Tourism officials: Hotel room tax increase affects Hawaii residents

Local News

HONOLULU (KHON2) — Counties are poised to increase hotel room taxes up to 3%. It is a move that affects not just visitors, but also many Hawaii residents.

Tourism experts said Hawaii hotels already add 15% in taxes to the hotel room rates. That will soon go up to 18%.

University of Hawaii economist Sumner La Croix said past increases have not affected the flow of tourism and this one should not either.

“If hotels were 30% of the cost of a trip, the additional 3% increase in the 30% cost, that’s just increasing the cost of the trip by 1%. It’s highly unlikely that that would cause a big change in visitor traffic,” said La Croix.

The head of the Hawaii Lodging and Tourism Association (HLTA) points out that it could slow down inter-island travel for residents.

“Keep in mind, there’s a lot of staycations happening right now, it’s very popular, local residents will have to pay that extra 3%,” said Mufi Hannemann, HLTA president and CEO.

He pointed out that this puts Hawaii as the most expensive destination, or at least in the top two.

The average nightly rate for a Hawaii hotel room is about $300 — add in 18% and it goes up to $354. Other popular destinations like Las Vegas charge over 13%, while San Francisco sits at 14%.

State lawmakers passed a bill that took away the counties’ share of the Transient Accommodations Tax of about $100 million and allowed counties to raise the tax up to 3%. La Croix said it could mean more money for the counties and more control of it.

“There’s a lot to be said for that extra money to be put back into tourism services because we badly need it, we need more attention paid to the management of tourist flows,” said La Croix.

But Hannemann pointed out that the City Council still has to approve it so there will be a lot of debate on whether that money will go to tourism services.

“There always are differences in terms of how that 3% it’s going to be allocated. Some may want it strictly for tourism-related purposes, others might say well, we want to use it for transportation as well,” he said.

Correction: An earlier version of this story listed an incorrect figure for the nightly hotel room rate in Hawaii. The error has been corrected.

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