Hotel Tax Study Reveals Economic Value of Visitors

The Destination & Travel Foundation has made available a case study demonstrating how hotel tax contributions in Phoenix impact city, county and state government operations, and infuses the local economy with US$166 million annually. The document shares how the Greater Phoenix Convention & Visitors Bureau captured hotel tax information to illustrate the economic impact of visitors in its community.

The study - "How the Visitor Industry Contributes to the Local Economy: An Analysis of Phoenix Hotels' Property and Visitor-Related Taxes" - shows that the average guest room in Phoenix generated more than US$6,300 in taxes in 2008. In all, hotels in the City of Phoenix paid more than US$166 million in combined property and sales taxes in 2008 - US$20 million of which went toward funding local school districts.

Real-estate property taxes alone accounted for more than a quarter of the tax contributions. That means each guest room in Phoenix generated US$1,710 in property taxes - or 8%more than the median household in the city.

"The average hotel room is much smaller than the average house and a hotel guest uses a fraction of the government services provided to residents," said Steve Moore, president and CEO of the Greater Phoenix Convention & Visitors Bureau. "So it is apparent from this more inclusive tax data that attracting visitors to our area hotels is an even greater investment yield for the state, county and city than previously known."

The Greater Phoenix CVB asked each hotel within Phoenix's city limits s to report its hotel occupancy taxes, food and beverage/catering sales taxes, property taxes and all other sales-activity taxes (utilities, retail, audio visual/telecommunications, etc.). Forty-one hotels responded, representing 45% of Phoenix's guest-room inventory. Through a consultant, the citywide tax-contribution total was extrapolated from the 41 respondents' data, and property taxes were again reconciled against county tax records.

"The research and public relations campaign done by the Greater Phoenix CVB is a blueprint other destination marketing organizations can use to illustrate the economic impact of the visitor industry on their local communities," said Karen Williams, chair of the Destination & Travel Foundation. "This is the sort of hard data that taxpayers, stakeholders and elected officials can relate to, especially in challenging economic times."

Moore noted that the data published in the study does not reveal the full economic impact of the visitor industry on the community, because it does not address off-site spending by visitors, nor does it address spending by hotel employees or the hotels' vendors.

Steve Moore said added, "For people within our industry, this data is educational; for people outside our industry, it can be enlightening as to just how hotels are a fabric to one's community needs. Of course we would not lay claim to all hotel activity but destination marketing organizations (DMOs) are the sole agencies funded publicly to pursue visitors, and hotels are the local icon of this industry."

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