Coronavirus pandemic could cost state governments over $16B in hotel tax revenue
California, New York, Florida among the hardest-hit states
FOX Business’ Jeff Flock on what new measures hotels are taking to make patrons feel safe amid the coronavirus.
State and local governments stand to lose $16.8 billion in hotel tax revenue as the coronavirus pandemic batters the travel industry, according to an analysis released Thursday by an industry group.
States hit hardest by the plunge in hotel demand include California ($1.9 billion), New York ($1.3 billion), Florida ($1.3 billion), Nevada ($1.1 billion) and Texas ($940 million), according to an analysis released by the American Hotel & Lodging Association. That includes the direct tax revenue decrease from the drop in hotel occupancy, including sales and gaming taxes.
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Travel restrictions implemented in response to the outbreak of the virus grounded planes worldwide, gutting the travel industry. Residents were directed to stay at home and businesses were shuttered as the American economy came to a grinding halt to slow the spread of COVID-19.
In 2018, hotels generated about $40 billion in tax revenue for state and local governments, according to the report.
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U.S. hotel profits tumbled more than 116 percent amid the closures, according to hospitality data intelligencer provider STR. Although occupancy rates are starting to slowly increase, at the end of May, six out of 10 open hotel rooms in the U.S. were still empty.
This year is expected to be the worst on record for hotel occupancy. Experts estimate that it won't return to pre-crisis levels until at least 2022, the report said.
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"With the impact to the travel sector nine times worse than 9/11, hotels need support to keep our doors open and retain employees as we work toward recovery," Chip Rogers, president and CEO of the American Hotel & Lodging Association, said in a statement. "We expect it will be years before demand returns to peak 2019 levels.”
Before the pandemic, hotels represented one in 25 jobs, or 8.3 million in total, contributing $660 billion to the nation's GDP, the industry group said.
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