Hoteliers Urge Tennessee Lawmakers to Reject Million-Dollar Tax Hike on Tourism

Tennessee is one of the nation's leading states for tourism. But instead of being content with marketplace-driven success, a small contingent of Tennessee Republicans are defying party orthodoxy on taxes and pursuing a $1.5 million dollar tax increase on the state's valuable tourism sector. The proposal is especially startling in light of Tennessee's general rule of not taxing services at the state level.

The lawmakersSen. Douglas Overbey (R-Maryville), Rep. Art Swann (R-Maryville), and Rep. Steve McDaniel (R-Parkers Crossroads) are pushing legislation aimed at travel facilitators such asTennesseetravel agents, tour operators, and online travel companies. Under the new tax proposal (Senate Bill 212 and House Bill 678), traveling consumers would be forced to pay state sales and local transient occupancy taxes on hotel reservation facilitation services, driving up the cost of their nightly room stays.

"These proposals are driven by local tourism executives who want to increase their budgets, and out-of-state hotel interests that want to drive more business to chain hotels and company websites," saidBobbie Singh-Allen, Executive Director of the Independent Lodging Industry Association. "Independent hotels cannot match large out-of-state hotels chains' marketing war chests, so we rely on travel agents, online travel companies, and other such marketing services to compete. There is a real danger that families and businesses planning their trips will shorten their stays or simply choose other, lower-cost destinations if Tennessee starts taxing travel services."

"If this bill becomes law, Tennessee hoteliers will feel the pain of reduced demand and higher costs for travelers," Singh-Allen continued. "With apologies to the King, this bill threatens to make every inn, motel, and B&B in Tennessee a Heartbreak Hotel."

The Tennessee Department of Tourism Development reports that tourism generated $15.36 billioninTennesseein 2011, supporting 177,800 Tennessee jobs. Many of these travelers were Tennesseans themselves, who stayed in hotels after enjoying Nashville's live music scene, a Volunteers game, or a visit to Graceland. This in-state travel would be equally affected by the new tax.

"This proposed travel services penalty tax would disproportionately harmTennesseeindependent hotels, small- business travel agents trying to make a living, and budget-conscious travelers looking to book a getaway with their family. Now is not the time for new travel service taxes inTennessee," said Singh-Allen.

About the Independent Lodging Industry Association

The Independent Lodging Industry Association (ILIA) is a national association with over 3000 members nationwide. It was founded in 2010 by the California Lodging Industry Association (CLIA). CLIA was established 65 years ago by a group of independent hotel owners and operators. Over the past several decades, independent hotels, independently owned franchised hotels, and owners have been impacted by decisions being made out of the halls of State Capitols toWashington, D.C.Chain hotels have dominated the policy making process. ILIA will level the playing field and allow independent hotels a seat at the table.