Friday, August 07, 2020
Hawai'i Free Press

Current Articles | Archives

Sunday, June 07, 2015
Whither the Resort Fee?
By Tom Yamachika @ 5:01 AM :: 3847 Views :: Taxes, Tourism

Whither the Resort Fee?

by Tom Yamachika, President, Tax Foundation of Hawaii

This week we will be talking about “resort fees.” In recent years, a number of hotels, including many in Hawaii, have been adding them to hotel bills. The hotels say that it's for access to the gym, pool, or Wi-Fi network, for example. But the fee is charged whether or not the guest uses the gym, pool, or Internet.

By adding a resort fee of $25 to a room rate of $125, the hotel brings in $150 per night but it can advertise a $125 room rate.

Whether or not this is truth in advertising -- the consumer protection people can sort that one out -- this also creates tax issues.

Our state imposes a general excise tax on pretty much every kind of income. But an extra 9.25% is slapped on the charge for a hotel room. This is called the transient accommodations tax, or TAT. The hotels say that the resort fee is not for accommodations, as mentioned above, but the Department of Taxation has stated that a mandatory resort fee looks and walks like a room charge, so by golly they're going to apply the TAT to the fee as well.

The Department’s view of the world might make sense at first glance. After all, if I show up at a hotel without a car and they charge me a per-night parking fee anyway, then it's tough for the hotel to say that what they are calling a parking fee isn’t just another piece of the room charge. But the Department’s own regulations add a wrinkle. The regulation gives the example of a guest who pays a certain amount per night on the “American Plan,” which includes breakfast. The regulation says that the TAT is not due on that part of the per-night cost attributable to the meal. Presumably the guest would pay the same amount even if he skipped breakfast; and we don’t know if the hotel offered the same room without the meal plan. The rule doesn't go into that much detail. So the regulation appears to say that if you can figure out that part of a per-night charge is for something other than the stay, then the TAT doesn't apply to that part.

To get “further clarity” on the issue, the Department for the last couple of years has pushed some bills at the Legislature that would have explicitly made resort fees subject to the TAT. The bills have all stalled, indicating that at least some lawmakers are not buying the Department’s view. In the meantime, the Department’s apparent unwillingness to follow its own regulation is creating confusion.

One way out of this problem is for the Department and industry to work out a suitable dividing line. For example, we could look at the reality that a “room rate” is not just for a hotel room but also includes amenities and services that one would typically expect with a hotel room. Other amenities and services, like the meal in the American Plan example, should not be subjected to TAT whether or not they are bundled with the room cost.

Here it looks like the regulation is causing a problem and the Legislature seems to be reluctant to change the law, so let's get that regulation changed to a reasonable compromise position. The Department won't get everything it wants, the hotels won't get everything they want, but everyone gets clarity and the hotels can go on with their business. We owe it to the industry to come up with clear, no-nonsense rules that everyone can abide by.

- 30 -


TEXT "follow HawaiiFreePress" to 40404

Register to Vote


808 Silent Majority

ACA Signups Hawaii


Alliance Defending Freedom

Aloha Pregnancy Care Center

American Council of Trustees and Alumni


Antonio Gramsci Reading List

A Place for Women in Waipio

Astronomy Hawaii

Ballotpedia Hawaii

Better Hawaii

Blaisdell Memorial Project

Broken Trust

Build More Hawaiian Homes Working Group

Christian Homeschoolers of Hawaii

Cliff Slater's Second Opinion

Coffee Break

DVids Hawaii

E Hana Kakou Kelii Akina


Fix Oahu!

Follow the Money Hawaii

Frank in Hawaii

Front Page Magazine

Frontline: The Fixers

Genetic Literacy Project

Grassroot Institute

Hawaii Aquarium Fish Report

Hawaii Aviation Preservation Society

Hawaii Catholic TV

Hawaii Christian Coalition

Hawaii Cigar Association

Hawaii Coalition Against Legalized Gambling

Hawaii ConCon Info

Hawaii Credit Union Watch

Hawaii Crop Improvement Association

Hawaii Debt Clock

Hawaii Defense Foundation

Hawaii Family Advocates

Hawaii Family Forum

Hawaii Farmers and Ranchers United

Hawaii Farmer's Daughter

Hawaii Federalist Society

Hawaii Federation of Republican Women

Hawaii Future Project

Hawaii Gathering of Eagles

Hawaii History Blog

Hawaii Homeschool Association

Hawaii Jihadi Trial

Hawaii March for Life

Hawaii's Partnership for Appropriate & Compassionate Care

Hawaii Public Charter School Network

Hawaii Rifle Association

Hawaii Shippers Council

Hawaii Smokers Alliance

Hawaii State Data Lab

Hawaii Together

Heritage Foundation



Hiram Fong Papers

Homeschool Legal Defense Hawaii

Honolulu Navy League

Honolulu Traffic

House Minority Blog

I Vote Hawaii

If Hawaii News

Imua TMT

Inouye-Kwock, NYT 1992

Inside the Nature Conservancy

Inverse Condemnation

Investigative Project on Terrorism

Iowa Meets Maui

Jackson v Abercrombie

Jihad Watch

July 4 in Hawaii

Kahle v New Hope

Kakaako Cares

Kau TEA Party

Kauai Co GOP

Keep Hawaii's Heroes


Land and Power in Hawaii

Legislative Committee Analysis Tool

Lessons in Firearm Education

Lingle Years

Malulani Foundation

Managed Care Matters -- Hawaii

Malama Pregnancy Center of Maui

Mauna Kea Recreational Users Group

Middle East Forum--The Legal Project

Mililani Conservatives for Change

Military Home Educators' Network Oahu

Missile Defense Advocacy

MIS Veterans Hawaii

Muslim Brotherhood in America

NAMI Hawaii


National Christian Foundation Hawaii

National Parents Org Hawaii

National Wind Watch

New Hawaiian

New Zeal

NFIB Hawaii News

No GMO Means No Aloha

Northwest Economic Policy Seminar

Not Dead Yet, Hawaii

Now What I Really Think

NRA-ILA Hawaii

Oahu Alternative Transport

ObamaCare Abortion Hawaii


OHA Lies

Opt Out Today

Pacific Aviation Museum

Patients Rights Council Hawaii

PEACE Hawaii

People vs Machine

Pritchett Cartoons

Pro-GMO Hawaii


Rental by Owner Awareness Assn

Republican Party -- Hawaii State

Research Institute for Hawaii USA

Rick Hamada Show

RJ Rummel

Robotics Organizing Committee

Save Dillingham Airfield

School Choice in Hawaii

Sink the Jones Act

Statehood for Guam

Tax Foundation of Hawaii

The Real Hanabusa

Time Out Honolulu

Trustee Akina KWO Columns

UCC Truths

US Tax Foundation Hawaii Info

VAREP Honolulu

West Maui Taxpayers Association

What Natalie Thinks

Whole Life Hawaii