Guest Editorial, February 15-17, 2012
February 15, 2012
I am writing on behalf of the Interactive Travel Services Association (ITSA), the voice of the online travel industry, to respond to your Feb. 11 article, "Online travel companies ducking taxes," about the taxes paid by online travel companies.
First, with regards to some of the central inaccuracies stated in your article, let me respond to a few points:
The online travel companies pay the same tax rate on the same transactions that hotels do, and imposing a new tax would result in an unfair and unbalanced taxation towards online travel companies.
Online travel companies do NOT charge consumers taxes and then "pocket" the money, as the article falsely alleges. In fact, numerous audits and lawsuits from across the country have debunked that inaccuracy many times.
With regards to litigation and the trend in the states, the article gets the facts almost completely wrong. While there have been a very small minority of states that have passed laws to impose new taxes on online travel companies, notably in New York and Minnesota, along with Washington, D.C., these states still face costly litigation and compliance problems. On the other hand, a growing number of states, including Florida, Connecticut, and Massachusetts, have recently rejected imposing these taxes in light of the obvious harm it would cause to the tourism industry and job creation in those states.
Online travel companies provide significant benefits for Utah businesses, not only by bringing millions of tourists to Utah, but also by helping to book local tourist attractions as well, such as museum tours, ski trips and other local activities, which bring significant jobs and revenue to the state and to local communities.
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The online travel companies and our travel partners spend millions of dollars promoting travel destinations all over Utah to consumers around the world, and as the article points out, hotels "have to get business however you can We need these companies to help us book rooms." Imposing taxes on consumers and travelers to Utah is likely to dampen consumer travel to Utah destinations, hurting job growth, tourism and tax revenue.
Most consumers are aware of the benefits that OTCs provide in assisting them in making their travel arrangements, including increased transparency and lowered costs for flights, hotel rooms and other travel services.
In fact, the hotel industry itself recently conducted a major, statistical study on the role of OTCs in the hotel industry, and the author concluded by stating that:"If there was no such thing as OTAs, [hotel] room rates would be considerably higher."
The online travel companies also provide significant benefits to our hotel partners. For instance, the vice president of revenue management for Wyndham Hotels said that OTCs help them and other hotel companies "reach customers that [hotels] otherwise would not reach by themselves."
This is particularly true of small business, independent hotel owners throughout Utah, who gain tremendous benefits from online travel companies by utilizing marketing services to help them advertise their availability and features, giving those small businesses an international advertising platform, connecting them to a world of potential customers.
We urge you to correct the inaccuracies conveyed in your article and communicate the true facts about the benefits online travel companies provide people and businesses in Utah.
Joseph Rubin is the president of the Interactive Travel Services Association, http://www.interactivetravel.org.