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Leaders of Philadelphia’s hospitality industry sent a letter to City Council Tuesday opposing Mayor Cherelle Parker’s proposed hotel tax increase in the 2027 budget.
“If the proposed tax increase is passed and enacted this year, we will be the highest taxed major city on the East Coast. We will lose a competitive advantage to cities like Boston, New York, Baltimore, Washington, D.C., and Atlanta,” leaders said in the letter.
The letter was cosigned by the Greater Philadelphia Hotel Association, the Philadelphia Convention& Visitors Bureau, the Pennsylvania Restaurant & Lodging Association, the Pennsylvania Convention Center and Visit Philadelphia.
Parker is proposing a 2% increase to the city’s hotel tax, raising it to 10.5% from the current 8.5%.
The Commonwealth of Pennsylvania imposes a 7% tax, bringing the total current tax rate to stay in Philly’s hotels to 15.5%, which would rise to 17.5% if the proposal passes.
If passed, the estimated $110 million collected would go towards housing for people experiencing homelessness.
The group of hospitality leaders said that if the tax increase is approved it will be the first time in the past 30 years that the hospitality industry, City Hall and Philly’s business community have broken from a unanimous consensus on changing the rate.
“Additionally, this would also be the first time the hotel tax funds a city service rather than an initiative directly tied to leveraging the economic competitiveness of our industry, setting a dangerous precedent for the City and the Commonwealth,” the group’s letter read.
Philly’s tourism and hospitality industry is gearing up for a bumper summer with the nation’s semiquincentennial celebrations and several large-scale sporting events, including six FIFA World Cup games and the MLB All-Star Game.
However, close to 80% of surveyed hotels described a booking pace “below expectation and behind a typical summer” for the World Cup games, according to a hotel outlook report of the 11 World Cup host cities by the American Hotel & Lodging Association.
“We respectfully request that Council not move forward with Mayor Parker’s proposed hotel tax increase,” the letter closed. “At the same time, we remain committed to working in partnership with the City to identify and advance collaborative solutions to address street homelessness.”
