Legislation requiring online travel companies to pay a greater share of hotel taxes replaced with study

Legislation that would have recaptured tens of millions of dollars for local governments by updating tax policies for online travel booking companies faced an all too familiar fate Thursday that most bill sponsors hope to avoid: the dreaded "gut and replace."

Assemblywoman Heidi Kasama (R-Las Vegas) told members of the Assembly Government Affairs Committee that her bill AB408, which would have required county commissions to adopt ordinances requiring online travel booking companies to pay a greater share of taxes, was being amended to become an interim study. She told lawmakers that she wants to take more time to understand the bill’s implications.

"The travel sector is an integral part of the Nevada economy," Kasama said. "The growth of online travel planning tools has most definitely played a role in increasing the convenience and ease for travelers and by looking at how those tools are used, we as lawmakers can make more and better informed decisions."

Under Nevada law, when a guest pays a hotel directly for a room, all the tax money goes straight to the relevant local government. But if an online travel agency negotiates a discounted rate for a room and still sells the room at the same price point, the travel company pays taxes on the negotiated rate.

For example, if a travel service such as Booking.com charged a customer $100 for a room at a hotel but negotiated a rate of $80 with the hotel, the travel service company would pay taxes on the $80 rate, not the $100 one.

Hotel room taxes vary by local government, and geographical area, but generally run anywhere from 10 to 13 percent in Clark County and 13 to 13.5 percent in Washoe County.

"This really has to do with the collection of the hotel room tax — no change in rates, no change in any of that. It is just simply the collection of the room tax," Kasama said.

The bill’s conceptual amendment proposes:

  • Establishing a committee consisting of six legislators (two members appointed by the Senate majority leader, two members appointed by the Speaker of the Assembly and one member each appointed by the Senate minority leader and Assembly minority leader).
  • Requiring the interim committee to study and examine statewide tourism and promotion in Nevada and the role of online travel companies.
  • Having the committee submit a report with results of the study and recommendations for the Legislature.

Assemblywoman Natha Anderson (D-Sparks) expressed disappointment that the bill was becoming a study.

“I really liked the initial bill. I'm not going to lie, I really wish it was still that,” she said.

But Kasama said she received outreach from numerous entities that asked to be involved and a study was the best way to include all relevant parties.

"We looked at turning it into a study so that we can have all the stakeholders at the table,” Kasama told The Nevada Independent after the hearing. “It's a big topic for the state and I think we need to carefully look at it, have all the stakeholders involved and come up with the best legislation."

There was no opposition or neutral testimony on the bill as amended. Still, Nicholas Vassiliadis, a representative for the Nevada Resort Association, thanked Kasama for her decision to turn the proposed bill into a study.

"We'd like to thank the sponsor for recognizing the complexity of this issue," Vassiliadis said. "Looking at this and getting all the stakeholders involved is probably the best way to move forward to craft a good policy on this front."

The bill was heard for the first time on Thursday, but the committee took no action on the bill. Friday marks the deadline for bills to pass out of their first committee.