If you can’t beat the online travel agencies, join them. That’s a blunt assessment of a percolating legislative debate down in Florida.
In late April, a group of lobbyists for some hotel heavyweights including Marriott International, Hilton Worldwide and Starwood Hotels & Resorts Worldwide pushed for an amendment that would allow hotels to skirt retail occupancy taxes in very much the same way OTAs do.
OTAs have long argued in Florida and elsewhere that they should not be taxed on the retail rate they sell to guests, but rather the smaller wholesale rate they purchase directly from hotels. This means fewer tax dollars get collected by local municipalities, which in turn might tax hotels even more to recoup their losses.
The proposed amendment would have granted a similar tax arrangement for online transactions booked directly at sites like Hilton.com or Marriott.com, the reservation systems of which are typically housed in central locations outside of the Florida municipalities in which rooms are booked.
The proposal was an attempt to even the playing field between OTAs and hotels, said Shawn McBurney, VP of government affairs at the AH&LA.
“We’re not going to pursue this in a vacuum. … We want to be treated equally,” he told me Monday.
No vacuum indeed. The amendment was actually to be tacked onto HB 493, a pro-OTA bill that would have once and for all freed OTAs of the regional tax burdens in Florida. Introduced by Rep. Joseph Abruzzo, the bill and the subsequent amendment are both designed to “protect businesses and consumers from additional taxes.”
“In Florida tax code it is our policy that we do not tax services in the sates of Florida,” he told me. “The travel companies (e.g. hotels AND OTAs) are a clear service.”
Abruzzo is the first person I’ve talked to regarding this issue who is simultaneously on the side of both hotels and OTAs. Hell hath frozen over.
CVBs draw the short straw
So who gets left out in this proposed arrangement? If hotels and OTAs both end up paying fewer taxes, clearly someone has to suffer.
In this case, it’s obviously the local municipalities, and, in effect, the convention and visitors bureaus.
Neither McBurney nor Abruzzo necessarily want to take money out of the hands of the CVBs, which promote the travel and tourism that fills hotels and makes those online transactions. If McBurney had his way, neither the bill nor the amendment would pass, and OTAs would pay the same taxes hotels pay. Again, it’s all about an even playing field.
Abruzzo takes a different stance. First, he doesn’t think any “service” in the state of Florida should be taxed; that takes precedent over the coffers of any CVB. Secondly, he wants reform in the local CVBs. He’s lobbying for more transparency in how they spend their money, far too much of which goes toward overblown marketing budgets or US$400-an-hour lobbyists.
No action yet
But all of this is moot for the time being, as HB 493 died on the Florida Senate floor and the amendment was dropped because Abruzzo missed a filing deadline.
The representative plans to pursue both measures again in the future, as well as a bill that would give tourism-related business, specifically hotels, tax breaks from bed taxes, room service taxes, valet taxes, etc.
As always, we’ll keep you posted on any new developments.
