Wilkes-Barre hotelier Gus Genetti said he was “speechless” to learn Pennsylvania legislators were considering a 5 percent hotel-tax increase to help balance the state budget.
“I was astounded when I heard the news. Hopefully, saner passions will reign,” said Genetti, owner of Best Western Plus Genetti Hotel & Conference Center on East Market Street.
It appeared his wish was granted. The Associated Press reported Wednesday evening that efforts to nearly double the state hotel tax rate had “all but collapsed in the GOP-controlled House of Representatives.”
The hotel tax would have increased from 11 percent to 16 percent in Luzerne County under the proposal.
The state currently charges 6 percent, and the county had tacked on another 5 percent in 1996 solely to help fund county tourism and the Mohegan Sun Arena in Wilkes-Barre Township.
Genetti said travel/tourism is the state’s second highest economic generator, following agriculture.
“They’d better be careful,” he said. “If you damage our reputation for being a friendly and welcoming state, it could have devastating long-term effects on the travel industry in Pennsylvania.”
Travel agents and motor coach operators would notice the additional 5 percent and could “just as easily” shift lodging stays to New York and Maryland, Genetti said. Area hotels also rely heavily on Canadian travelers passing through the region on Interstate 81, and they are “extremely sensitive” to finances because the value of each dollar shrinks to 80 cents when they cross their border, he noted.
County Convention and Visitors Bureau Executive Director Janet Hall was monitoring the proposed tax increase and had alerted county hoteliers Wednesday in case they wanted to express concerns to legislators.
Marketing of the state as a whole has declined due to past tourism office budget cuts, while some other states have beefed up their tourism campaigns, including Michigan and New York, Hall said, echoing Genetti’s sentiment about the impact.
“Compounding that with an increased hotel tax would be devastating to hotels and the economy across the state,” predicted Hall.
The state’s 6 percent hotel tax generated an estimated $172.2 million in the 2016-17 fiscal year, said state Department of Revenue spokesman Jeffrey A. Johnson.
In Luzerne County, collections totaled $2.8 million in 2016, according to county Treasurer’s Office Manager/Tax Administrator Laura Beers.
After the treasurer’s office administrative fee of $55,952, or 2 percent, the office forwarded $2.2 million to the Convention Center Authority for the arena and $548,326 to the Convention and Visitors Bureau, Beers said.
The arena receives 80 percent, while 20 percent is earmarked for tourism.
Collections have increased as more hotels were built in the county, she said.
Total receipts were $1.29 million in 1997, the first full year of collection.
The county had 53 lodging facilities paying the tax at that time, compared to 61 today, records show.
