Home Hotels CA, FL, HI, TN, TX Upping Hotel Taxes, While NYC’s May Decrease

CA, FL, HI, TN, TX Upping Hotel Taxes, While NYC’s May Decrease

by SharonKurheg

The only things guaranteed in life are death and taxes.

Hotel room taxes (a.k.a. “hotel occupancy tax,” a.k.a. “hotel accommodations tax,” a.k.a. “local occupancy tax,” a.k.a. “transient occupancy tax,” a.k.a. “transient accommodations tax,” a.k.a. “tourist development tax,” a.k.a. “resort tax,” a.k.a. “lodging tax,” a.k.a. “bed tax” You get the picture) are interesting because they pay for different things (and, *ahem* have different names), depending on where you are. According to documentation from various city and state comptrollers:

  • In SAN FRANCISCO, the money is used to recover some of the costs of government services associated with nonresidents.
  • In TEXAS, 39 percent of HOT revenue is allocated to advertising and promotion; 3 percent for historical preservation; 5 percent for arts and heritage purposes; and 21 percent for other purposes, including the operation of visitor centers and event facilities.
  • In ORANGE COUNTY, FLORIDA, “Expenditures for the first four cents are limited by Florida Statutes to the acquisition and operation of convention centers, sports stadiums and arenas, auditoriums and museums, promotion and/or advertisement of tourism and funding of tourist and convention bureaus and tourist information centers. Expenditures for the fifth cent are limited by Florida Statutes to pay the debt service on bonds issued to finance the construction, reconstruction, or renovation of a professional sports franchise facility or subsequently a convention center or promote and advertise tourism. Expenditures for the sixth cent are limited by Florida Statutes to pay the debt service on bonds issued to finance the construction, reconstruction, or renovation of a new professional sports franchise facility or a retained spring training franchise that was not based in Florida prior to April 1, 1987.”
  • In the SAN LUIS OBISPO, CALIFORNIA, hotel taxes help fund important County services, such as law enforcement and road maintenance.

Government officials have the ability to raise or lower hotel taxes. How, when and why they do this varies from state to state, and county to county. Also, sometimes they need voters’ approval, sometimes, not, depending

With that in mind, these are 5 places either currently looking at changing their hotel taxes, or that recently did – 4 to make them higher and one, SURPRISE! to make them lower.

Downey, CA

Downey’s transient occupancy tax has stayed the same – 9% – since 1998. But the city would like more money for infrastructure projects such as street repairs and park improvements. So they’re hoping to be able to increase the TOT to 13%.

In March, the City Council unanimously agreed to place the tax hike on the November 2022 ballot. So we’ll see what happens with that.

Sarasota County, FL

Last month, Sarasota County commissioners voted 4-1 to raise the county’s rate on vacation rentals, hotels, campgrounds and more for stays of less than six months from 5% to 6%.

The additional percentage will add about $5.2 million in revenue with which to fund capital projects and beach work:

  • 70% for capital improvements, such as Mote Marine Laboratory and Aquarium’s new aquarium attraction in Nathan Benderson Park;
  • 20% for beach maintenance; and
  • 10% for beach renourishment.

The new rate won’t take effect until the next budget year, which begins on Oct. 1.

Honolulu, HI

Counties in the State of Hawai’i have the authorization to establish and administer their own transient accommodations tax (TAT) at a maximum rate of 3%.

With that, effective December, 2021, Honolulu began adding a 3% surcharge on short-term rentals and hotel rooms.

Officials estimate the new tax could generate about $86 million a year for Oahu, the Honolulu Star-Advertiser reported.

The surcharge will be imposed on top of the state’s 10.25% tax on gross rental proceeds from hotels, vacation rentals, timeshares and other transient accommodations, for a total of 13.25%.

Honolulu plans to allocate 58% of the tax’s revenue to the general fund, about 33% to rail and about 8% to a special fund for natural resources.

Honolulu was the 4th county to add the 3% tax – Kauai, Maui and Hawaii counties had already adopted the surcharge.

Nashville, TN

Tennessee state legislators recently gave the approval to the City of Nashville to raise its hotel-motel tax by 1%. That will bring the city’s total to 6%. Combine that with the 9.25% state sales tax, individual travelers and meeting groups will soon be paying a total of 15.25% in taxes alone, on every hotel room bill in Nashville.

According to The Tennessean, Nashville Convention and Visitors Commission CEO Butch Spyridon said the tax increase could generate about $20 million per year if traveler numbers return to 2019 levels. However, the tax increase is earmarked to help fund a new stadium for the city’s pro football team, the Titans. One opposing state legislator commented that “this isn’t a tax increase on [Nashville residents], but on all” in-state and out-of-state visitors.

Dallas, TX

The city council in Dallas is hoping to increase the hotel room tax by 2%. They hope extra money could help pay for a complete modernization of the Kay Bailey Hutchinson Convention Center. If approved by voters in November, the increase is expected to raise $1.2 billion for the multi-year project. According to local affiliate Fox4 News Dallas, the Hotel Association of North Texas supports the move.

“For years, meeting planners have told us the convention center is subpar compared to others,” said Carolyn Dent, managing director for Omni Dallas Hotel. “And we lose out to Houston, Chicago, Atlanta, Orlando, and New Orleans, who offer better, more modern facilities.” (Note: I live in Orlando. The officials in Orlando have a “thing” about the Orange County Convention Center. It’s currently 3 HUGE buildings [the 2nd largest convention center in the country]) and they pour as much money as they can into it…to the point that they’re considering upping Orange County’s sales tax by 1% so more tourists can go directly from MCO to the OCCC, instead of using some of the hotel tax money).

If the proposal passes, the tax increase will bring the total levy on a hotel room in Dallas to 15%.

New York City

Meanwhile, NYC, in the past, has DECREASED or even temporarily ELIMINATED their hotel room occupancy tax. The last time they did it was during the summer of 2021, when former NYC Mayor Bill DiBlasio was still in office (here’s more info about what happened, why they did it, etc.).

The city council of NYC is trying to do something similar this year, albeit not quite so drastic as eliminating the tax altogether. Instead of having no tax for a relatively short period of time, they’re considering lowering the occupancy tax rate from 5.875% to 2.875% for at least two years. So a 3% decrease. They’re doing this with the hopes to speed up the rebound in tourism and business travel. The Hotel Association of New York City and the Hotel Trades Council, which represents workers, are strongly in favor of the proposal.

Current Mayor Eric Adams still has not said yes or no to the proposal.

The total tax on a hotel room in New York City right now is 14.75%, plus $2 per night. The proposed cut would bring the total rate to 11.75%, plus $2 per night.

Feature Photo (cropped): Patrick Pelletier / Wikimedia / Creative Commons Attribution-Share Alike 4.0 International license

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