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Understanding Hotel Taxes

illustration,San Francisco,Golden Gate Bridge

Photo: Leif Parsons

In the past five years, state and local governments have grappled with dire budget cuts and dwindling revenue. To make ends meet, they’ve turned an eye toward one of the easiest targets in town—travelers, who can pay as much as $33 in taxes for a $200 hotel room. Hotel-occupancy taxes have long been around, but they’re on the rise. Less than a year ago Connecticut raised its tax from 12 percent to 15 percent. Villages across Westchester County, north of New York City, are now allowed to tack a 3 percent bed tax on top of the existing 10.38 percent hotel tax. As you read this, residents of San Mateo County, California, home of San Francisco International Airport, are voting on whether to raise the hotel-occupancy tax from 10 percent to 12 percent. According to a 2011 study from the Global Business Travel Association (GBTA), the effective tax rate on a $100 room in the top 50 U.S. markets ranges from a (not-so) low of 10.5 percent in Burbank, California, to a whopping 18.27 percent in New York City. To add insult to injury, many of these taxes support projects only tangentially related to tourism: bond payments in Virginia, a sports stadium in Seattle, and the Nascar Hall of Fame in Charlotte, North Carolina. “In most cases we see the taxes going to the city’s general fund,” says Joseph Bates, senior director of research for the GBTA. What’s more, while airfares quoted online are now required to include taxes and mandatory surcharges, this is not true of hotel rates. You have to click through to get the full price. After that, it’s up to you whether to pay the tax—or find another city to visit.

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