December 22, 2009
The hotel merchant tax issue is creating havoc for online travel agencies. At the present time, more than 200 municipalities, counties and states have lawsuits pending in an attempt to claim additional tax revenues based on the markups applied by Online Travel Agencies (OTAs.) In some cases, the suits are groundless as the current hotel occupancy tax laws are based on the revenue received by the hotel. However, some cities are changing their tax laws to base the taxes on the retail price paid by traveler. Unfortunately, there is widespread confusion – this article attempts to provide clarity on the key issues and a recommendation for resolving the hotel merchant tax problem.
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December 15, 2009
Compete produced an analysis that indicates traffic to hotel brand and Online Travel Agency hotel specific web pages have increased faster than airline and car rental sectors, indicating a faster path to recovery. Unfortunately, the increase in site traffic has not translated to improved hotel performance as hotels continue to deeply discounting their product to shift market share from competitors. As the hotels fight to support occupancy and average rate, share of leisure travel bookings is shifting away from hotel brand sites to the OTAs.
With the steepest drop in US hotel net operating income on record and non-performing Commercial Backed Mortgage Securities hotel loans hovering close to 15%, the US hotel industry appears to be preparing for a difficult stretch that will continue to provide travelers with excellent hotel values, but test the patience and wallets of hotel owners.
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