Florida, which has been hit hard by multiple hurricanes that hit beaches and islands, Broward, Collier, Lee and other counties are applying tourism revenue to rebuild and protect those travel properties, Johnson said. He added that bed taxes now contribute to funding for dune restoration, shoreline stabilization, erosion control and other coastal management activities.
The change has raised some concerns from the hospitality industry.
AHLA CEO Chip Rogers said, “In general, the more taxes states and cities impose on hotels, the more competitive disadvantage they create for local businesses, as potential hotel guests look to other destinations with lower tax burdens.” can search.”
As the Biden administration comes under scrutiny for industry-imposed fees, AHLA spokesman Kurt Cashour said only 6% of hotels nationwide charge “a mandatory resort, destination or amenity fee, averaging $26 per night,” adding that They “directly support hotel operations” such as employee pay and benefits.
Cashour said the AHLA is “continuing to work with the authorities to ensure that the same standards for fee performance are applied across the lodging booking ecosystem” so that guests are not caught off guard.
Bed taxes may send highly 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 in tax matters.”
“If people want to see the Space Needle,” she said, “they’re not comparing 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 at the moment.
We want visitors who align with our economic and community goals – who will shop at local business, dine at local restaurants, participate in ‘voluntourism’.
Ileahia Gionson, a public affairs officer for the Hawaii Tourism Authority
Hawaii, for example, is seeing a strong post-pandemic tourism recovery, even though its 13.3% state and county transient lodging tax combined with a 4.5% excise tax adds close to 18% to nightly hotel bills. State revenue forecasters expect Hawaii’s bed tax alone will bring in more than $785 million this year, up from $645 million last year.
Since attracting more tourists isn’t the main challenge, said Illiah Gionson, a public affairs officer for the Hawaii Tourism Authority, the agency is trying to use some of the funds it receives from hotel taxes to influence what types of visitors it attracts. 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, dine at local restaurants, participate in ‘voluntourism’ and be mindful of their economic impact. So, it’s ‘Here’ Come’, and more about ‘here’s who we are and what we’re about’.
San Luis Obispo, along California’s Central Coast, is earmarking some of its hotel tax income for projects that officials hope will benefit the community.