Legislators pass on hotel and lodging issues
March 9, 2012
No matter what movement, industry or group, the Utah Legislature will always have good years and bad years in taking up certain causes or issues. The Utah Hotel and Lodging Association is no exception, as several issues the organization brought forward were set to the side for next year’s legislative session.
"With the legislature and business, the pendulum swings both ways," said Bill Malone, president of the Park City Chamber/Visitor’s Bureau. "It was in neutral mode this year. We didn’t get hurt, but we didn’t make a lot of advances either."
Issues ranging from double taxation to liquor were put forward by the industry, Park City included, with the understanding that bills can take years to advance. The numbered bills, none of which made it out of committee, are expected to be readdressed over the summer during the Interim Session.
"It became very apparent early on in the session that there was no appetite for any major alcohol changes other than dealing with the (Department of Alcoholic Beverage Control)," said UHLA President Michael Johnson.
"It was also clear early on that any tax changes that would dramatically change budget was another issue legislators had no appetite for. These are two issues that for last couple of months we’ve know there was not much of a chance."
The six biggest issues UHLA and the Park City Area Lodging Association were watching closely were: removing the sales tax on room amenities and complimentary continental breakfast, introducing a hotel liquor license, supporting the creation of fair tax policy for online travel agents, increasing the state per diem rate, ensuring funding for the tourism performance marketing fund and fighting significant funding mechanisms for a convention center hotel.
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Removing the sales tax on room amenities and complimentary continental breakfast involved changing the current policy, which taxes Utah hotels twice for the same product. Hotels are charged once on the original wholesale purchase of items such as mini-shampoos and toothpaste, and then charged again in the sales tax customers pay for the items that are included in the room price.
"There needs to be some education on some of these issues," said Teri Whitney, the PCALA treasurer and manager of Snow Flower Condominiums. "Right now, legislators don’t understand how this affects us. It’s double taxation. and you can’t double tax."
The hotel liquor license debate would reword liquor license language to give the license to the entire hotel and not just the bar or restaurant inside the property. As the law is currently written, customers are often stopped if they try to take their drink to their room or even step into the lobby to make a call or check out.
"To have to explain that to someone traveling here, they look at you like you have two heads," Whitney said.
Malone was on the same page.
"Advancing the bill on portability of alcohol, that’s something we’ve heard about for a long time," he said. "It’s certainly been on the wish list in terms of desired adjustments to liquor laws."
Another issue and a success for the tourism industry as a whole that was on the UHLA docket was preserving funding for the Utah Tourism Budget, which was facing its fifth-consecutive year for cuts early in the session. When the legislature first started, before official numbers for the 2013 Budget were released, the Utah Department of Tourism advertising budget was looking at a $1M cut. Late Thursday night, legislators finalized budgets, including an additional $2M to the tourism advertising budget, bringing the total to $8.6M.
"I’m encouraged, it seems as though the tourism marketing fund has finally gotten a boost," Malone said, "and we’re all pretty excited about that."
Despite a lackluster year in pushing through legislation, Johnson said he was satisfied with the way the session came to a close.
"We knew these would be multiyear endeavors," Johnson said. "Now at least, the issues are in front of legislature, on legislators’ minds."
Johnson expects the taxation issue and the alcohol issue to have a strong presence over the interim period as legislators work to draft a piece of legislation. With hopes set to smooth out the kinks, Johnson added that the bills would be able to carry much more weight with in the 2013 Legislative Session.
"Our true keys to success will be the involvement of hotels," he added. "The more hotels that get involved, the more likely these pieces of legislation will pass next year."
Utah Hotel & Lodging Association legislative priorities for 2012
1. Removing sales tax on room amenities and complimentary continental breakfast
NO LEGISLATION INTRODUCED
Currently hotels are required to pay sales tax on shampoos, soaps and other amenities that are put into the commodity of the room and sold to the guest. UHLA’s position is that amenities, as well as complimentary breakfast that is included in the purchase price, should be exempt from sales tax when purchased wholesale for resale. UHLA believe that the tax currently levied on the end user should be sufficient for these products.
2. Introduce a hotel liquor license
LEGISLATION NUMBERED WITHOUT SUBSTANCE
Hotels guests are unable to move between functions within a hotel while holding a lawfully purchased alcohol beverage. This causes countless awkward moments among guests who are caught in the middle of laws. Hotels are required to manage, in many cases, four or five, even as many as eleven licenses in one hotel. Having one license would make the enforcement of liquor laws far more manageable while also creating a more hospitable atmosphere for those visiting the State.
3. Support the creation of fair tax policy for online travel agents
BILL FAILS IN COMMITTEE
There is a lot of contention nationally about whether online travel agencies should collect and remit sales and room tax on the wholesale or on the retail rate. Many counties within Utah have expressed their concern that the current practices of the online travel companies are inconsistent with their interpretation of the law.
4. Increase the state per diem rate
LEGISLATION NUMBERED WITHOUT SUBSTANCE
In many communities throughout Utah the state per diem rate is much lower than the average daily rate of reasonable accommodations in the area. In order to ensure that state employees are able to find reasonable accommodations and that hotels are able to serve that group while maintaining rate integrity, UHLA encourages an evaluation of the system.
5. Ensure funding for the tourism performance marketing fund
INCREASE OF FUNDING TO $8.6M
In conjunction with UHLA partners at the Utah Tourism Industry Coalition the industry is committed to ensure continued support for tourism marketing.
6. Fight significant funding mechanisms for a convention center hotel
BILL NUMBERED WITHOUT SUBSTANCE
UHLA does not believe that it is the place of state or local government to provide significant financing for a convention center hotel in Salt Lake City at this time. UHLA will work to discourage any level of government from pursuing a funding model for this type of hotel which includes major government intervention and that disadvantages existing hotels in their ability to compete.
*Information from the UHLA website