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New York City

NYC hotel tax hike would devastate tourism industry costing city jobs and businesses

eTN  Dec 09, 2008

Any increase in the city hotel tax would strike a tremendous blow to New York City's visitor industry and the city's already reeling economy according to Joseph E. Spinnato, Esq., the president of the Hotel Association of New York City. Mr. Spinnato strongly argues against a New York City Council proposal for a nearly twenty percent increase in the existing New York City hotel tax and warns that the increase would result in hundreds of millions of dollars in lost revenue for New York businesses and lead to thousands of job losses across the region.

"Our industry is already grappling with a twenty percent decrease in hotel revenue over last year, in November alone," said John Fitzpatrick, president and CEO of the Fitzpatrick Manhattan Hotel and the chairman of the Hotel Association of New York City. "This tax increase, on top of the 14.54 percent our customers already pay, is a lump of coal in a holiday stocking that will drive visitors away. The net result will be reduced revenue for the city and the state and increased job losses at hotels and the businesses we support," he said.

Mr. Spinnato added, "Any tax increase would be gravely detrimental to the city's economic health. This increase could bring us back to the dark days of the 1990's when convention planners - outraged by the fact that city policymakers would take advantage of our visitors to fix a budget hole - boycotted our area. In addition, local New York companies are significant hotel users and increased taxes will hurt those businesses."
Even a one percent increase on the hotels would cause:

-- A loss of more than $533 million in room sales and associated visitor spending;

-- A loss of 3,716 jobs in the hotel industry and businesses supported by hotels; and

-- A loss of more than $162 million in wages at hotels and businesses supported by hotels.

Sean Hennessey, CEO of Lodging Advisors, LLC and one of the foremost hotel industry analysts in the United States, compiled the data for the Hotel Association based on a variety of sources including the American Economics Group, NYC & Company, Reuters and the Smith Travel Report.

"This tax would make New York City's combined hotel rate the second highest in the country after Houston, Texas. Instead of generating new revenues, any increase in taxes could have the opposite effect. More taxes on top of a strengthening U.S. dollar could divert tourists and travelers elsewhere or cause them to shorten their stays," said Mr. Hennessey.

The current 14.54 percent rate includes a five percent city hotel tax and factors in as percentage based on an average room charge the $2.00 per night New York City hotel occupancy tax and the $1.50 Javits Center surcharge. The City Council proposal would bring the city hotel tax to nearly six percent.

NYC hotel tax hike would devastate tourism industry costing city jobs and businesses
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