HTA Endorses Extension of TAT 9.25% Rate, Opposes Additional Increase 

News Release from HTA Feb 8, 2013

The Hawaii Tourism Authority (HTA) does not support any proposed increase to the transient accommodation tax (TAT) beyond the current 9.25 percent.

An increase to the TAT would negatively affect Hawaii’s competitive position in the marketplace by putting an additional tax on our visitors. This could cause us to lose momentum in the significant gains in visitor arrivals and spending experienced over the past three years. We need to ensure the continued success of our industry for the state’s economy to be sustainable.

Hawaii is a leisure destination, where the visitor’s spending is discretionary.   As such, our visitor market is price-sensitive, and any increase could drive a traveler to a competing destination. An increase to the TAT will only diminish Hawaii’s ability to compete in a price-sensitive market.

Currently, the visitor industry supports more than 166,000 jobs and we anticipate this number to grow this year. However, we are still well below the peak of more than 178,000 jobs in 2005, and the TAT increase could cause a loss of jobs in the tourism sector.

Visitors contribute an average of $196 in per person per day spending, which adds up to approximately $1,800 per person per trip. These expenses are inclusive of the 14.0% hotel room tax, which include the 4.712% GET and current 9.25% TAT. Should the TAT increase to 11.25%, hotel room taxes would then jump to 16.0%.

Instead of increasing the TAT, we believe that by investing in opportunities to maintain market share and diversify our tourism profile in the leisure and meetings, conventions and incentive (MCI) markets to our established and emerging major market areas, we can generate greater revenue that will benefit the entire state. We will also continue our efforts to maintain and expand airlift and neighbor island distribution, improve the cruise ship arrival program, build on the experiential assets of our people, place and culture, and support career development for our youth – all of which are an investment into the state.

While we do not support increasing the TAT, we do support keeping the rate at 9.25 percent beyond the current sunset date, provided the cap of $71 million on HTA funding is removed. If legislation passes, the HTA will receive 23.5 percent of the TAT,  a 3.5 percent increase in the funding level, which would be reinvested into the  Hawaiian Islands brand and would allow us to further market, develop and support Hawaii’s tourism economy, which was the original intent of the creation of the TAT.

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Editorial Comment: HTA is so easy to toy with.  Just bluff an increase in TAT and they all line up in favor of extending the ‘temporary’ 9.25% rate.  It is so easy to get them to endorse a tax hike on their own industry, even an Abercrombie teamed with a straw man can do it.