The hotel-related news from Tennessee during the past couple of weeks has been anything but good. The state that Smith Travel Research, the parent company of HotelNewsNow.com, calls home has had its share of political incorrectness.
First, there’s the story of Walt Baker, the CEO of the Tennessee Hospitality Association. Baker forwarded to a number of prominent Nashville movers and shakers a politically incorrect e-mail that portrayed First Lady Michelle Obama in an unflattering manner. The e-mail cost Baker his job at the association, and it cost his marketing firm a ton of business.
The folks at the THA are good people, and they shouldn’t be painted with a broad brush because of this incident. Baker made a terrible mistake and will pay for it for a long time, but being insensitive and boorish is not a crime. There’s so much of that behavior on both sides of the political spectrum that being offensive and crude is a way of life in politics. The lesson for everyone reading (and writing) this is to think before hitting the ‘send’ button. If the e-mail could be considered raunchy or politically incorrect by one person, it’s best to delete it.
Far more important of an issue that came out of Tennessee last week is that state lawmakers want to tax hotels for the food they offer as a “free” breakfast. The free breakfasts are staples at limited-service hotels. The tax would be at the prevailing sales tax rate in the state’s county’s—which reach as high as 9.75 percent. Tennessee lawmakers expect a tax to generate up to US$2 million. The proposal is pending in committees in the General Assembly.
According to an article from the Associated Press, state officials stress the hotels would be taxed—not the guests. Reagan Farr, commissioner of the Department of Revenue, told the AP he doesn't believe hotels would pass the tax on to consumers.
"It would be nominal value that each consumer eats," he said. "I doubt that they would raise their rates.”
Please pardon the derisive howl coming from my office. Apparently Mr. Farr has hit the cinnamon roll stash a little too hard. If enacted, a “breakfast tax” will appear on a guest’s folio right next to the state tax, county tax, city tax, visitor tax, etc. I know of no hotel owner who will want to absorb the cost of this tax. Of course they will pass it to the consumer. To think otherwise would be so out of touch that I’d have to accuse one of being a politician.
These out-of-touch politicians must not know room rates have fallen 30 percent or more during the past two years. They must not realize many hotels are on the brink of foreclosure or bankruptcy. Piling another burden on the small business owner is a politician’s never-ending salvation.
Because these politicians have run their budgets into the ground, they are searching for ways to make up revenue shortfalls. Hotels are prime targets. I can hear the following conversation taking places in political circles across the country:
“No, just wait a minute. We currently have a hotel room tax, but there’s more to a hotel than just a room, right? If Tennessee can charge a tax on an included breakfast that’s already taxed, why can’t we charge a tax on the actual bed? How about the TV? The Internet service? The iron? The soap? The shampoo? The newspaper delivered in the morning? And that treadmill—tax it!”
If government bodies such as the Tennessee General Assembly continue to approve taxes such as the proposed “breakfast tax,” it won’t be long before taxes will cost consumers as much as the room rate itself.
