State & Local Tax Issues

Hotels are integral contributors to communities all across the country, generating $72.4 billion in federal, state and local, and lodging taxes in 2022. Of this, $47.5 billion represents tax revenue to state and local governments, including nearly $23.9 billion in taxes on lodging (sales tax on room revenue, hotel occupancy taxes and tourism improvement district fees, and other taxes on room rentals). It also includes 2.2 billion in sales taxes on other sales at hotels (e.g., food and beverage and retail) and $10.6 billion in property taxes. 

Our Position

Occupancy Tax & Tourism Marketing Protection

Occupancy tax goes by many names, such as hotel tax, hotel/motel tax, bed tax, lodging tax, and transient occupancy tax. Occupancy tax is critical to the continuing success and vitality of the tourism industry. These taxes help cover the cost of marketing campaigns to encourage domestic and international visitors. No industry was hit harder during the COVID-19 pandemic than tourism and hospitality. It remains more important than ever to protect our tourism dollars and the stated mission of those dollars – to promote tourism. Allowing revenues to be diverted to projects unrelated to the marketing and advertising of tourism jeopardizes the efforts of our industry to recover in the wake of the pandemic. 

Online Travel Agencies (OTAs) advertise hotel rooms and charge customers the same or more as hotels do when they sell their rooms directly. However, due to loopholes in some laws they may end up remitting taxes based on the wholesale price of the room they purchased. The loophole should be closed, and parity is achieved when OTAs remit taxes on the amount they charge customers. 

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