The hotel industry paid an estimated $8.1 billion in property taxes in 2016, but some markets face more of the burden than others.
BROOMFIELD, Colorado—Based on Hotel News Now parent company STR’s 2016 HOST and Trend data, the total property tax expense for U.S. hotels exceeds a potential $8.1 billion.
In a recent analysis of property tax data collected from the HOST P&L program, we calculated real estate, personal-property and total-property tax expense by county. From 5,200 HOST submissions, data was provided in 611 counties. While each county assesses real and personal property taxes for hotels differently, an estimated 36% of all hotel property tax expense in the U.S. resides in 15 counties. This report summarizes average property tax expense ratios for 117 counties collected from 2016 HOST data, and also details hotel property tax expense for 15 of the largest U.S. counties.
As illustrated below, the median property tax expense ratio was 3.7% of total revenue. Half of the hotels were included in the range from 2.7% to 5.3% of total revenue. The median property tax expense ratio for full-service hotels was 3.3% and 4.2% for select-service hotels.
When comparing total property tax expense for the largest counties by hotel rooms, New York County, New York, by far had the highest property tax expense at 9.4% of total revenue. The next highest total tax expense for any county was Harris County, Texas—which includes the city of Houston—at 5.8%. Cook County, Illinois—the home of the city of Chicago—came in third at 5.6%. Los Angeles County, California, rounded out the top ten with 2.8%.
(Note: The largest county in terms of total hotel rooms is Clark County, Nevada, which includes the Las Vegas market. However, Clark County was excluded from this analysis due to the nature of casino hotels in Las Vegas and the lack of participation of these properties.)
When looking at total property tax expense on a per-available-room basis, New York County continued to have the highest tax expense at an average of $11,091 per room, well above any other reporting U.S. county. Cook County had the second-highest tax expense at $4,368 per room, while San Diego County, California, was third at $2,842 per room. Maricopa County, Arizona—home to the city of Phoenix—rounded out the top ten with property tax expenses of $2,074 on a per-available-room basis.
For more inquiries about this report or to order a Custom HOST Report, please contact HOST@str.com. We are now collecting data for our 2018 HOST P&L program. To find out more information about participation, visit 2018 HOST Submissions. Additional information about our HOST Program can be found here.
This article represents an interpretation of data collected by STR, parent company of HNN. Please feel free to comment or contact an editor with any questions or concerns.