Area counties raising hotel tax rates to expand tourism reach

Numbers of hotel rooms by county as of Dec. 31, 2016

  • Philadelphia: 16,420
  • Montgomery County: 7,875
  • Bucks County: 4,299
  • Chester County: 3,689
  • Delaware County: 3,409
  • Source: Visit Philadelphia

Tourists from China, Europe, and the Middle East, as well as the New York and Washington areas and elsewhere, increasingly are visiting Philadelphia's suburban counties, and  the counties are looking to capitalize on that trend by raising more tax revenue to promote tourism further. 

Chester County's commissioners on Wednesday voted to increase hotel-room tax rates, joining Montgomery and Bucks Counties, which voted to do the same in December. Officials in Chester and Bucks upped their 3 percent rate to 5 percent. Montgomery County officials raised theirs to 4 percent from 2 percent, keeping just under the others to stay competitive, they said. 

A bill Gov. Wolf signed in April allows 57 of the state's 67 counties to raise their hotel-room taxes from 3 percent to 5 percent, with the stipulation that the additional money be used to promote tourism.

Susan Hamley, executive director of the Chester County Conference and Visitors Bureau, asked the commissioners to raise the tax. In alliance with Montgomery County and Philadelphia, she said, she has been focusing efforts on the United Kingdom. Chester County also has welcomed more visitors from China, which she anticipates will be the county's No. 1 overseas tourism market by 2020.

The extra $1.3 million the tax increase will give the county — on top of the $1.7 million the tax has been pulling in — will allow the tourism bureau to do what it does today, including working with overseas partners and touting agriculture tourism, just “more of it, more widely, more often,” she said.

Counties and local visitor bureaus had asked for an increase in the tax limit to offset drops in state tourism funding. As of Wednesday, 28 counties had told the Pennsylvania Restaurant and Lodging Association that they had raised their rates.

“States and municipalities tend to like hotel taxes, because they’re taxes that we call exported — not paid by residents of that jurisdiction,” said Nicole Kaeding, an economist at the Tax Foundation. 

Some counties are waiting until they have a marketing plan that will optimize their return on investment, said Melissa Bova, the association's vice president of government affairs.

"For others, a tax is a tax," even though it does not target residents, Bova said. "In some places, that’s a curse word nowadays."

Delaware County's rate is 3 percent, and officials there have no plans to raise it for the county's more than 3,400 hotel rooms.

The hotel-room tax rate in Philadelphia, which has more than 16,400 hotel rooms and is not covered under April's legislation, is 8.5 percent. In Allegheny County, it is 7 percent, and New Jersey charges a 5 percent fee and allows municipalities to add up to 3 percent.

North Jersey and New York are priorities for Montgomery County tourism officials, as well as the District of Columbia, Maryland, Delaware, and countries overseas. The county has seen increases in visitors from Asia and the Middle East and "huge interest" from the French, who feel connected to Revolutionary War sites, officials said.

"We’re going aggressive out of market,” said Mike Bowman, president of the Valley Forge Tourism and Convention Board.

Officials at Visit Bucks County said the more than $1.5 million they plan to raise with the tax increase will help them take their tourism pitches to potential visitors' television screens for the first time, so they, too, can break into new markets, said Jerry Lepping, president and chief operating officer.

"When the state allowed us to increase the hotel tax," he said, "we had to go along just to stay competitive, to have a level playing field."