Hundreds of local US tax authorities are attempting to apply room occupancy tax rates on the margin captured by online travel companies under merchant model hotel booking transactions. The question raging in courtrooms, executive suites and now, the halls of congress is “Who deserves the money?”
This week, the American Hotel & Lodging Association (AH&LA) held its annual Legislative Action Summit in Washington, DC. A significant portion of the agenda was dedicated to discussing the impact of hotel merchant occupancy taxes and expressing the industry’s views to US federal legislators. Over the past decade, this issue has spawned litigation, now numbering in the hundreds of cases, by cities and counties to recover alleged lost tax revenues from the online travel agencies.
The rhetoric recently escalated due to an open letter addressed to the US hotel industry requesting support of proposed legislation that would eliminate merchant hotel room occupancy tax assessments. The letter was drafted by a consortium of organizations representing online travel sellers including: the American Society of Travel Agents (ASTA), the Business Travel Coalition (BTC), the Hotel Electronic Distribution Network Association (HEDNA), the Interactive Travel Services Association (ITSA), and the U.S. Tour Operators Association (USTOA).
For those desiring more detail on the history, stakes and and ramifications of the potential outcomes, here is a comprehensive blog post on the topic: Bathing in the Hotel Merchant Tax Quagmire
Many challenges face the global travel industry. New business models, competitive marketing strategies, emerging mobile technologies, interactive customer engagement and the constant need to drive profitability create complexities that were never previously imagined by hotels, destinations, airlines or online travel companies.