Hotel-Room Taxes Can Change Travel Plans

A warning from The New York Times about increasing hotel-room taxes to pay for San Diego’s Convention Center expansion: Some travelers are changing their plans because the taxes are too high. From the Times:

For financially troubled municipalities, these tax proceeds help fill depleted coffers, and taxing visitors rather than local voters can be politically advantageous. The most common way to tax visitors is via a special tax, in addition to the ordinary sales tax, on hotel rooms. For travelers, this “bed tax” can add significantly to the cost of lodging, especially for long stays or visits to cities with high hotel rates. In some cases, the tax burden — on top of high airfares and room rates — is significant enough that some travelers are even altering their plans, cutting their stay short or seeking out cheaper properties.

“The hotel tax is so visible, they see how these taxes are hitting the bottom line of their hotel bill, and that becomes, in many regards, what sticks in people’s minds,” said Deborah Sexton, president and chief executive of the Professional Convention Management Association, a trade association for people who plan large conventions and trade shows. “All those dollars add up. In the end, it’s going to mean fewer people attending or people staying for a shorter period of time.”

Close voiceofsandiego.org readers might note that we’ve had a back-and-forth over calling the Convention Center expansion financing plan a hotel-room tax increase. The plan would charge visitors up to 3 percent more on their hotel bills to fund the expansion, but backers are hoping it doesn’t qualify as a tax under state law and be subject to a public vote. Three-quarters of the $550 million expansion is projected to come from this source.

The Times labeled San Diego’s plan as a tax hike and added that they’re common to help expand convention centers:

The bed tax, the largest component of the total taxes borne by visitors, is usually used to finance the development or expansion of convention centers and to market the destination. Doug Ducate, president and chief executive of the Center for Exhibition Industry research, says a convention center is typically a municipality’s largest expenditure. Cities issue bonds to pay for construction of new convention centers or expansions of existing centers, and the bed taxes help pay the cost of the bonds.

Please contact Liam Dillon directly at liam.dillon@voiceofsandiego.org or 619.550.5663 and follow him on Twitter: twitter.com/dillonliam.