Code rewrite aims to address ‘resort fee’ trend in South Lake Tahoe | TahoeDailyTribune.com

Code rewrite aims to address ‘resort fee’ trend in South Lake Tahoe

The revised city code on TOT will specifically state that all resort fees are taxable.

The trend of additional "resort fees" tacked on to room rates is on the rise at lodgings across the country; and, in South Lake Tahoe, there is some ambiguity when it comes to whether these fees are taxable. In response, the city is working on a rewritten Transient Occupancy Tax (TOT) code that will come before council in the next couple of months.

A resort fee — also called a facility, destination or amenity fee — is charged in addition to a room rate, and was originally designed to help lodging establishments cover the cost of additional offerings, such as free breakfast, Wi-Fi and others.

Since the '90s, these fees have been on the rise. The industry garnered $2.47 billion from the practice in 2015, according to a trend analysis report from the NYU School of Professional Studies Jonathan M. Tisch Center for Hospitality and Tourism.

"Unfortunately, the trend toward mandatory hotel resort fees seems to be growing. During my own research for a hotel in Las Vegas, I saw several hotels artificially deflating their prices by neglecting to advertise their room rates along with their mandatory fees," said Brian Young, public policy associate for the National Consumer League.

"Furthermore, these fees tend to cover amenities that were historically included in the price of the room such as local calling from their hotel room, beach towels, access to the pool or gym and discounted access to the hotel's amusement park."

While the Federal Trade Commission has stated that it will continue to monitor the practice of resort fees, many cities have amended their codes to make sure these lucrative tolls are taxed.

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The town of Truckee, for example, states that in addition to room rates and cleaning fees, line items like resort fees, internet charges, cancellation fees and late check out fees are subject to TOT.

"We haven't had much of a situation before, but now 'resort fees' are all the rage," said Debbie McIntyre, South Lake Tahoe city finance director.

Locally, resort fees range anywhere from a few dollars up to $35.

"We are right in the middle of updating our code, and resort fees will be taxable," assured McIntyre.

At present, there is some gray area in the city code when it comes to taxing resort fees. Lodging establishments are asked to spell out what amenities or services are covered by the resort fee, and then the city decides what — if any — of that is taxable under the current code.

The current code states that "Rent … in a transient lodging facility for period of 30 days or less … including all receipts, cash, credits, property, or services" and cleaning fees are taxable, while other fees such as refundable pet deposits, parking, telephone charges and cancellation fees are not.

McIntyre said the revised TOT code would be voted on by City Council sometime in February or March. It is unclear how the revised code will affect TOT revenue in South Lake Tahoe.

Meanwhile, the 2-percent increase in TOT approved by voters in November went into effect Jan. 1, raising the rate for lodging in the Stateline area to 14 percent and to 12 percent outside the area. The estimated $1.4 million raised from this increase will go toward the construction, operation and maintenance of the new city rec center.