Texas proposal would tax travel agency service fees: Travel Weekly

ASTA has decried a new bill in the Texas House of Representatives that, if passed, would impose taxes on travel services related to hotel bookings in the state.

The bill would impose a 6% tax on the price paid for a room or space in a hotel. But the bill further specifies that the price includes “charges for reserving or booking the room or space.”

“Thus, any fees travel advisors charge their customers for Texas hotel bookings would be subject to state sales and local taxes that they aren’t today,” Eben Peck, ASTA’s executive vice president of advocacy, said in a statement.

The Society has launched a grassroots portal and is asking advisors and other industry stakeholders to get in touch with lawmakers in opposition of the proposed tax.

Peck said the bill is targeted at large online travel agencies (OTAs) but doesn’t make a distinction between OTAs and brick-and-mortar agencies.

It is particularly problematic, Peck said, as many agencies now charge clients service fees to move away from reliance on supplier commissions. 

“In 2019 — a year when travel agencies booked $33 billion worth of hotel rooms — 45% of agents charged a fee for hotel-only bookings and 42% charged a fee for an air, hotel and car package,” Peck said. “These fees are charged for a service — saving consumers time and money by helping them navigate a travel marketplace that offers an overwhelming number of options. ASTA’s long-held position is that this revenue, already subject to existing federal and state taxes, should not be taxed a third time through taxes traditionally applied on hotel room stays.”

Peck said the Society opposed the bill now even more than in normal times because of the uphill battle travel agencies face as a result of the coronavirus crisis. He called it “the worst possible time to be raising taxes on the travel agency sector.”

ASTA is no stranger to fighting proposed new taxes, having successfully shot down a number of such measures.