WASHINGTON–As tax reform legislation moves through Congress, a new economic impact study found that tax cuts could generate $131.7 billion in economic activity for hotels and related industries over the next 10 years. On behalf of the American Hotel & Lodging Association (AHLA), Oxford Economics analyzed the impact of tax policy changes that would result in a tax cut of $1.5 trillion over 10 years, which they believe will cause real GDP growth to accelerate to 3.0 percent in 2018.
The results show that tax cuts will stimulate the economy and are expected to generate a boost to hotel industry operations, cause additional guest spending at restaurants and stores in the travel destination, and increase hotel capital investment.
“With tax reform moving through Congress and becoming closer to a reality, we are pleased to see the potential for significant financial benefits to the industry, and the U.S. economy,” said Katherine Lugar, president and CEO of AHLA. “From hotel operations, to our industry’s employees, to consumers enjoying their favorite travel destinations, tax reform enables further opportunity for financial growth and prosperity.”
Under this tax cut scenario, consumer and business travel are both expected to increase. Direct hotel guest spending, both onsite and through ancillary spending such as local restaurants, stores, and attractions, would be $57 billion higher over the next five years.
To meet this increased demand, businesses would hire new employees and add more shifts for existing ones, and increase their capital investment. This would generate $22.3 billion in additional wages and salaries for U.S. workers—equivalent to the annual compensation of 94,700 employees for five years. It would also increase state and local tax revenues by $3.9 billion. The total economic impact of this tax scenario is projected to be $131.7 billion.
Lugar praised Congress for its commitment to reforming U.S. tax policy and creating a pro-growth tax environment that will benefit the hotel and lodging industry, its employees, and American consumers. “It’s particularly critical as three out of every five hotels in industry are made up of small businesses, many independently or family owned. Tax reform will go a long way in benefiting these individuals, as well as their employees and guests,” said Lugar.
“We are pleased Congress has taken the next step toward enacting smart and effective tax reform that will allow businesses, families, and individuals to succeed. AHLA advocates for policies that enable hotels to operate on a level playing field and that empower business growth, competitiveness and entrepreneurism. We look forward to working with Congress and the Administration before the proposal becomes law to ensure that the final details support continued growth for our industry and the broader economy.”