Most experts do not anticipate a full recovery for the hospitality industry until 2024—those estimates are perhaps optimistic. As businesses adjust to the new virtual work environment, it remains to be seen whether or not the business travel sector will ever fully recover. As a result of lower occupancy, jurisdictions across the country are seeing less revenue from hotel stay taxes.
To recover the loss in tax revenue, Arlington County, Virginia is proposing a potential change to the transient occupancy tax. The revenue generated in 2020 was $16.6 million, down from $24.6 million in fiscal year 2019. The county expected to generate $19.3 million in 2021, prior to the discussed changes.
The current rate of 8.25% is based on tax, the total cost paid for each room or space rented. The proposed change would tax the total price of the stay, including resort fees, food and beverage, and other costs accrued by the guest. This change will specifically target those fees applied by booking tools, such as Expedia.
Arlington County board members will decide later this month to approve a request for a public hearing on the issue, during its October 16 board meeting. Ryan’s property tax experts will continue to monitor the progress of this proposed change, as well as how it affects our current clients. We urge you to reach out to our local team with questions.
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