For Internet Travel Sites, a New Hotel Room Tax
Tourists visiting New York State who book their hotel rooms through travel agencies and Web sites like Expedia or Orbitz may face higher prices after state lawmakers passed legislation requiring the booking industry to collect sales tax on lodging.
The measure, included in the budget that lawmakers in Albany completed on Tuesday, reclassifies third-party vendors under the tax umbrella of hotel operators, requiring them to collect the same sales tax.
At the moment, travel sites buy hotel rooms from hotel operators at a price that includes the 4 percent state sales tax. They make the rooms available to consumers at a higher price, but no sales tax is collected on the difference in price. The new provision, which takes effect on Sept. 1, eliminates the loophole.
I'm guessing this will affect hostel booking engines like Hostelbookers and Hostelworld too.
See also the idea that hotel chains might be getting Government help to drive bookings away from the travel agencies:
It’s actually the “major hotel chain revenue channel integrity act.” It’s the Marriotts, Starwoods, Hiltons, and Hyatts versus Expedia, Orbitz, and Travelocity. This tax applies to rooms booked via third party sites, not rooms booked with a hotel or chain directly.
The major hotel companies have been trying for several years to wrest control of the distribution fo the rooms away from sites like Expedia, pushing bookings onto their own sites. In the travel slump of late 2001 through 2003, hotels relied increasingly on third-party discounters, but paying those commissions or offering blocks of rooms at a wholesale discount was a costly way to move their inventory. So they’ve worked hard to bring customers back to booking directly through their own channels.
That’s why chains like Starwood and Hilton only offer elite benefits to members staying on rates booked directly with the chain.
What do you think?
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