Tax-Credit Programs Drive Immediate Revenue; Voluntary Benefits Programs Curb Turnover - By Steven Belmonte

Probably the best kept secret in the hospitality industry is this: Your hotel is entitled to receive tax credits just for hiring entry level employees. Let me state that another way: Tens of thousands of dollars are waiting to be claimed by you as a hotel owner simply because you hire lower- to minimum-wage employees.

It's not 'too good' to be true - it is true. According to experts in this field, billions of dollars in government-based 'Employer and Employee Tax Credits' go unclaimed every year for no other reason than businesses simply don't know the programs exist.

With more than 30 years of hospitality experience under my belt - serving as an owner/operator, franchisee, franchisor, brand President/CEO, and head of one of the largest hotel management companies - this service was news to me.

Even better news is that companies have recently been established for the hospitality industry to take the burden of applying for and administering the tax refunds to hotels and their employees. All paperwork is managed off site by a third-party administrator. These liaison companies work on your behalf to identify and maximize the tax credits to which your hotel and your employees are entitled.

The BEST news is that it costs absolutely nothing out of pocket to apply or to participate in the program. The tax-credit administrator is paid (upon consignment) a percentage of the credit provided to your hotel or hotel company.

Benefiting Employers and Employees
Here's how the employer tax-credit program works. A tax-credit administrative company will work with hotel owners to identify which properties qualify to receive tax credits based on the eligibility of its employees. Employer tax credits are based on Welfare to Work, Work Opportunity and Enterprise Zone government tax credit programs.

Consider the following: If just 10 hotel employees qualify for one of these programs during the year, a hotel's potential tax credit is about $24,000 . If 50 employees qualify, their potential credit is $120,000 , and if 100 employees qualify, the potential employer credit provided to a hotel company is $240,000 !

While tax credit programs are becoming an obvious benefit for employers, IRS Earned Income Credit Laws also are enabling hotel owners to put more money in the pockets of their lower-paid employees with no risk and no upfront cost. In many cases, participating in employee tax-credit programs can result in increasing a line-level employees' take-home pay by as much as $130 a month.

The newly discovered source of revenue for employers could result in providing better voluntary benefits to employees and thus, decreasing employee turnover.

AAHOA members, industry getting on board
Ash Patel, President of Southwest Hospitality and current Treasurer of AAHOA, recently enrolled five of his properties in a tax credit program. In addition, 26 employees were identified as being eligible to participate in a voluntary benefits program.

'The Tax Credit program proved to be simple and successful,' Patel said. 'We expect to receive at least $12,000 in annual tax credits for doing absolutely noting but hiring outstanding line-level employees,' Patel said. 'In turn, a number of our employees are now going to receive an increase in their monthly take-home by as much as $40 to $130 per month, and some have opted to use that money for supplemental disability insurance and limited benefit health insurance. Previously these benefits were not available or affordable.'

Mike Patel, President of Diplomat Hotels and past Chairman of AAHOA, enrolled six of his hotels in the same program. Patel said he expects to receive about $25,000 in annual tax credits, and 44 employees enrolled in supplemental voluntary benefits programs.

'How can anyone say no to receiving money for doing absolutely nothing?' Mike Patel said. 'You'd be surprised how investing just a little bit of your time to launch the program will reap such a big reward-both monetarily and in employee loyalty and satisfaction.

'In today's employment crisis, making programs like this available to your employees really brings them together,' he added. 'It shows that you genuinely care for your employees' welfare. Our staff told us that they really appreciate the opportunity to finally have the supplemental benefits they've needed for so long but could not afford previously.'

Roger Bloss, president of Americas Best Value Inns, said he plans to put the tax-credit program into place at all hotels that he owns and manages, and will promote it to all franchisees as well.

'This program sounds FANTASTIC,' Bloss said. 'I don't know why any hotel owner or brand manager would elect to do nothing and walk away from an untapped source of income for their hotel and their employees. A third-party will do all the work for us - from communicating, qualifying, enrolling and completing all necessary paperwork on our behalf. They will identify and maximize the tax credits our hotel company and our employees are eligible to receive - and it doesn't cost us a penny. What could be simpler?'

For more details on how AAHOA members can participate in Hospitality Tax Credits and Benefits Solutions programs, visit www.stevenbelmonte.com.

Steven Belmonte is the president and c.e.o. of Hospitality Solutions LLC, based in Randolph N.J. Hospitality Solutions new franchise agreement negotiations, franchise termination and liquidated damage claim negotiations, mediation, expert witness, litigation support, motivational speaking, market studies, feasibility studies, on-site analysis, ownership and development assistance, and tax credit and benefits services to the hospitality and service industries. Former President and CEO of Ramada Hotels, Belmonte also served as Chairman of the American Hotel & Lodging Assn.'s Educational Foundation and serves on the Board of Directors of Arlington Hospitality Inc. and the Industry Relations Committee for the Asian American Hotel Owners Assn. For more information, call (973) 598-0839, email stevenbelmonte@aol.com or visit www.stevenbelmonte.com.


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