Let’s say that after painstaking research, hours of online searching or through plain luck you manage to find a decent hotel room in New York City for $295 a night – which, in 2008, represents a Gotham bargain. You check in after 3 p.m. and you’re at the reception desk again by noon the next day, rested, having breathed the fine air of Manhattan and relatively happy to part with your … $338?
Ouch. You may not have realized it when you made your reservation, but spending one night at a hotel in New York means paying slightly north of $43 in fees and taxes above the quoted room rate. On $295, you’ll be paying an extra $14.75 in city tax and $24.72 in state tax, plus a $2 New York Occupancy Tax and, as someone’s idea of fun, a mandatory $1.50 New York City Javits Center Tax.
Now, your night won’t get any longer, you get nada in return and if you’re in town for Broadway, the Javits convention center may as well be on Mercury. But, any way you slice it, the taxes and fees add up to a raw deal.
Surprisingly, New York City doesn’t have the highest hotel room tax rate in the nation – that distinction belongs to lodgings along the New Jersey Shore, where the total room tax rate is a staggering 21.71 percent. In New York City, by contrast, the total tax rate is a paltry 14.54 percent. However, those taxes, combined with the country’s highest room rates, drives up the amount travelers end up paying in taxes at check-out. According to the Washington, D.C.-based American Hotel & Lodging Association, the average room tax is $12.69 nationwide and ranges from $4.67 (Southern Illinois) to New York’s $43.82.
It’s easy to understand why room taxes are levied — tourists’ pocketbooks have always made for easy prey regardless of the circumstance, and what politician wouldn’t love to score brownie points with constituents by foisting part of their tax burden out of the state? They’re banking on the fact that most travelers won’t be sticking around long enough to contest a fee.
And when it comes to filling city coffers, town legislators are voracious: some municipalities have even resorted to suing online travel companies to chase down uncollected hotel room taxes. The overall room tax paid is the result of a messy mix of lodging, sales and bed taxes assessed on the state and local levels. Ironically, some localities aren’t even required to pass enabling legislation – these governing organizations claim the authority to levy taxes without hearings based on vague state statutes. In the end, Joe the Traveler is hit with what amounts to taxation without any representation.
There isn’t much one can do, unfortunately, in the face of state-sanctioned extortion. These fees don’t only grate on guests, hotel owners are irked as well. According to a 2008 AHLA report that surveyed the economic impact of room taxes on the lodging industry, “hotel guests pay these high taxes by reducing other purchases, staying fewer days, coming less often and making other adjustments in their budget.” In other words, by gouging guests, state and local authorities are missing out on other revenue streams.
With state budgets looking wobbly across the country, room taxes aren’t coming down any time soon. But as Americans become more guarded with their travel dollars, room tax realities may start to have more impact on consumers’ leisure budgets than before.
Consider Hawaii, where tourism has been hurting of late. Travelers will save oodles of money by opting for Oahu, where the average daily room tax is $20.67, instead of Maui, where it’s $31.92. Stretched over a week, that’s $70 in savings. In these times that is nothing to sneeze at. On the mainland, Las Vegas’s nine percent lodging tax works out to an average daily room tax of a palatable $10.51 on top of the room rate. There, in addition, no state taxes apply. Fabulous.
