Travel Agents Slam Maryland Hotel Bill
PHOTO: The state capitol building in Annapolis, Md. (Courtesy of Thinkstock)
Travel agents expressed both disappointment and concern about the April 8 passage of a Maryland hotel bill that will apply six percent taxes to agent service fees, contending that it could not only negatively impact their own businesses but the state’s as well.
“This is not just about Maryland agencies, it’s about agencies and meeting planners around the country,” said Jay Ellenby, a staunch opponent of the bill who serves as ASTA treasurer and president and CEO of Safe Harbors Travel Group. “A meeting planner in California who books a hotel in Maryland will also be charged six percent.”
The passage of the bill doesn’t bode well for Maryland tourism either, according to Ellenby. “If there’s an opportunity for someone to look outside of Maryland, they’re going to take it,” he said. “They may go to Virginia instead. So it’s not good for business in Maryland.”
While ASTA is urging Maryland Governor Larry Hogan to veto the bill, Ellenby expressed uncertainty as to what the outcome of that request may be. “He’s in a real tough spot,” he said, adding that while the governor ran on a platform that opposed both new taxes and increases in existing taxes, he is also decidedly pro business. “Unfortunately he also has a major corporation – Marriott – in the state so he’s receiving pressure from that side and he doesn’t want to damage that relationship,”
In the meantime, agents of all shapes and sizes are expressing their opposition to the bill. “Travel Leaders Group strongly and vigorously opposes SB 190 because it unnecessarily burdens the travel agency community with an unprecedented sales tax,” said Steve Loucks, CTC, chief communications officer of Travel Leaders Group, whose various agencies collectively include more than 40,000 travel advisors.
For her part, Judy Nidetz of Chicago-based Travel Experts questioned how the state plans to execute the collection of the taxes. “I think this is a logistical nightmare,” she said. “I’m not sure how they think they can regulate and track this, given that there are agents all over the world with many different systems in place to book hotels in Maryland.”
Nidetz said that she often includes one invoice for hotel, air and car rental service fees. “In that case would I need to pay a tax? How will they charge me the tax and how will they monitor my bookings?” she asked. “I think the accounting nightmare will cost the state much more than the six percent they are trying to collect.”
The prospect of booking hotels on separate invoices will be cumbersome not only for Nidetz but for her clients as well. “In the end, this will raise costs for us that we will need to pass on to our clients, so this will drive up costs needlessly for travelers,” she said.
Furthermore, Nidetz noted that agents already pay state and income tax on their earning. “So in essence they are triple taxing us,” she said.
In the view of Claire Schoeder of Century Travel in Atlanta, Maryland did not evaluate the impact of the bill. “I think it is a tax grab aimed at large agencies, such as OTAs, but will disproportionately affect smaller agencies with much smaller profit margins,” she said. “I do not think they looked at the broad implications of this measure. They probably looked at the volume of the large agencies without thinking of the small agencies that directly employ state residents.”
Like Nidetz, Schoeder believes the bill’s passage will result in increased costs for travelers. “Agencies already lose a percentage of service fees to cover credit card costs. With an additional six percent taken away, most agencies, regardless of size, will need to increase fees to stem the loss from the new tax,” she said. “This will directly impact consumers – and in effect raise the price of travel for them as well.”
While Virginia recently voted down a similar bill, the prospect of other states following suit is troubling to agents. “Our neighboring state of Virginia chose not to go in this direction, but certainly other states that are cash strapped or trying to increase revenue might see this as opportunity,” said Ellenby.
ASTA said there are currently no such active bills in other states, although there is a possibility that Massachusetts and Pennsylvania are thinking of enacting them.
Also, governors in Illinois, Maine, Ohio and Pennsylvania are eyeing the possibility of expanding state taxes that have traditionally been imposed on such tangible items as cars and electronics to intangible items such as travel services.
More by Claudette Covey
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