Delegates Vote 84 to 56 in Favor of Hotel Industry Legislation – The House of Delegates approved legislation (Senate Bill 190 and HB1065) on Wednesday, April 8, that would close a sales tax loophole in order to provide parity for everyone in the business of booking hotel rooms in Maryland.
“The Maryland Chamber supports this legislation because it creates an even playing field regarding tax law between online travel companies and hotels when selling rooms in Maryland,” said Brien Poffenberger, president and CEO of the Maryland Chamber of Commerce.
Contrary to a widespread assumption that online travel company room rates are lower than room rates secured directly from a hotel, travel websites charge and collect the same amount of money from guests as hotels do. Despite this pricing parity, the online travel companies shortchange the state by remitting a lesser amount of sales tax, based only on the negotiated or wholesale cost they pay hotels, and pocket the difference.
“The hotel industry is pleased to see that lawmakers have decided not to further subsidize out-of-state, online travel companies, but rather support the hotels, lodges and resorts across Maryland that are invested in our communities and work force,” said David Reel, president and CEO of the Maryland Hotel & Lodging Association.
In 2014, Maryland hotels generated $1.2 billion in tax revenue for local and state government. The 671 hotel properties support roughly 24,000 jobs and are responsible for $787 million in annual wages for hard-working men and women. To the contrary, online travel companies make no tangible investments in Maryland.
“This is not a new tax or a cost that will be passed on to the consumer,” stated Reel. “This legislation simply clarifies existing law to keep pace with the emergence of the internet and online hotel room bookings, and ensures everyone in the business of booking hotel rooms is paying their fair share of sales tax.”
“There’s no new cost to the consumer, as the online travel companies already collect the money at issue,” added Reel. “They just aren’t remitting on the full taxable price, which gives them an unfair advantage over hotels.”
Senate Bill 190 is supported by the Maryland Association of Counties, Maryland Chamber of Commerce, Maryland Tourism Coalition and Maryland Hotel & Lodging Association, as well as a large group of hotel and lodging business of all sizes across the state, including Gaylord National Resort and Convention Center, Hilton Worldwide and Marriott International.