Tourism Commission takes pass on room tax issue

By Richard N. Velotta

Tuesday, Aug. 25, 2009 | 6:56 p.m.

If there’s going to be a legal fight by the state to require online travel sites to pay higher room taxes, it’s not going to be started by the Nevada Commission on Tourism.

Weeks after commissioners agreed to look at whether it was fair for travel sites like Expedia, Orbitz and Travelocity to pay room taxes based on what hotel guests pay rather than the rate the agency negotiates with the property, commissioners today agreed that the matter is not within the purview of the board. (VEGAS.com, a sister company of the Las Vegas Sun, is in the business of selling hotel and travel packages online.)

Commissioner Eric Bello, who is an executive with Las Vegas Sands, owner of the Venetian, raised the issue at the commission’s June meeting, telling other members that “there may be a source of revenue that is right under our noses.”

Tens of millions of dollars in revenue is at stake since online companies pay tax based on the bulk rates they negotiate with their hotel partners, but they then sell those rooms at higher prices to customers. Sometimes the companies package rooms with airfare, car rentals and other features and the room price is invisible to the customer.

At Tuesday’s meeting, Bello said that the issue isn’t the commission’s fight.

“As other commissioners pointed out accurately last time, the area just simply isn’t within the scope of the commission,” Bello said.

But he added that other departments within state government should keep looking at it.

“I really do believe it’s in the right hands within the Nevada government,” he said. “Those hands should inquire further and do their due diligence.”

Bello also referenced a letter Expedia executives sent to the commission’s chairman, Lt. Gov. Brian Krolicki, that was critical of efforts to get online companies to pay more.

Online companies are embroiled in legal battles from coast to coast over the issue.

The Georgia Supreme Court ruled Columbus, Ga., was entitled to room tax revenue based on the amount paid by the room’s occupant, but that ruling was contrary to five federal court rulings that said because online travel agencies are not innkeepers and serve as an intermediary between the hotel and the customer, they are not subject to a higher rate.

Expedia.com, Travelocity.com and Orbitz.com dropped listings for hotels in Columbus, steering customers instead to nearby Phenix City, Ala.

Other legal fights have been waged in San Francisco, Anaheim, Calif., and in South Carolina. Clark County commissioners also have been encouraged to look into the matter.

Other Tourism Commission members oppose fighting the travel intermediaries. At the June meeting, Commissioner Chuck Bowling, an executive at Mandalay Bay, said MGM Mirage has worked with the online companies as partners that have invested millions of dollars in technology to market Las Vegas and make money for themselves as well as the resort partners and, through the room tax, the state.

In other business, the commission approved two preponderance findings for tourism improvement districts in the downtown Reno area.

By law, the Tourism Commission must make a determination that more than half of the sales in a tourism district would come from visitors from out of state since sales and use taxes are pledged toward sales tax revenue bonds that help pay for improvements.

In unanimous votes, the commission approved resolutions in support of Freight House Project and the Tessera Project in downtown Reno.

The Freight House Project involves an area in the vicinity of a new stadium that is home of the Reno Aces AAA baseball team while the Tessera Project abuts Interstate 80 and is proposed as a gateway to downtown Reno that would connect with the University of Nevada, Reno.

Both projects would support new restaurants, retail and entertainment outlets to attract visitors to the area.

Commissioners also received an update from the Nevada-based Winter Games Coalition, which is teaming with a California group to bid to host the 2018 Winter Olympic Games. Representatives of the group say Oct. 2 will be a key date – that’s when the International Olympic Committee is expected to award a bid for the 2016 Summer Games and Chicago is in the running.

If Chicago is successful in its bid, it’s likely the U.S. Olympic Committee would not work toward hosting the 2018 Winter Games and the Nevada group might put off efforts until 2022.