Hotel Industry Urges Maryland Lawmakers to Override Governor; Close Online Travel Loophole

Published on : Monday, January 11, 2016

AHLAThe American Hotel & Lodging Association (AH&LA) along with the Maryland Hotel & Lodging Association, Asian American Hotel Owners Association, and several of America’s leading hotel companies are urging Maryland lawmakers to override a decision by the governor and close an important tax loophole.

In a letter addressed to Maryland Senators and Delegates, the hotel industry called on them to override Governor Hogan’s veto of SB 190, which closes a tax loophole and ensures online travel companies pay the state’s existing occupancy sales taxes.

“Maryland hotels are an important part of the state’s economy, generating more than $1.2 billion in tax revenue for the state of Maryland alone,” said Katherine Lugar, AH&LA president and CEO. “We urge Maryland’s policy leaders to close the loophole that benefits online travel companies at the expense of in-state hotels employing thousands of Marylanders. Our industry prides itself on being a partner with local communities, and closing this loophole will protect the state’s jobs as well as add new revenue to the state. Now is the time to level the playing field and we encourage the Maryland delegation to do the right thing for the people of Maryland.”

“As Governor Hogan recognized, even as he vetoed the bill, this legislation would not create a new tax, it simply ensures that all companies in the business of booking hotel rooms remit existing sales tax in the same way,” the letter states. “As in many states, consumers in Maryland are required to pay certain sales and occupancy taxes when they stay in a hotel. These taxes support infrastructure and tourism promotion, generate funding for event venue construction, as well as provide general revenue for the state and its counties. Hotels collect sales and occupancy taxes from guests based on the rate charged for use of a room, regardless of the method of booking, and remit that sum to tax authorities.

“In contrast, online travel companies like Expedia, Orbitz, and Travelocity remit sales and occupancy taxes based on just the portion of their charges they turn over to hotels – not the final price they charge consumers. This means a hotel ends up paying more in sales taxes than an online travel company when selling the same room to a guest at the same rate. Online travel companies have taken this unorthodox approach in order to pad their bottom lines, resulting in a loss of revenue for the state while placing brick-and-mortar hotels at a competitive disadvantage.”

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