A High-Tax City

In an interview with The New York Sun that ran in Tuesday's paper, Deputy Mayor Daniel Doctoroff left the door open to an increase in the city's already steep hotel tax. The money — per haps a $2-a-bed increase — would finance the expansion of the Jacob K. Javits Convention Center. Some City Council members and New York City hotel owners are skeptical of a potential increase, but as for Mr. Doctoroff, he said, "Can I flatly rule out a hotel tax? No, I cannot flatly rule it out."

Even without the proposed hike, New York state and city governments already require hotels to collect a steep 13.625% hotel tax — 8.625% for the state and another 5% for the city — plus a flat $2-a-night occupancy "fee." It turns out that of the 10 most popular convention cities in North America, according to the Center for Exhibition Industry Research, six already have hotel taxes lower than New York's. Among the cities with the lowest hotel taxes, as the adjacent chart shows, are the two most popular cities for conventioneers: Las Vegas, where a $150-a-night, one-bed hotel room would cost $13.50 in tax, and Orlando, Fla., where such a room would cost $17.25 in tax. In New York, under the current rules, the comparable tax would be $22.44.

If a $2-a-bed increase were imposed, New York would fall to last place, with an overall hotel tax fully 81% higher than Las Vegas's and 54% higher than Orlando's.

This tax would fall short of the 21% hotel tax that burdened New York in 1994, but it still points the city in a dangerous direction. The national convention management group considered the 1994 charge so extreme that it boycotted New York as a result. The convention management group's memory might not be as short-lived as the city's seems to be, and the sting of an increased hotel tax might incur its resentment once again.

Which brings us full circle to the reason for the Javits Center expansion in the first place: to attract larger conventions to New York, thereby boosting hotels, shops, restaurants, Broadway, and the economy. The proposed tax hike might fund the expansion, but at the cost of driving the sought-after new traffic away. Those paying the price wouldn't just be conventioneers, but friends and family members of New Yorkers and New York–based businesses putting up visitors in the city's hotels. We've got no objection in principle to a Javits Center expansion. But the other nine top convention cities all seem to have found ways to attract conventioneers without having to raise taxes to such exorbitant levels.