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Florida tourist development tax changes and the risk to hotel revenue

Author

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  • Nestor M. Arguea

    (University of West Florida)

  • Richard R. Hawkins

    (University of West Florida)

Abstract

Taxes such as the Florida Tourist Development Taxes are popular in the United States. Earlier research on rate increases for these bed taxes identified a surprising short-term decline in pre-tax lodging spending. We address the surprise with hotel data that include price and quantity measures. Results show that when Florida counties increase the rate, room rental quantity reductions can occur. As prices charged by operators generally do not change, the Florida lodging industry faces the risk of potential loss of revenue when rate increases are enacted. This risk partially explains why counties have not moved quickly to the statutory maximum.

Suggested Citation

  • Nestor M. Arguea & Richard R. Hawkins, 2022. "Florida tourist development tax changes and the risk to hotel revenue," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 21(6), pages 685-690, December.
  • Handle: RePEc:pal:jorapm:v:21:y:2022:i:6:d:10.1057_s41272-022-00386-7
    DOI: 10.1057/s41272-022-00386-7
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    References listed on IDEAS

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    3. Breffni M Noone, 2016. "Pricing for hotel revenue management: Evolution in an era of price transparency," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 15(3), pages 264-269, July.
    4. Nestor M. Arguea & Richard R. Hawkins, 2015. "The rate elasticity of Florida tourist development (aka bed) taxes," Applied Economics, Taylor & Francis Journals, vol. 47(18), pages 1823-1832, April.
    5. Ramesh Durbarry, 2008. "Tourism Taxes: Implications for Tourism Demand in the UK," Review of Development Economics, Wiley Blackwell, vol. 12(1), pages 21-36, February.
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    Cited by:

    1. Ian Yeoman, 2022. "How COVID-19 changed things and what we did about it," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 21(6), pages 579-580, December.

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