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New tax at hotels and timeshares

Discussion in 'US - Hawaii Timesharing' started by tompalm, Jun 11, 2018.

  1. tompalm

    tompalm TUG Member

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    From Star Advertiser today

    BUSINESS| HAWAII NEWS
    Lodging industry opposes tax hike
    By Allison Schaefers
    June 11, 2018

    Updated June 11, 2018 12:05am

    Visitors to Hawaii hotels, who are already paying the nation’s top prices, should get ready to dig deeper into their wallets to offset a broader application of the state’s transient accommodations tax.

    • On average, visitors paid almost $293 per night to stay in a Hawaii hotel during the first quarter, the highest rate in the nation, according to a Hawaii Hotel Performance Report released by the Hawaii Tourism Authority last month. Based on that figure, they also paid roughly $30.45 nightly for the transient accommodations tax, currently 10.25 percent of the room charge.

      Historically, TAT, which is in addition to the state’s 4.5 percent general excise tax, has been levied solely on hotel, resort and timeshare industry rooms. It hasn’t applied to daily resort fees, which might include a variety of bundled offerings from fitness center use to bottled water, Wi-Fi, phone calls and the like. But this past session, state lawmakers passed Senate Bill 2699, which could apply TAT to virtually any lodging business transactions, from resort fees and parking to food and beverage orders, activities, spa appointments, banquet services or the like.

      According to a study conducted in May by Travel Hawaii, some 111 Hawaii hotels currently charge resort fees, ranging from $10 to $46 per day. Parking costs, which also have been exempted from TAT collections, could run another $9 to $35 per day. If Senate Bill 2699 becomes law, hotel, resort and timeshare visitors would automatically pay another $2 to $8 per night to cover TAT on resort fees and parking alone. Factor in conference events, wedding banquets and the like, and costs could quickly add up.

      Increases revenue

      Supporters said the bill would beef up resources by adding a minimum of $11 million in revenue to the state budget. Unite Here Local 5, which represents about 12,000 union members, supported the original measure, which limited TAT expansion to mandatory resort fees. However, Local 5 Secretary- treasurer Eric Gill said the union doesn’t support the final version because it believes it could have unintended consequences.

      “Nickel-and-diming undermines guest satisfaction,” Gill said. “It affects tipping, and it could impact banquet bookings and other business.”

      The union isn’t often aligned with the Hawaii Lodging & Tourism Association and the Waikiki Improvement Association. However, in this case the parties share similar concerns. Mufi Hannemann, HLTA president and CEO, hopes Gov. David Ige, who has until June 25 to veto the bill, will meet with stakeholders prior to making a decision. Bill opponents are circulating a petition, which already has 1,750 signatures, to present to Ige, he said.

      Hannemann said the measure is unfair given the State Council on Revenues’ recent projection that this year’s tax collections would grow by $125 million, “thanks in large part to the tourism industry’s strength.”

      “With such a large surplus making its way into state coffers … why are we adding an additional burden on our hotels and visitors?” Hannemann said.

      Could decrease tourism

      The bill, which could take effect in July, could reduce the number of tourists at a time when lava-related downturns are beginning to emerge, Hannemann said. It also could widen the tax gap between what alternative accommodations and other lodging properties are required to pay, he said.

      Hannemann said tourism is still up overall in 2018, but natural disasters have contributed to a recent year-over-year decline.

      “With the Kilauea volcano images headlining news stations nationwide we continue to prepare for the worst,” Hannemann said. “This leads us to reiterate that while we have enjoyed record visitor arrivals for a sustained period, given what we are experiencing, this phenomenal growth is starting to slide and we must be prepared to weather any future economic downturns through competitive pricing against other destinations.”

      Jerry Gibson, area vice president of Hilton Hawaii and vice president and managing director of Turtle Bay Resort, said he fears if the bill becomes law, which would follow January’s 1 percent TAT increase, it could cause some tourists to rethink whether they can “really afford to come.”

      “If we tip the scale, our greatest economic driver is in jeopardy,” Gibson said.

      Gibson also expressed frustration that state lawmakers have not reached a taxation agreement with Airbnb and other hosting sites for alternative accommodations.

      “Disparity between legitimate businesses and gray businesses will grow because they are not subject to the same taxation or rules and regulations,” he said.

      WIA President Rick Egged said the organization opposes ambiguity in the bill’s current version, which “defines resort fees as virtually anything that a hotel charges, which is not what TAT was meant to cover.”

      Ige, who supported an earlier version of the bill, which expanded TAT only to mandatory resort fees, has not shared his position on the broadened version.
     
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  2. tompalm

    tompalm TUG Member

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    Heads up when you eat at a hotel or buy anything in their store. The tax might be around 15 percent after July.
     
  3. mjm1

    mjm1 TUG Review Crew: Veteran TUG Member

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    Hopefully the governor vetos the bill. At some point the well will be dry and it will impact people’s decision about traveling there. Or, if one does travel there, how they will spend their money.

    I have similar concerns with the increase in resort fees and parking in Las Vegas. If cities and states aren’t careful they may kill the goose that lays the golden egg.

    Best regards.

    Mike
     
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  4. vacationtime1

    vacationtime1 TUG Member

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    This would be a problem for hotel restaurants, shops, etc., because it will look like an additional sales tax -- one that is charged at some restaurants and shops (i.e. those at hotels, timeshares, etc.) but not at others.

    But I have no issue with charging the TAT on mandatory resort fees and parking. These are disguised room charges and are properly taxed as room charges. And they may force some of the hoteliers to face the fact that they are also deceptive room charges.
     
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  5. PamMo

    PamMo Tug Review Crew: Rookie TUG Member

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    I "liked" your post, Tom, not because I liked reading about the proposed additional tax, but I appreciate the heads up. I guess Hawaiian legislators think guests won't know/won't care about spending a few dollars more on parking, meals, spa services, tours, etc, at their resorts.

    I'll be curious if it makes a difference on spend at resorts if it becomes publicized?
     
  6. TravelTime

    TravelTime TUG Member

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    This seems like a bad idea. There is worldwide inflation since the economy is strong and the governments want a piece of the action. It seems like a bubble waiting to explode again. I hope I am wrong.
     
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  7. controller1

    controller1 TUG Member

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    This could really kill resort restaurants. If your food bill is large, it would be beneficial to eat off-resort to avoid this potential tax. Hopefully the Governor has some common sense and will veto the bill.
     
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  8. dioxide45

    dioxide45 TUG Review Crew: Veteran TUG Member

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    I agree that this will put on property restaurants at a competitive disadvantage. Though they seem to already overcharge anyway. So they may just lower their prices to remain where they were before.
     
  9. tompalm

    tompalm TUG Member

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    I sent this to a couple of my friends in the travel business here and they don’t think it will pass. The state is hurting for money and will always think of something new. The hotels and travel industry will fight it as hard as they can
     
  10. controller1

    controller1 TUG Member

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    My understanding is the bill has already passed and is awaiting the Governor's signature. Our only hope is for a veto from the Governor. Is that not correct?
     
  11. mjm1

    mjm1 TUG Review Crew: Veteran TUG Member

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    That is my understanding as well based on the article. He originally supported the tax on a more narrow basis, but hopefully won’t cave to the expanded version.

    Best regards.

    Mike
     
  12. tompalm

    tompalm TUG Member

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    I agree that it reads like it passed already. But the fourth paragraph from the top says:

    If Senate Bill 2699 becomes law, hotel, resort and timeshare visitors would automatically pay another $2 to $8 per night to cover TAT on resort fees and parking alone. Factor in conference events, wedding banquets and the like, and costs could quickly add up.

    It seems like there is a seperate bill to pay TAT on resort fees and parking. Maybe the other bill to charge TAT at the hotel restaurant and hotel store already passed. I am not sure. But it is all bad news. Paying TAT on resort fees is like paying tax on tax.
     
  13. jestme

    jestme Guest

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    As with most timeshares, we book our trip there a year in advance, and have already paid for non-refundable airfare. So we will go next year, but the decision to go again after that will now be up in the air. Hawaii's 50 year old hotels, refurbished timeshares and high priced, but not necessarily high quality restaurants do not really compete with brand new, all inclusive resort options elsewhere who also have oceans, beaches, plus other activities that don't require a "resort fee" to use. The "Hawaii spirit" is the only marketing tool Hawaii really has to promote itself. Once you get past that aging "incentive", pricing Hawaii out of the vacation and convention market is very easy. Once those conventions go elsewhere, they often won't come back. The Pro Bowl experience is a perfect example of that.
    As for my view of TAT in general, if you don't want to be in the tourism business, adding specific taxes to it is a great path to go down. The bigger, the better. It makes you less financially competitive, for those costs people expect more than you can offer, and subsequently, won't return. I guess Hawaii can fall back on their other industries when tourism collapses.
     
  14. NTP66

    NTP66 TUG Member

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    I’m against this bill, obviously, but it won’t change my plans at all. If I have to pay more to visit Maui, so be it. I also won’t take money from tips to lessen the blow.

    There are other islands around the world to visit, but they all have one major thing going against them for me: they’re not Hawai’i.
     
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  15. SmithOp

    SmithOp TUG Member

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    I agree, no change of plans but I will avoid exchanges where I have to pay resort or parking fees.


    Sent from my iPad using Tapatalk Pro
     
  16. Luanne

    Luanne TUG Review Crew: Veteran TUG Member

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    If I have a choice I will avoid those resorts. BUT, if a trade comes up into a location I'm looking for, and in the timeframe I want, I would be inclined to pay those fees and consider it part of the cost of the vacation.
     
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  17. Tamaradarann

    Tamaradarann TUG Review Crew: Veteran TUG Member

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    I not only agree with this thinking, I have been practicing it already for the last 10 years when we have spent a great deal of vacation time in Hawaii. We have been to all the Hawaiian Islands, however, we usually stay in Honolulu without a car using our HGVC points to stay at the Hilton Hawaiian Village. Therefore, we don't pay for parking or the newly implemented resort fee, and won't have to pay this new TAT if it passes into law.
     
  18. Luanne

    Luanne TUG Review Crew: Veteran TUG Member

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    How are you planning to avoid the TAT?
     
  19. Tamaradarann

    Tamaradarann TUG Review Crew: Veteran TUG Member

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    This is a quote from the original post that started this thread.
    "But this past session, state lawmakers passed Senate Bill 2699, which could apply TAT to virtually any lodging business transactions, from resort fees and parking to food and beverage orders, activities, spa appointments, banquet services or the like." We use our HGVC points so there is no resort fee to charge the new TAT on. We don't rent a car, so there is no parking fees to charge the TAT to. We rarely if ever eat or drink at a resort restaurants so we won't pay the TAT there. We don't book resort activities or spa appointments so we won't pay the new TAT on those. We still will need to pay it on the accommodations,
     
  20. Luanne

    Luanne TUG Review Crew: Veteran TUG Member

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    Okay I think I got it. You'll still pay the original TAT on lodging, but not the additional.
     

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