Tourists expect to pay a princely sum for a sweet suite in glitzy San Francisco or New York. But double-digit hotel tax rates in many destinations away from the bright lights will absolutely blow your socks off.
An updated study by HVS, a global lodging industry consulting firm, quantified just how big a bite government is taking out of travelers’ wallets when they book a hotel room. Total tax rates—including state, county, city and miscellaneous add ons—in the 150 most populous urban centers range from a low of 7 percent (Lancaster, Calif.) to a whopping 17.7 percent (St. Louis, Mo.), with the average being around 13.4 percent, according to the study. Eleven other cities have rates of at least 17 percent: Birmingham and Mobile, Ala.; Omaha, Neb.; Milwaukee, Wis.; Chattanooga and Knoxville, Tenn.; Anaheim and Garden Grove, Calif.; Indianapolis; Houston, and Overland Park, Kan.
Conversely, some locales seem relatively cheap by comparison: Colorado Springs at 9.4 percent, San Diego, 12.5, Salt Lake City, 12.6, and New Orleans, La., Las Vegas, Miami, and Dallas, all at 13 percent. And Honolulu? The rate in Hawaii’s largest city came in at 13.8 percent.
Why do hotel tax rates seem so out of whack with tariffs on purchases such as clothing and restaurant meals? The answer comes down to politics: Visitors don’t vote. Lodging taxes are popularly viewed as a politically viable method to raise revenues because the vast majority of overnight guests who pay the tax are not constituents, according to HVS's managing director, Thomas Hazinski.
Because most lodging taxes are characterized as “ad valorem”—meaning they’re charged as a percentage of the room rate rather than as a flat fee—they generate substantial revenue. In 2012, New York City took in $487 million, up more than $100 million since 2008. San Francisco was next, at $240 million. Most lodging taxes are used for general-fund purposes, to promote convention and tourism, and to finance public facilities.
Here's how the the total tax rates compare in the top 10 cities, according to the 2013 HVS Lodging Study.
City |
Total tax rate |
Houston |
17 percent |
Indianapolis |
17 |
Columbus |
16.75 |
San Antonio |
16.75 |
Chicago |
16.39 |
Los Angeles |
15.5 |
San Francisco |
15.5 |
Austin |
15 |
New York |
14.75 |
Philadelphia |
14.2 |
San Jose |
14 |
Phoenix |
13.27 |
Dallas |
13 |
Jacksonville |
13 |
San Diego |
12.5 |
Bottom Line
While there’s little you can do to bypass room taxes, there are ways to avoid sticker shock from unexpected charges on your bill at checkout.
• Before booking, ask a hotel employee if there are charges for anything other than room occupancy and sales tax. Many resort hotels impose a resort fee whether or not you use the golf course or play tennis, for instance, while some automatically tack on a tip for staff.
• Scrutinize the hotel’s arrival and departure policies (there might be a hefty penalty in you want to check in early or leave late).
• Before using room service, the business center, fitness center, or other amenities, ask about fees.
• If you think you’ve been billed unfairly, speak up. Though hotel clerks are trained to discourage guests from having unwanted charges removed, success rates typically range from 10 to 20 percent, depending on the fee.
—Tod Marks
Click here for Consumer Reports' free advice on getting a great hotel rate.
And for additional information on travel taxes, check out our latest coverage.
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