Destinations face tax decline due to tourism downturn

In 2018, the hotel industry directly generated nearly $40 billion in state and local tax revenue across the country. But due to the COVID-19 travel decline, state and local tax revenue from hotel operations is expected to drop $16.8 billion this year, according to a new report by Oxford Economics released by the American Hotel & Lodging Association.

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Some of the hardest hit states include California (down $1.9 billion), New York (down $ 1.3 billion), Florida (down $ 1.3 billion), Nevada (down $1.1 billion) and Texas (down $940 million). These tax impacts represent the direct tax revenue decrease from the severe drop in hotel occupancy, including occupancy, sales and gaming taxes. These figures do not include the potential, significant, knock-on effects on property taxes supported by hotels (nearly $9 billion).
 
“Getting our economy back on track starts with supporting the hotel industry and helping them regain their footing,” said Chip Rogers, president and CEO of the American Hotel & Lodging Association. “Hotels positively impact every community across the country, creating jobs, investing in communities and supporting billions of dollars in tax revenue that local governments use to fund education, infrastructure and so much more. However, with the impact to the travel sector nine times worse than 9/11, hotels need support to keep our doors open and retain employees as we work toward recovery. We expect it will be years before demand returns to peak 2019 levels.”

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