Park City tourism industry leaders concerned about state’s proposed transient room tax increase
February 6, 2018
When a city's economy is based heavily off of visitors coming to empty their pockets, several factors play into making it an ideal destination. Taxes is one of them, and tourism industry leaders are worried that a bill at the Utah State Legislature could drastically affect the appeal of Park City.
Bill Malone, president and CEO of the Park City Chamber/Bureau, said that S.B. 136, introduced by the Transportation Governance and Funding Task Force, would increase the state's transient room tax (TRT) from 0.32 to 3 percent. It would also add a 5 percent increase to rental car taxes.
The transient room tax is a tax that cities, counties and states impose on those renting temporary lodging. Funds are typically used for recreation infrastructure, but the money from S.B. 136 would go toward transportation infrastructure.
The boost would bring Park City's total sales tax for lodging to 15.45 percent within the city limits and 12.85 percent in the rest of Summit County.
"I believe that this would bring our taxes on overnight stays to one of the highest tax rates of any mountain resort community in the U.S.," Malone said.
Resort towns such as Colorado's Vail and Steamboat Springs and Jackson Hole, Wyoming, all have lodging sales tax rates that sit between 8 and 11 percent, Malone said. Park City already has a relatively high lodging sales tax of 12.77 percent in city limits, which increased this year with the introduction of the state's current 0.32 percent transient room tax.
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Malone said that the prospect of creating an even bigger difference is a major concern to the Chamber/Bureau and the area's lodging industry.
"It just separates us so far from our competition," he said. "It's something that is a sticker shock."
Malone said that an increase of that size could make Park City seem less attractive to visitors of all kinds, but the main problem is with those booking hundreds of rooms for conferences or business retreats. For those customers, a 10 percent tax versus a 15-plus percent tax becomes noticeable.
"We're talking potentially thousands of dollars of difference in what the final bill is to the company," he said. "It definitely is alarming to us."
Chris Eggleton, managing director of Destination Hotels Utah, said that corporate travel is a large source of revenue for Park City and Utah overall. Such a large tax increase for visitors would make the whole state less competitive when conventions are exploring different destinations.
He said that individual and family visitors would likely be affected, too. Although they might not notice the difference when they are booking their trips, they would likely realize it after.
"When they walk away, they are going to pay attention to how much they paid and how much cash is left in their wallet," he said. "That might influence whether or not they decide to come back to Utah."
Rhonda Sideris, president of Park City Lodging Co., said that one group already canceled because of the introduction of the state's 0.32 percent TRT, on top of other sales tax increases in the state and county. Her business had to contribute funds to pay for some groups' taxes in order to convince them to stay since they had booked one or two years in advance. She is concerned about how the tax increase proposed in S.B. 136 could affect future business.
"I don't know that our legislators understand the importance of tourism and what an easy dollar it is and how many people it employs," she said. "They keep attacking us."
Another major concern about the bill for Eggleton, Malone and Sideris is that the money raised would not be going directly back into recreation or tourism. Although TRT funds have typically been reserved for recreation and tourism infrastructure, the money raised from S.B. 136 would go toward the public transportation capital investment fund to improve transportation in the state.
"Without a strong correlation of the tax source to the problem's solution, I feel like it is totally unreasonable," Eggleton said.
Eggleton said that it is not fair to put the burden of fixing Utah's roads and public transportation on visitors who come and do not use the roads nearly as much as permanent residents. He said that residents should be shouldering that burden rather than guests. Instead, funds raised from the TRT should go toward tourism, he said.
"There is very little, if any, correlation of someone saying, 'I'm not going to go on vacation here again because I hit a pothole,'" he said. "It's just not there. But if people do find new and exciting ways to recreate in a state that is renowned for its outdoor recreation, then it continues to grow the tourism fund."
Sen. Wayne Harper (R-Taylorsville) and Rep. Mike Schultz (R-Hooper), the bill's sponsors in the Senate and House, respectively, did not return multiple calls seeking comment.
The bill, which earned a favorable recommendation from the Senate Transportation, Public Utilities, Energy and Technology Committee on Monday, has already dropped the proposed TRT increase to 2.68 percent from the 4.68 percent initially proposed, but Eggleton and Malone said that any increase could have a negative impact on tourism.
"It's frustrating," Eggleton said. "We are constantly trying to defend the people who love coming here."
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