The hotel industry is a frequent target for new taxes and tax increases, with bed taxes often being used by municipalities to pay for community developments or repairs. For this reason, three counties in Kentucky voted to pass a tax increase on hotel rooms, with Boone County being the most recent.
This month, Boone County Fiscal Court approved a 1-percent increase on transient hotel room taxes. The move follows Campbell and Kenton counties, which passed tax increases last month.
The Northern Kentucky Convention and Visitors Bureau estimates the 1-percent increase (which brings the previously 6 percent tax to 7 percent, according to the Kentucky Department of Revenue) will generate an extra $1.2 million to $1.5 million per year for the county. This money will be used to expand the area’s 204,000-square-foot Northern Kentucky Convention Center in Covington, Ky.
Eric Summe, CEO of the Northern Kentucky CVB, said the convention center has hosted 2,500 events since opening in 1998, and supports 350 employees related to hospitality. Once the expansion of the convention center is completed, the increased tax will fund tourism projects.
Depending on who you ask, hoteliers have mixed emotions about rising bed taxes. On one hand, these operators want to support their local area and are willing to contribute, such as a May decision from Hawaii lawmakers to raise hotel taxes to fund a state rail project. Conversely, many hoteliers argue that counties should be putting as much effort into going after home-sharing services such as Airbnb for tax revenue.
At the time of this writing, Kentucky is not included on a list of locations where Airbnb collects occupancy taxes, and more than 300 listings can be found in searches for Boone County. On May 1, Airbnb entered into agreements with more than 275 international jurisdictions for tax collection, collecting and remitting more than $240 million in hotel and tourism taxes worldwide in the process. More than 250 jurisdictions are collecting taxes from Airbnb in the U.S., but because these agreements take place at the local level, they take time and effort to iron out.