No, this is not a post about how I hate hotel fees and taxes. This post is about the problem hotel fees and taxes are for the governments that enact them.
I was listening to Peter Greenberg radio show/podcast from last week where he mentions that Alabama has assessed a tax to hotel rooms to fund their schools. I wont go into the fact that Alabama’s public school system is #43 in the country, other then to mention that it’s not one of the best in the country.
It got me thinking about how governments often use hotel taxes to fund local projects. On the surface it makes sense – you’re not taxing your own constituents (keeping them happy) and as long as the taxes aren’t too high it’s unlikely to affect tourism, it’s like free money! Except the money might not always be there…
If you’re New York Ctiy it takes a lot to really hurt tourism. Short of the massive hurricane they say we’re due to have hit the area or another terrorist attack people are still going to come to visit. But even New York City has a potential to lose out on hotel taxes – people are now trying to rent hotel rooms for their stay instead of staying at hotels (obviously a problem if the government is trying to ban this practice.)
But what if you’re a lesser known location and run into tourism problems? The Gulf Coast now and after Hurricane Katrina, or if you have a lot of national parks and they are closed due to budget cuts. What if your “free money” from hotels dries up? What happens when the money to fund your schools and other essential services dries up? It’s a question that all governments and their residents should be asking before enacting these hotel taxes.