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Booking NYC Hotel Rooms Online Might Be Getting a Bit Pricier

June 29, 2009 at 2:54 PM | by Jenna | 3 Comments

Uh-oh. We're pretty sure lots of online hotel booking sites are going to have something to say about this: according to WNYC, New York City's Mayor Bloomberg "will sign a bill into law today that should bring in a lot of additional tax revenue for the city" — that is, travel sites will now have to pay taxes on the full retail prices of the NYC hotel rooms they sell.

Per WNYC:

The city believes it's currently collecting less hotel tax than it should. That's because some travel websites pay hotel taxes based on the wholesale rate of the rooms they buy. Then, the websites charge their customers the same hotel tax on retail room rates, and pocket the difference.

A trade group representing travel web sites says the change is, quote, "exactly the wrong approach", and will result in more vacant hotel rooms.

Uh, hmmm. Yikes. We'll keep you updated as we learn more about how much this is going to affect the price you're going to be paying (if it does) — in the meantime, we suspect the travel sites are not really going to be so down with this.

3 Comments

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Return to » Booking NYC Hotel Rooms Online Might Be Getting a Bit Pricier

  1. HighOccupancy

    HotelChatter Member

    Expedia's Tax Scam Revealed

    I've been working with Expedia for years, and yes they absolutely make a few bucks per reservation off their tax scam. You ask "How?"

    Let me explain...

    You book a $100 NYC hotel room on Expedia which comes with about a 15% tax, so Expedia charges you $115 total. After your stay, Expedia subtracts their commission and pays the hotel a net rate of $75 + 15% tax = $86.25. This means Expedia collected $15 in "tax" from you, but the hotel (and NYC) really only collected $11.25 in tax. So you paid $3.75 in "taxes" that are really Expedia revenue.

    The higher the rate, the longer the stay, the higher the city's taxes, the more Expedia skims. I imagine this adds up to hundreds of millions per year in NYC alone. How much do they make nationwide? I always wondered how they were getting away with this.

    June 29, 2009 at 5:32 PM
    #Permalink

  1. rockstar7

    HotelChatter Member

    Interesting...

    HighOccupancy thanks for explaining how Expedia is making money... I guess they wouldn't do it for free right:)
    June 30, 2009 at 5:29 AM
    #Permalink

  1. adinarayan

    HotelChatter Member

    Journalist query

    Hey Hoteljunky
      I am a journalist working on a print story about the complicated rate and tax structure used by hotel resellers and operators. I'd be really intrested in speaking with you. It'll be great if you could respond to me at scijourn@gmail.com.

    Best,
    Adi N
     

    June 30, 2009 at 8:35 PM
    #Permalink

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