Who Will Win the Merchant Hotel Room Occupancy Tax Battle?

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.

Each week, RockCheetah and the Views from a Corner Suite blog will present a new poll to gauge the sentiment of the travel industry, and of course, allow respondents to comment on the issues at hand.

About Robert Cole

Robert Cole is the founder of RockCheetah, a hotel marketing strategy and travel technology consulting practice. He also authors the Views from a Corner Suite Blog and publishes the Travel Quote of the Day. Robert speaks regularly at major travel industry conferences, authors articles for leading travel industry publications, advises travel-related startups and the equity investment community. He is an evangelist for the global travel industry.

  • I will feed your RSS after this useful article. Thanks a lot.

  • Anonymous

    Useful article! However,I personally think that this tax will affect tourism in a negative way, and tourism, as we all know, it’s an economic engine of the Commonwealth. I think this problem needs rethinking. I know that the Sydney hotels pay a similar tax and it proved to have negative effects.