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Profitable hotel companies absorbing steep property tax increases.

Publication: Business Travel News
Publication Date: 17-JUL-06 		Format: Online
Delivery: Immediate Online Access

Article Excerpt
Hotel property taxes grew 6.2 percent in 2005, the highest single-year increase since 1987, according to a new PKF Hospitality study, which sampled year-end 2005 financial statements of more than 5,000 hotels nationwide. Yet, while property taxes are moving up--PKF predicted them to rise another 5.1 percent in 2006--the amount is being masked and absorbed by the robust profits that the hotel industry currently enjoys.

Analysts do not believe, however, that higher property taxes by themselves will fuel further room rate hikes.

Upward property tax movement directly correlates to the increasing value of hotels. Cities now understand that the hotel industry is enjoying good times--Smith Travel Research estimated that the industry amassed profits of $22.6 billion in 2005. "Municipalities will...

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