Cornell University Study Highlights Potential for Massive Tax Savings for Hotels Under H.R. 7024

Wednesday, April 3, 2024

According to a study conducted by Cornell University’s Center for Hospitality Research on behalf of the American Hotel & Lodging Association, the Tax Relief for American Families and Workers Act of 2024 (H.R. 7024) has the potential to offer significant tax relief to hotels nationwide, thereby encouraging investments in property upgrades and renovations.

The study underscores how hotels of varying sizes and service levels could benefit from the provisions of H.R. 7024, which include extending 100% bonus depreciation and expanding deductibility of business interest. This bipartisan bill, aimed at temporarily extending these provisions, was passed by the House in January and is currently awaiting Senate approval.

By temporarily reinstating 100% bonus depreciation, the bill encourages investments in qualified improvements. For instance, the study illustrates that a hotel investing $2.75 million in qualified commercial kitchen equipment could potentially receive over $175,000 in additional tax relief under H.R. 7024.

Additionally, the temporary expansion of business interest deductibility offers further tax relief. The study presents various scenarios, examining 25 hotel properties of different sizes that could benefit from the bill:

• Nine properties with up to 150 rooms could experience tax relief ranging from $17,000 to nearly $500,000.
• Another nine properties with more than 200 rooms but less than 500 rooms could see tax relief ranging from $37,000 to $1 million.
• Seven properties with over 500 rooms could benefit from tax relief ranging from $600,000 to nearly $6 million.

“The bipartisan tax package would help hoteliers invest in renovations and upgrades to stay competitive and improve the guest experience. This means more jobs, employee benefits, and economic growth,” said AHLA Interim President & CEO Kevin Carey. “This study is proof that the bill would help hoteliers navigate the economic challenges created by persistent inflation, a nationwide workforce shortage, and an aggressive federal regulatory agenda. On behalf of America’s nearly 62,500 hotels, we call on the Senate to pass the bipartisan Tax Relief for American Families and Workers Act as soon as possible.”

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