Occupancy tax update on internet hotel booking - By Jim Butler, author of www.HotelLawBlog.com

Hotel Lawyer: The transient occupancy tax litigation by cities and local governments continues to mushroom.

On November 3, Florida filed one of the first lawsuits against Expedia and Orbitz for lost bed taxes, but using the Florida Deceptive and Unfair Trade Practices Act.

Although October was a big month in the OTC battles, November may be even bigger. Today, we are going to look at the latest litigation filings and what they mean.

On October 31, 2009, San Antonio won a $20 million verdict against major travel companies. Earlier in the month, the Georgia Supreme Court upheld a lower court decision against the OTCs for the City of Columbus. And just last week, 5 Florida counties announced they would sue Expedia, Orbitz, Priceline and Travelocity over shortchanged bed taxes.

But November promises to be another important month. On November 3, 2009, Florida Attorney General Bill McCollum announced what is believed to be the first such TOT lawsuit filed by a state against the online travel companies. Some Florida tax officials have estimated the underpaid bed taxes in Florida at $146 million since 2000.

As the State of Florida now joins more than 200 municipalities and other governments suing Expedia and the other online travel companies, the high stakes got even higher. What does this all mean for hotel owners and operators?

No one knows how much lost tax revenue is at issue. But just a few days ago, looking at present awards and assessments already made, we saw more than $300 million at stake.

If the recent filings by the State of Florida and 5 more counties in Florida indicate a continuing trend, this number can soar even higher.

Why is the current occupancy tax litigation so important for hotel owners and operators?

The current occupancy tax battles are generally between Expedia and the other online travel companies pitched against various state, county and local governments. If matters went no further, this litigation might be a matter of idle curiosity for hotel owners and operators. But it does not look like it will stop there.

James O. Abrams is a senior member of the JMBM Global Hospitality Group(R) and the former President and CEO of the California Hotel & Lodging Association. He has been watching the TOT problem develop over the past few years, starting with the lawsuit which Los Angeles filed in 2004 against all of the OTCs.

Recently, the cities of Anaheim and San Francisco have taken the same position and told local lodging operators informally that they intend to come after the hotels for the additional TOT if they ultimately lose to the online travel companies in court. This seems to be part of a national trend.

On the flip side, Abrams says, "I am convinced that if the local governmental entities ultimately win, the online travel companies will do whatever they can to recoup the extra TOT from the hotels."

So either way, hotels are likely to be targeted for unpaid bed taxes, by either frustrated local governments who were unsuccessful against TOTs, or by the TOTs who lost to local governments.

Detailed background and 5 things every hotel owner and operator needs to know

We will keep you posted on new developments we see. If you learn of anything new, please let us know and we will share material information with our readers.

This is Jim Butler, author of www.HotelLawBlog.com and hotel lawyer, signing off. We've done more than $50 billion of hotel transactions and more than 100 hotel mixed-used deals in the last 5 years alone. Who's your hotel lawyer?

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