Property Taxes for Hotels
Property taxes can be the biggest expense you face as a hotel owner. Whether you manage a single property or multiple locations, you have to keep track of tax rates, assessment dates and changes in the market to avoid financial consequences. You should also know what options you have to appeal the assessment.
What’s Going On in the Hotel Industry?
According to hotel industry reports, in the early 2000’s, hotel owners rented out approximately 4.7 million rooms and took in a total of $127 billion. After a significant slump in the years between 2007 and 2011, the hotel industry began to rebound. A 6.6 percent increase in demand between 2009 and 2010 forecast continual growth to come. Currently, occupancy and room rates are on the rise, pointing to a brighter future for those in the hospitality business.
Technology plays a big role in how the modern hotel draws customers. Internet reservations started the trend and have been joined by mobile check-ins to make travel easier for tourists and business people. Location-based marketing tools allow hotel owners to reach out to travelers via their tablets and smartphones and offer special deals on hotel services.
However, the hotel industry does continue to face challenges. Employment costs are on the rise and can add up fast for those who manage chains of hotels. Upgrading to “go green,” a move that can potentially attract more customers, means investing in renovations and paying fees associated with obtaining government certification. Such upgrades may lead to an increase in hotel property taxes on top of already increasing rates in many areas of the country.
Dealing with Property Taxes as a Hotel Owner
An unexpected surprise on your property tax bill is the last thing you need when trying to budget for your hotel amidst the ups and downs of the industry. Avoiding tax time “sticker shock” requires being diligent the rest of the year.
The first thing to do is find out how long it’s been since your last assessment and have your property reassessed if necessary. Depending on the trend in local tax rates, you could wind up saving a significant amount of money. However, if taxes have recently spiked or you added on to your hotel in the recent past, your tax payments will wind up being higher. Compare the results of your property assessment to similar hotels in the area to determine if you’re being charged a fair amount. If others are paying much less, get a second opinion on the assessment.
When budgeting for hotel property taxes, use past expenses as a guide to predict what you can expect to pay in the future. Keep clear documentation of all real estate transactions and renovations in case you need to dispute any charges.
Seeking Professional Services
Saving money on hotel property taxes can have a substantial impact on the bottom line of your business. Assessment Technologies offers a variety of services designed to help you avoid paying too much and ensure that all of your tax documents are filled out correctly and filed on time. With over 29 years of experience, Assessment Technologies offers assessment reviews for hotel owners in more than 20 states and has dedicated tax accountants on staff to offer support with tracking, budgeting for and paying property taxes. Having professional help takes a load off your mind so that you can focus on growth and improvement for your hotel.