Bed Taxes Are on the Rise

Many Municipalities Look to Traveler Tax Dollars to Close Shortfalls

1009NL PMoscaritoloWith visitor tax revenues down, some major meetings destinations recently have raised their occupancy taxes to close budget gaps. For example:

• Boston's rate went from 12.45 percent to 14.45 percent, effective Oct. 1.

• On Sept. 1, Indianapolis' rate rose one percentage point to 10 percent, for a total tax on rooms of 17 percent.

• In Las Vegas, the rate went up three points, as of July 1, to 12 or 13 percent, depending on the hotel's location.

• In Hawaii, the state legislature voted in May to increase the state's room tax from 8.25 to 9.25 percent.

• Last March, New York City's occupancy tax rose from 5 percent to 5.875 percent, for a total tax of 13.375 percent (plus $3.50 per room, per night).

"I'm not surprised it's happening," said Pat Moscaritolo, president and CEO of the Greater Boston Convention & Visitors Bureau. "Unfor­tunately, whenever states and counties get in financial binds, they look to the visitor industry."

Don Welsh, president and CEO of the Indianapolis Convention & Visitors Asso­ciation, said the tax increase was levied as a last resort: "With $3 billion in new convention infrastructure nearly complete, the city needs additional funds to properly market our facilities."

Does this method actually work? "The results are very mixed," said lodging expert Bjorn Hanson of New York University's Tisch Center. "Competitive areas are hurt by raising the taxes, if they fall out of the range of their market."