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Expedia Vows Less Florida Marketing If State Raises Web Agencies' Hotel Taxes

Expedia: You tax us, we'll ditch you  Apr 22, 2009

Expedia Inc. says it has spent more than $20 million during the past 12 months on " Florida-specific" advertising, including television commercials, radio spots, and online banners and key words.

But the Bellevue, Wash.-based company also says that figure could drop if the Florida Legislature forges ahead with plans to make online travel agencies collect and pay taxes on the full hotel rate they charge consumers ‚ÄĒ rather than their current practice of paying taxes only on the lower rate they negotiate with hotels.

"There are a lot of places that have beaches. There are a lot of places that can satisfy the leisure traveler," Brent Thompson, vice president of government affairs at Expedia, said last week. "And the leisure traveler is the most flexible and the most responsive to price."

That pushback came as support built in the Florida Senate to collect hotel and sales taxes on the higher rate. Florida's counties have argued for years that the online travel industry should already be paying at the full rate, and lawmakers suddenly appear more sympathetic as they seek to patch another multibillion-dollar budget hole.

Counties and their allies, including some hotel groups and tourism bureaus, are unfazed by the industry's threats. They say companies such as Expedia won't stop marketing Florida to consumers just because taxes are raised incrementally ‚ÄĒ particularly since so many of those consumers already want to visit the state that is home to attractions ranging from Walt Disney World to South Beach.

"I don't believe they would stop selling the destination," said Stuart Blumberg, president of the Greater Miami & The Beaches Hotel Association.

Expedia insists it could.

"I just don't think it's credible to make the argument that changes in tax policy don't create changes in behavior," Thompson said. "Markets react. Tax policies have implications for incentives and how businesses operate."

Expedia: You tax us, we'll ditch you

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