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Hotel Industry News |
Tuesday December 2nd, 2008 |
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Property Taxes - As hotels prosper, their property taxes surge |
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The U.S. hotel industry is enjoying some of its best times ever, and local tax collectors are taking note.
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 Hotel property taxes went up by at least 10% in eight cities, including Miami, Charlotte and Washington, according to an analysis by Atlanta-based PKF Hospitality Research. They jumped nearly 19% in Dallas. The average hotel tax bill nationally rose 6.2% last year, the biggest annual jump since 1987, the analysis shows.
"The cities and counties want their piece of the pie," PKF President Mark Woodworth says.
State laws vary, but generally commercial property valuations - the basis for the final tax bill - consider market value and income-producing potential.
Laurence Geller, CEO of Strategic Hotels & Resorts, which owns 20 hotels, says the higher taxes must be offset by raising room rates, cutting costs or raising revenue elsewhere. Several of Geller's hotels are putting in specialty retail shops to increase sales.
"It's part and parcel of real estate being more valuable. ... You have to get more yield to justify holding the real estate," he says.
In addition to strong income from high room rates and high occupancy, hotels are upgrading. This year, U.S. hotels are expected to spend $5 billion on improvements, many of which drive up valuation.
External Source - For the complete article click here
Source - USATODAY
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