ASTA Bites Back on New York City Hotel Tax
I’m not one to say “I told you so,” but it’s darn tempting to throw that phrase at New York City officials who implemented the tax on travel agencies selling available rooms in the Big Apple.

Lots of rooms, lots of taxes
After trying to figure out what the law says and exactly how to implement it this fall, the American Society of Travel Agents and a host of big online Internet players (i.e. Expedia, Hotels.com, Orbitz, Priceline and Travelocity) responded this week with a lawsuit against the city. The grounds: extending the hotel room occupancy tax to “third-party travel intermediaries” is “unconstitutional and illegal” as the city “has no inherent power to tax.”
Other points in the lawsuit bring up the fact that New York City failed to answer critical questions and the City’s interpretation of its new rules was unacceptable. To rub salt in the wound, the City of New York imposed the tax without notice, hearing or other opportunity for meaningful input.
ASTA’s senior vice president had previously said the law was written by ”people who don’t know about the industry who just want more money.”
Technically, I predicted that travel agencies would retaliate with a huge drop in bookings in the fourth quarter. I was correct about the retaliation part — a lawsuit could deter other cities from pulling this stunt in the next six months. The move is predictably popular among travel agents, although it is aimed only at stopping taxation on online hotel bookings at the moment, which could end up giving their biggest competitors an advantage they don’t enjoy. But that’s for another day. Fighting back is the first order of business.
Happy holidays, Mayor Bloomberg.
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