Steve Robinson

Good News for Discount Hotel Rooms

Florida’s Republican Legislature appears ready to support a bill in Florida that would help online travel companies continue to offer cheap vacation packages and discount hotel rooms by exempting these companies from paying a larger share of hotel occupancy taxes.

Many experts believe that if online companies’ revenues were subject to local hotel taxes then their hotel prices would increase.

Passage of this bill looks even more likely since it is expected to be supported by the new militant anti tax Florida governor.

Online travel companies earn revenue by negotiating discounts from hotels and then they sell the rooms to customers a lower rate than normally available, even after a small profit margin.  Many states and cities claim that they are not being paid the full hotel taxes owed because online companies pay local occupancy taxes based on their cost of the rooms vs. what they charge their customers.

Online sellers view the difference as a booking fee that should not be subject to local taxes.  Online companies claim that they are not hotel owners and thus their markup should not face occupancy taxes.

If the bill passes, Florida would become the second state, after Missouri, with a law that clearly spells out online travel companies’ reduced hotel tax liability.  New York City and Washington D.C. have passed laws subjecting online companies’ booking fees to occupancy taxes.

Florida Republicans want to remove any barrier to increasing hotel bookings which have been negatively impacted over the past two years by the recession and the Gulf oil spill.

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