Tourism Tax and amnesia

Today’s Orlando Sentinel reports that Orange County’s county’s advisory Tourist Development Council should “raise its resort tax and spend the extra money to market the area to more tourists and help fund nearly $1 billion in downtown arts and sports projects”! The paper goes on to report that “the plan is opposed by a faction of the tourism industry”. Any wonder? That faction happens to be the hotel industry led by respected veteran Harris Rosen,a man who arguably has contributed more to Orlando’s hotel industry than any one else.

Orange County and Orlando plan to “raise a tax on hotel guests from 5 percent to 6 percent. The annual $25 million in added revenue would be split between tourism ads and civic projects“. Hotel room taxes are notoriously regressive and have historically been a handy piggy bank for pet projects of politicians seeking to enhance their profile ostensibly at the expense of outsiders. That the evidence is to the contrary matters not a whit to self-aggrandizing politicos intent on affixing their moniker on “civic projects”. The best example is New York City where a reduction in occupancy taxes in the early 90’s saw a surge in tourists and tax collection. Yes – there is an inverse relationship to tax collection and its ratio. When (if) politicians get it, communities thrive. Not the other way around. Mr. Rosen should be commended for at least insisting that the dollars go towards the industry that they are being pried from.

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Vijay Dandapani

Co-founder and president of a New York based hotel company for 24 years. Grew the firm to five hotels in Manhattan and also developed a greenfield project at MacArthur airport, New York. Speaker at numerous prestigious forums including Economy Hotels World Asia, Lodging Conference, NYU, Columbia University Real Estate Roundtable, Baruch College's Zicklin School and ALIS. President and ceo of New York City Hotel Association since January 2017.

2 thoughts on “Tourism Tax and amnesia”

  1. Vijay – I understand what blog I’m reading here – but your ties to the industry must be clouding your judgment.
    I live in Orlando, and let me tell you – this is a good thing. More than perhaps any other city (Vegas may be an exception) – this city is geared for tourists. There is a direct divided highway from Orlando International Airport to the attractions, but no direct route to the Central Business District. Disney routinely uses its clout to block improvements (such as a light rail system) that would benefit all residents, if it will also help Universal Studios or other competitors. And the city of Orlando (yes, there is a rather large population here) has a large workforce of tourism-employed poor kept in a state little better than indentured servitude.
    The hoteliers, Mr. Rosen among them, clearly don’t care much about the welfare of the city that has allowed them to build their fortunes.
    And a regressive tax? While technically true, you’re missing the big picture. The people that fly here from around the world certainly aren’t hurting for cash. This is all superfluous, discretionary cash spending. Also, further portions of the tax will go back into the tourism industry (and *all* of the existing taxes already do)
    Most of the people in Orange County/Orlando don’t live near The Mouse – but millions of dollars that we contribute in taxes go towards making sure that the tourist areas are policed, watered, and traversable. Is it wrong that we’d get something in return?

  2. Jeff
    Thanks for stopping by. I certainly agree with the larger point you raise – that businesses need to “give back” to the community. If one were to ask the “mouse” their contention would be that they do – just as Mr. Rosen also does. I do not have independent verification of either their real intent or their true levels of “give back”. But generally tax monies that are not directly accountable to the source end up with varying degrees of waste – and that is one of the issues with regard to a room tax.

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