Just days after the Georgia Legislature passed a new hotel tax as part of a transportation bill, a company that studies the lodging industry says anticipated revenue from the tax may be less than expected.
A $5 fee tacked onto hotel bills is expected to help Georgia raise about $200 million annually for much-needed road and bridge repairs. But a study by PKF Hospitality Research said fees discourage hotel occupancy and the state may miss hitting its $200 million mark.
“History reveals that consumers do react negatively to an increase in price (particularly when the price increase is not accompanied by an enhancement to the product received) and some level of demand is likely to be lost,” wrote Mark Woodworth of PKF.
Woodworth said metro Atlanta’s and Savannah’s aggregated 68 percent occupancy could fall to 65.2 percent if more than about 1 million rooms go unsold because of price sensitivity.
There are 177,625 hotel rooms in the Georgia. About 53.1 percent of hotels are in metro Atlanta; Savannah has about 8.5 percent.
And it’s not only hotels that may suffer, he said.
“The renting of a room is only one expense incurred when travelling away from home,” Woodworth said. “Visitors also spend dollars in restaurants and other retail establishments. Thus, the data presented herein should be viewed accordingly.”
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