New study reveals travel taxation trends
Thursday, October 18, 2012
Regardless of whether executives choose to stay in serviced apartments or chain hotels during business trips, hidden costs such as taxes can have a substantial impact on the overall cost of the trip. According to The Wall Street Journal, a new report published by the Global Business Travel Association (GBTA) reveals the extent of travel taxation trends across the U.S.
Sign of the times
According to the GBTA report, tax on hotel accommodations in Chicago, Illinois, is 16.4 percent. As the economy struggles to get back on its feet, there is a chance that taxes on travel-related services could rise. For this reason, business travelers may choose to stay in corporate housing when on the road to maximize their company's return on investment. Some cities, such as Fort Lauderdale, Florida, were identified as having substantially lower travel-related taxes by the GBTA report.
Substantial taxes on accommodations and vehicle rentals also negatively affect demand for these services, which has an effect on regional economies. Richard Broome, a spokesman for Hertz car rental, said that taxes have a clear impact on consumer purchasing decisions.
Laurie Goldstein, a representative speaking on behalf of the Marriott Hotels Group, said her organization's business had not seen a noticeable decrease in business due to taxation. However, the uncertainty over potential rate hikes on accommodations could drive more business travelers to choose serviced apartments as opposed to corporate hotel suites.
Indications of Latin American growth
The findings of the GBTA report were mirrored by a similar study conducted by American Express. The financial services organization predicts that overall costs for business travelers are likely to increase by between 1 and 3 percent next year due to ongoing economic uncertainty in the Eurozone.
American Express' study also indicated that the strength of the Latin and South American economies was likely to drive business travel to these regions well into next year, potentially fueling demand for corporate housing and business-class flights offered by some carriers. Argentina and Brazil were identified as two countries most likely to lead this increase in demand.
Due to the lingering economic difficulties in Europe, business-class airfares are expected to rise only slightly, as airlines continue to compete for passengers. Growth in the hospitality industry in Europe is expected to remain at similar levels for the foreseeable future as hotel groups wait for the economic situation to stabilize.