“The last thing New York needs is a new
tax on tourists,” the Interactive Travel Services Association, which represents online
travel companies such as Expedia and Orbitz, said in a statement issued in response
to the law’s passage. “A year ago, Mayor
Bloomberg said that a higher tax on hotel
rooms would be like ‘killing the golden
goose’ of tourism, and we agree. Higher
taxes on hotel rooms will mean fewer visitors and fewer jobs.”
In June 2008, the now-defunct
New York Sun newspaper quoted
Bloomberg saying, “We don’t want
to have more taxes that would hurt
the economic well-being of this city.
For example, a tax on tourists is a
terrible idea. We desperately need
tourists from around the world.
… Killing the golden goose is not a smart
thing to do.”
The new law requires that a tax be imposed on the net amount paid for any hotel
room booked by a “room remarketer.” The
ordinance defines that term to mean “any
person, excluding the operator, having any
right, access, ability or authority, through
an Internet transaction or any other means
whatsoever, to offer, reserve, book, arrange
for, remarket, distribute, broker, resell or
facilitate the transfer of rooms.”
Based on Thomas’ explanation, rent includes any additional fees or charges an
online travel company, retail agent, tour
operator or wholesaler charges for the
transaction. It remains unclear if an agent’s
commission would be taxed.
“A third-party fee like that … that may
not be taxable,” said Antonio Whitaker, director of legislative affairs for City Councilman David Weprin, who authored the
“The intent of the bill is to ensure that
travel companies are actually paying the
full amount of taxes that is owed to the
city,” Whitaker said.
The City Finance Division’s report on
the amendment offers this example: “Let’s
assume an online travel company rents a
Continued from Page 1
hotel room from a hotel operator valued at
$100 for $50. The same online travel company subsequently charges consumers $80
to rent the same room. The travel company
[currently] will pay the tax on the wholesale rate of $50. … In this transaction, $30
remains untaxed. This bill seeks to correct
But according to travel associations, what
it really creates is a host of problems for
travel companies and, potentially, for New
York’s tourism industry.
‘A tax on tourists would
be a terrible idea. We
desperately need tourists.’ – N. Y. Mayor Michael
Bloomberg, in June 2008
“If we’re talking about a travel agent who
earns a commission on a hotel room and
[the commission is] going to get taxed on occupancy, [then] the same commission is being taxed two times, as income and as a hotel
occupancy,” said Paul Ruden, ASTA’s senior
vice president for legal and industry affairs.
He added that the same was true for any service fees or mark-ups agents apply to a New
York hotel booking to generate income.
“Our view of the occupancy tax ordinances is that they’re written in a way that
captures things that were not intended,”
Ruden said. They are written, he added, by
“people who don’t know about the industry
who just want more money.”
Ruden said that ASTA got word of the
amendment on June 26, only three days
before the bill was signed into law. The Society initiated a campaign asking agents to
call the mayor’s office to voice their concerns. He estimated that at least a dozen
agents did so.
Bob Whitley, president of the U.S. Tour
Operators Association, said a similar law
was introduced in Hawaii about a decade
ago, but a lobbying firm was hired and the
bill was defeated.
Whitley called New York’s law “
impossible to administer.” He added: “It’s a law,
but an unenforceable law.”
Among the law’s most burdensome aspects is a requirement that all hotel remarketers register with the city’s finance commissioner by Sept. 4, within three days of
the law’s effective date. Within five days of
registering, the finance commissioner will
issue the remarketer a certificate of authority that will allow the remarketer to charge
customers the additional tax. There is no
charge for the tax certificate.
“The law, as written, could affect everything from your small mom-and-pop
agency to the largest travel companies
on Earth,” said Andrew Weinstein,
spokesman for ITSA. “That includes
not only the financial costs associated with the tax but the logistical cost;
those could be significant burdens.
This law may have been passed without adequate review, given the significant negative impact it could have on
tourism to the city.”
The law’s passage in New York came
amid a flurry of lawsuits filed by some 50
city and county taxing districts around the
country alleging that online sellers of hotel
rooms and other hotel intermediaries are
shortchanging local tax coffers when they
collect hotel occupancy taxes on the retail
rate but remit tax-recovery charges to the
hotels based on the net rate.
The mayor’s office did not respond when
asked if those lawsuits were a factor in deciding to sign the bill into law.
KEY POINTS ABOUT NEW YORK’S
AMENDED HOTEL OCCUPANCY TAX
• A room remarketer is defined as: Any
person, excluding the operator, having
any right, access, ability or authority,
through an Internet transaction or any
other means whatsoever, to offer, reserve,
book, arrange for, remarket, distribute,
broker, resell or facilitate the transfer of
• The tax is based on the rent paid by
the occupant to the remarketer, including
any service and/or booking fees.
• The new law goes into effect Sept. 1.
• The deadline to register as a room remarketer with New York’s finance commissioner is Sept. 4.
PHO TO BY CHRISTOPHER OT TAUNICK
Oceania’s French connection
From left, Bob Binder, president, Oceania Cruises, Jacques Pepin, the line’s executive culinary director, and Frank
Del Rio, CEO of Prestige Cruise Holdings, were in New York to announce that a French bistro named for Pepin,
with a menu created by him, will be the sixth restaurant on the Marina, Oceania’s upcoming newbuild.
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