A resolution from the National Conference of State Legislatures on collecting taxes from online travel companies and hotels drew predictably mixed reactions from a pair of industry associations.
Online travel sites could be facing more scrutiny, thanks to a resolution by the National Conference of State Legislatures to change the way taxes are collected from them.
The NCSL passed a resolution urging state lawmakers to “consider rules that would require online travel companies to pay hotel occupancy taxes on the full rental price paid by customers, and not simply the wholesale rate they have negotiated with hotels,” Bloomberg reports.
According to Bloomberg, the NCSL resolution targets sites such as Expedia and Priceline, calling for online agencies to “publicly and explicitly display charges and resort fees leading to the final price to the user; and require that taxes, fees, and service charges be separately stated instead of bundling them together.”
The “merchant model” used by online travel companies (OTCs) draws criticism from state and local governments, which contend it puts local hotels at a disadvantage and reduces revenue at a time of shrinking state and municipal budgets. New York and North Carolina are among the states that have gone as far as passing legislation that mandates payment on the full room price.
The American Hotel & Lodging Association issued a statement backing the resolution. AH&LA President and CEO Katherine Lugar said that “hotels simply want a level playing field and to not be subjected to unequal taxation,” and the NCSL resolution should signal state legislators “that laws need to be clarified to ensure that hotels are not placed at a competitive disadvantage because identical transactions by OTCs receive a different tax treatment.”
Lugar said her organization is urging lawmakers “to ensure that tax policies for both OTCs and hotels are consistent.”
Not surprisingly, the resolution didn’t find favor with the Travel Technology Association, a trade group representing OTCs. The association told Bloomberg, “Fortunately for taxpayers, legislators are beholden to their constituents—constituents who don’t like new taxes—not to an NCSL working group.”
Online travel agencies are facing a variety of business issues in addition to the tax question, including transparency, hidden fees, and changing technology.