Higher hotel tax promoted as a benefit to Centre County
Now that the Penn State football season has begun, visitors will be looking for a place to stay on home game weekends in Centre County. Whether they choose a hotel or book through an online site like Airbnb, they’ll be paying more.
Earlier this year, the board of commissioners voted to double the county’s hotel tax from 2.5 to 5%. Centre County retains 4% of the tax collected for administrative processing, and the Central Pennsylvania Convention and Visitors Bureau — a certified tourism promotion agency — gives 20% of the added tax to local nonprofits to promote tourism. The remaining amount is used by the CPCVB for marketing and branding efforts.
Due to a new provision in the state tax code, home sharing services must register as online booking agents and reservations are subject to any local hotel taxes, though some area hosts have issues with how the funds are being used.
In March, Airbnb was the first online agency to register as a booking agent in Centre County. HomeAway, which includes agencies like Vrbo, registered in April. Rent Like a Champion followed and registered with the county in June, confirmed Centre County Treasurer Richard Fornicola. With the added online agencies, Fornicola anticipates the county will collect close to $4 million from the occupancy tax — doubling last year’s $2 million.
“Now, having the online booking agents become more compliant, that’ll be an additional source of revenue,” Fornicola said. “That whole online booking industry has exploded over the last few years.”
Are hosts at a disadvantage?
According to Vrbo data, the average nightly rate of vacation rentals in State College rose to $726 and rental demand increased by 550% on average during Penn State home game weekends in 2018.
This year, Airbnb is an official sponsor of Penn State football. For the first home game on Saturday, 600 State College visitors booked with Airbnb, spokesperson Liz DeBold Fusco said. Last year, State College Airbnb hosts made about $1.1 million from sharing their homes during game weekends, she said.
But Eric Tischler, who runs an Airbnb in Boalsburg, thinks his contribution to the county’s hotel occupancy tax deserves more credit.
Now that online booking agencies are in compliance with the hotel tax, Tischler thinks there’s a level playing field among Airbnb, Rent Like a Champion and HomeAway. However, with hotel chains, local bed and breakfasts, campgrounds and vacation rentals getting more advertisement, he thinks hosts are at a disadvantage.
“If there’s no direct link to anything I do with my personal home ... I don’t want to pay the tax,” Tischler said.
How is the hotel tax used?
Fornicola said the county’s hotel tax helps promote more than just Penn State events.
“There are pockets of the county that have tremendous things going on that might be less well-advertised throughout the rest of the state and up and down the East Coast,” he said, citing fall festivals, the Bellefonte Arts and Crafts Fair and the Bellefonte Cruise.
Lesley Kistner, CPCVB director of public affairs, said 20% of hotel tax funds were given to 50 local applicants through the annual Tourism Grant Program in 2019 — totaling at $750,000. The Dutch Fall Festival, Nittany Valley Symphony, First Night, Philipsburg Heritage Days and the Rowland Theatre received funding through the grant.
The CPCVB also plans to launch a county agritourism promotional campaign through a partnership with the Chamber of Business and Industry of Centre County.
“The return of investment is the impact to the local economy,” Kistner wrote in an email. “The importance of hospitality industry to the success of Centre County cannot be underestimated and the numbers prove it.”
According to a study conducted by Tourism Economics, travelers spent $794.2 million in Centre County in 2017, nearly $46 million more than in 2016. In an email, Kistner wrote that county visitors spent $139.3 million on lodging, $180.9 million on food and beverage, $132.4 million on shopping, $122.3 on recreation and $219.3 on transportation in 2017. Travel expenses like gas, parking, tolls and car repairs may be included in the totals. Kistner wrote that the industry raised $41.5 million in state and local taxes in 2017 and supported 5,049 tourism related jobs.
Listing hotels, bed and breakfasts and vacation rentals as lodging options both inside and outside Centre County, the CPCVB advertises local opportunities for eat, sleep and play.
While Tischler thinks promoting tourism in the area is positive, he thinks online agents should be included in CPCVB advertisements because of their contribution to hotel tax funds. The only way to not have to pay the hotel tax, Tischler said, is to go offline and advertise by word-of-mouth.
CPCVB President and Chief Executive Officer Fritz Smith could not be reached for comment on future plans to include online booking agencies in promotional efforts.
“With regard to home share entities, some — not all — voluntarily pay the lodging tax — because they recognize the economic importance of our work to promote the county and attract more visitors,” Kistner wrote.
Rent Like a Champion Chief Executive Officer Mike Doyle said he hoped the county would benefit from the funding, adding that hosts and guests should see participation as a way to support local tourism and residents who open up their homes to visitors.
Since complying with the tax code, DeBold Fusco and Doyle said neither company has seen a change in its booking numbers and has tried to make collecting the tax as easy as possible for customers.
“For the most part, people are still choosing to stay in Airbnb,” DeBold Fusco said last month.