The hotel industry in New Castle County is facing a direct challenge, driven by New Castle County Executive Matthew Meyer’s singling out our industry for a 38 percent tax increase. House Bill 377 is legislation that would allow counties to levy a lodging tax of 3 percent on top of the existing 8 percent in most of New Castle County, except for Wilmington, where the tax is 10 percent.
The members Delaware Hotel and Lodging Association oppose this bill for the following business reasons:
1. The 38 percent increase in the County Lodging Tax will impact the competitiveness of the hotel industry and cost much-needed hotel business, as the tax will be higher than surrounding areas. Guests have already asked about this proposed extreme tax.
2. Loss of tourism business will impact our ability to create and maintain jobs, many at entry level positions, in hotels and related tourism venues. Hotels already pay our fair share of property taxes, school taxes and other employment taxes.
3. New hotel development will slow down, meaning fewer new jobs and less property taxes for the county and possibility our state. Anti-business legislation is never for the good of our community.
4. Meyer and the New Castle County Council are pushing for the maximum tax increase of 3 percent, with no mention of any allocation for tourism marketing. In the more progressive counties, the lodging tax increases are allocated to add marketing dollars to tourism. New Castle County is taking all the money.
5. There is no mention of addressing AirBnB, the operator of illegal hotels in Delaware, which pay zero lodging tax, and take hotel business and jobs. Legislation should be passed to tax them like we tax our hotels.
6. Last year, the state of Delaware was about to take all the tourism marketing dollars for the three counties, despite existing law. The lodging industry needs assurance that will never happen again. Only at the last minute was that funding restored. It would have seriously impeded our ability to compete.
7. An overall lack of trust of the word of government has really hurt our relations in the state, and now County Executive and Council.
Hotels currently pay the 8 percent lodging tax with 5 of that 8 percent going to the State of Delaware general fund, 1 of the 8 percent to beach replenishment in Sussex County, 1 of the 8 percent to fund the State Tourism Office and prorated share of the last 1 percent to support the marketing of the county via the Greater Wilmington Convention and Visitors Bureau.
The industry is urging all hoteliers, associates, tourism industry partners and the public to oppose this tax, and reach out the chair of the House Administration Committee, Rep. Valerie Longhurst, to express opposition.
Bill Silva is Chairman of the Board of the Delaware Hotel and Lodging Association.