New York State Attempts Fuzzy Math in Latest Occupancy Tax Skirmish

The current budget under debate in Albany includes an interesting twist in the ongoing OTA lodging tax fight. The proposed budget contains language that attempts to compute the occupancy tax on the retail rate by simply multiplying the net rate by 120% and applying the tax rate on this amount.

Yes, you read that right. This simpleton proposal assumes that all OTA deals are created equal and that the mark-up is always 20%. If passed, this will certainly will make future hotel/OTA negotiations easy! Doubt it.

Tracey Weber Trades Gnomes for Tomes

Long-time Travelocity (and Site59) executive Tracey Weber has been appointed EVP Textbooks and Digital Education at Barnes and Noble.com (www.bn.bom)

Tracey Weber is one of the last Site59.com senior executives still with Travelocity. We expect that getting back to New York City was a key driver of Tracey's decision. No immediate successor has been named.

Irony - San Diego CVB: Expedia "Partner of the Year" While City Sues Expedia Over Occ Taxes

Expedia Media Solutions (the media arm of Expedia Inc.) yesterday announced that the San Diego Convention and Visitors Bureau had named Expedia.com "Partner of the Year." According to the press release, the San Diego CVB was recognized as "a top advertising partner and major sales channel for San Diego hotels."

The press release continues:

"'As a promotion partner, Expedia not only grew San Diego's room nights year-over-year by 26 percent, but in these tough economic times they were able to grow revenue by 11 percent – exceeding ROI estimates and generating a significant return on investment of 125 to 1,' said Joe Terzi, President and CEO of the San Diego CVB. 'Serving many different consumer segments—from families booking a summer vacation to individuals arranging a quick weekend getaway—Expedia gives us a highly effective way to share San Diego's message to a broad audience of travel shoppers and potential visitors.' "

Hmmm. Interesting that the CVB is so enthusiastic given that the City of San Diego is one of the many municipalities currently suing Expedia and the other major online travel agents. An administrative hearing has been held on the case but before any decision was rendered, the Judge in the similar Anaheim case rendered her opinion in favor of the the OTAs.

And just how does the San Diego CVB receive most of its funding? You guessed it, occupancy taxes. According to the CVB's own website, "the majority of funding is derived from San Diego Tourism District Assessment Funds." Again from the CVB's own website, the current transient occupancy tax is 10.5% in the City of San Diego. There is also an additional 2% occupancy tax levied for the San Diego Tourism Marketing District. If you enjoy reading tax code, here is the actual language from the City of San Diego's municipal code.

Anyone who has been following the ongoing saga of the tax lawsuits against the OTAs knows that the issue is if the taxes above are levied on the net or wholesale rate actually charged by the hotel to the OTA or the marked-up, retail rate sold by the OTA.

So now we have an interesting situation: The very agency (the CVB) charged with promoting San Diego (whose funding comes from the occupancy taxes in question) is holding out an OTA (Expedia) as a great partner. At at the same time the city of San Diego is suing Expedia et al for non-payment of occupancy taxes that largely fund the CVB!

So, San Diego (and other cities) which is it?