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The effect of lodging tax increases on US destinations

Author

Listed:
  • Simon Hudson

    (2629University of South Carolina, USA)

  • Fang Meng

    (2629University of South Carolina, USA)

  • Kevin Kam Fung So

    (2629University of South Carolina, USA)

  • Scott Smith

    (2629University of South Carolina, USA)

  • Jing Li

    (2629University of South Carolina, USA)

  • Rui Qi

    (The University of Memphis, USA)

Abstract

This study examined the impact of lodging tax increases on eight different destinations of the United States. Data were collected via in-depth stakeholder interviews and monthly statistics provided by Smith Travel Research including average daily rate, occupancy, and revenue per available room. Time series analysis was employed to estimate the impact of tax increases in each destination by analyzing that time series before and after the imposition of the tax. Overall, our results did not fully support the hypothesis that when a city’s hotel tax greatly increases above that of an easily accessible competitor, it will result in an economic loss to the city with the disproportionate tax rates. Hotels appear to have absorbed any tax increases with little impact to their businesses, but there was concern among stakeholders as to how the lodging tax was spent.

Suggested Citation

  • Simon Hudson & Fang Meng & Kevin Kam Fung So & Scott Smith & Jing Li & Rui Qi, 2021. "The effect of lodging tax increases on US destinations," Tourism Economics, , vol. 27(1), pages 205-219, February.
    • Handle: RePEc:sae:toueco:v:27:y:2021:i:1:p:205-219
    DOI: 10.1177/1354816619890752
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    References listed on IDEAS

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    1. Gurel Cetin & Zaid Alrawadieh & Mithat Zeki Dincer & Fusun Istanbullu Dincer & Dimitri Ioannides, 2017. "Willingness to Pay for Tourist Tax in Destinations: Empirical Evidence from Istanbul," Economies, MDPI, vol. 5(2), pages 1-15, June.
    2. Wilson, John D., 1986. "A theory of interregional tax competition," Journal of Urban Economics, Elsevier, vol. 19(3), pages 296-315, May.
    3. Phillips, Peter C B & Ouliaris, S, 1990. "Asymptotic Properties of Residual Based Tests for Cointegration," Econometrica, Econometric Society, vol. 58(1), pages 165-193, January.
    4. Bonham, Carl & Fujii, Edwin & Im, Eric & Mak, James, 1992. "The Impact of the Hotel Room Tax: An Interrupted Time Series Approach," National Tax Journal, National Tax Association;National Tax Journal, vol. 45(4), pages 433-441, December.
    5. James Mak, 2015. "Research Note: Are Hotel Property Taxes Fully Passed on to Hotel Guests? Implications from Recent Research on Property Tax Incidence," Tourism Economics, , vol. 21(4), pages 899-905, August.
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    Cited by:

    1. Juan Luis Nicolau, 2021. "Editorial of the special issue on “Sports and Tourism: Economic Impactsâ€," Tourism Economics, , vol. 27(3), pages 415-418, May.
    2. Charles Swenson, 2022. "Empirical Evidence on the Economic Impacts of Hotel Taxes," Economic Development Quarterly, , vol. 36(1), pages 33-42, February.

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