Brookfield, WI (June 18, 2020) – Today, the Wisconsin Hotel & Lodging Association, responded to a new report by Oxford Economics released by the American Hotel & Lodging Association (AHLA) that showed as a result of the sharp drop in travel demand from COVID-19, state and local tax revenue from hotel operations will drop by $16.8 billion nationally in 2020 with a loss of $186.5 million in Wisconsin. These tax impacts represent the direct tax revenue decrease from the severe drop in hotel occupancy being experienced; they do not include the potential, significant, knock-on effects on property taxes supported by hotels (nearly $9 billion nationally).
“The dynamic growth of the hotel industry over the last decade has been upended by the pandemic, which has caused more than 70 percent of hotel employees to be laid off or furloughed. Not only has the toll of the pandemic impacted employees, the dramatic drop in travel has impacted local governments across Wisconsin who rely on these tax dollars to fund schools, roads and bridges, social service programs, and much more. This impact shows the vital impact hotel and lodging establishments have on the communities we serve and the important role hotels play in reviving our economy,” said Bill Elliott, CAE, President and CEO of the Wisconsin Hotel & Lodging Association.
This year is projected to be the worst year on record for hotel occupancy, and experts estimate it will be at least 2022 before hotels return to their 2019 occupancy and revenue levels. While leisure travel is slowly starting to resume, six in ten hotel rooms remain empty, with business travel not expected to fully rebound until 2022. “Getting our economy back on track starts with supporting the hotel industry and helping them regain their footing,” said Chip Rogers, president and CEO of AHLA. “Hotels positively impact every community across the country, creating jobs, investing in communities and supporting billions of dollars in tax revenue that local governments use to fund education, infrastructure and so much more. However, 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. We expect it will take years before demand returns to peak 2019 levels.”
Hotels have long served as an economic engine for communities of all sizes, from major cities, to beach resorts, to small towns off the interstate—supporting job creation, small business opportunities and economic activity in states and localities where they operate. Hotels also generate significant tax revenue for states and local governments to fund a wide array of government services, directly generating nearly $40 billion in state and local tax revenue in 2018 alone.
Prior to the pandemic, hotels were proud to support one in 25 American jobs—8.3 million in total—and contribute $660 billion to U.S. GDP. A representative hotel with 100 occupied rooms per night supports nearly 250 jobs in the community and generates $18.4 million in guest spending at neighborhood shops and restaurants. Hotels also generate $186 billion in local, state, and federal taxes each year.