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Section 1 of 2
THE NATIONAL NEWSPAPER OF THE TRAVEL INDUSTRY
JULY 27, 2009
N.Y. enacts tax
on all resellers
of hotel rooms
New levy covers agents’ fees
and markups by online sellers
By Michelle Baran
Opponents of a recently enacted hotel reseller tax in New York predicted
last week that the measure would
discourage travel sellers from booking rooms in the city and thus exacerbate the deep slump the Big Apple
is seeing in its hospitality sector.
The reseller tax, enacted last month as an
amendment to New York’s Hotel Occupancy
Tax, requires that anyone who resells a New
York hotel room remit a tax based on the full
amount paid by the customer, including any
service fees or charges.
Under the merchant model, online travel
agencies have until now paid taxes only on
the amount they pay the hotel for a room;
they have paid no taxes on the markups they
How is the recession
affecting leisure travel?
The 2009 National
Leisure Travel Monitor
offers insights gleaned
from its annual in-depth
study of the travel activi-
ties, research preferences
and travel-buying habits
of American consumers.
SEE PULLOUT SECTION
‘The last thing New York
[ AIRLINE OFFERS TO DELAY IMPLEMENTATION UP TO 60 DAYS ]
needs is a new tax on tourists.
It will mean fewer visitors
and fewer jobs.’ — ITSA
House may hold hearings on United’s credit card cutoffs
See NE W YORK on Page 35
charge consumers. Travel agents have never
paid a hotel tax on service fees they charge
consumers for booking a room or on commissions the hotels pay them for bookings.
“The provisions of the law are not limited to online travel companies,” Elizabeth
Thomas, media specialist for the New York
City Law Department, wrote in an email. “All
payments made to travel intermediaries as a
condition of occupancy, including booking
fees, will be subject to tax.”
The new provisions signed into law by
Mayor Michael Bloomberg on June 29 are
scheduled to go into effect on Sept. 1.
By Nadine Godwin
U.S. Rep. Michael Arcuri (D-N. Y.) is “
looking at the possibility of calling for congressional hearings” into United Airlines’ plan to
cut off some agencies’ access to the airline’s
merchant credit card account.
Arcuri’s press secretary, Jay Biba, said hearings could begin as early as September.
Meanwhile, United, responding to requests
from Arcuri and other members of Congress,
informed agencies that were set to lose access to United’s merchant accounts that they
could request a reprieve of “up to” 60 days.
Most had been set to lose those rights on July
20, but United pushed back the cutoff date
for all 28 affected agencies to Aug. 3.
Several U.S. senators and House members
wrote in letters to United that they were concerned the credit card policy could undermine the federal Fair Credit Billing Act. The
lawmakers said they wanted at least 60 days
to consider the matter and “if necessary and
appropriate, to take action to mitigate the effects of the decision.”
In a July 17 letter, United advised 13 members of the House of Representatives of its
decision to delay implementation. It also
defended its move as being “very limited in
scope, confined to a small number of agen-
cies and in no way … intended to be a broad
move in the marketplace.”
That was the first public comment the
airline had made on the subject, despite the
fact that the cutoff notices had triggered a
growing storm of protests. Until members of
Congress got involved, United had declined
to say how many agencies it had notified or
how extensively it planned to apply the withdrawal of merchant credit card privileges.
In its response to lawmakers, United declared that its action “neither violates nor
undermines the Fair Credit Billing Act. There
will be no difference in how credit card
See UNITED on Page 36