The proposed New York State budget would levy a higher occupancy tax rate on online travel agency websites than hotel websites.
The budget legislation would increase the occupancy tax on intermediary sales 20%, which would mean that guests booking a New York City hotel room through Expedia, Travelocity or tour operator websites, for instance, would see the occupancy tax rise to 7.05%, from 5.875%, according to the In Transit blog.
The potential higher tax would be on the net rate that the OTAs get from hotels and the OTAs' service fees, a move vehemently opposed by the Interactive Travel Services Association, which represents the OTAs on hotel tax issues.
When taking OTAs' service fees into account, the legislation, if adopted, could make hotel websites an even cheaper option for hotel bookings than OTA websites.
The Business Travel Coalition and the American Society of Travel Agents are aligned with ITSA on the issue.
“This should be called the New Jersey and Connecticut Tourism Promotion Act,” said Art Sackler, ITSA's executive director. “It will create an entirely new tax on nearly every participant in the travel value chain -- a tax that will create massive red tape, increase paperwork, damage the state's critical tourism industry, raise hotel prices, reduce the number of visitors, and worsen the impact of the current slump. Let’s not step over dollars to try to collect a few pennies.”
Some hoteliers, however, may view the move as leveling the playing field since they charge consumers occupancy taxes on the full retail rate.