The “2019 HVS lodging Tax Report – USA” found that 120 of 150 states surveyed impose a dedicated lodging tax, and all of them collect some form of taxation on hotel room revenue.

STATE AND LOCAL governments have come to depend on the collection of lodging taxes from hotels, according to a study hotel valuing and financial research company HVS. The study found that average state lodging tax revenue grew at a rate of 2.92 percent from 2017 to 2018.

The “2019 HVS lodging Tax Report – USA” looked at rate and revenue figures for 150 U.S. cities to discover trends in lodging tax policy and revenue. It lists several specific changes in those policies, such as the decrease in New Jersey’s state lodging tax from 7 percent in 2017 to 6.625 percent in 2018. Other specific changes in the report included Gilbert, Arizona’s reduction in taxes from 3 to 2.8 percent last year and the District of Columbia’s increase from 14.5 to 14.8 percent.

“Of the 150 largest U.S. cities examined in this study, more than 120 impose a dedicated tax, and all of them collect some form of taxation on hotel room revenue,” the report says. “In small suburban cities and major tourist destinations alike, lodging taxes have become an important source of funding for economic development initiatives.”

The report also analyzes the taxability of short-term home rentals, such as Airbnb and other services, and how growth in the short-term home rental market adds to any decline in the lodging market. That has been a point of concern in the past for hotel groups like the American Hotel and Lodging Association and AAHOA.

For example, in February AAHOA filed a petition with the Florida Division of Administrative Hearings claiming Airbnb’s voluntary tax agreement with the state violates proper approval process and public disclosure rules defined by state law. The association has about 1,100 members in the state.

“Airbnb negotiated its secretive agreement with the state of Florida behind closed doors with no opportunity for public input and zero transparency,” Rachel Humphrey, AAHOA’s interim president and CEO, said at the time. “While traditional lodging providers adhere to strict tax collection and remittance laws, the VCA essentially allows Airbnb to operate under their own honor system with no way to verify whether they are collecting and remitting all applicable taxes.”

Lodging taxes impact more than just hotels and guests, said Thomas Hazinski, managing director of HVS Convention, Sports, & Entertainment Facilities Consulting in Chicago, in an article on the company’s website.

“Lodging taxes can be used for the funding of tourism agencies and public assembly venues such as convention centers across the U.S.,” Hazinski said. “Lodging tax trends are tied to the development of modern cities.”