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Florida Appellate Court Ruling on Non-Payment of Bed Taxes Could Lead to Hotel
Chains Adopting and Creating Thier Own Online Model Avoiding Taxation

By Jason Garcia and Sara K. Clarke, Orlando SentinelMcClatchy-Tribune Regional News

March 03, 2013--Now that a Florida appellate court has ruled that online-travel companies don't have to pay bed taxes on the full price they charge consumers, hotel chains could begin following a similar model.

That's the warning from Judge Philip J. Padovano, the dissenter in last week's 2-1 decision by the 1st District Court of Appeal upholding the model followed by Expedia Inc. and other online-based travel agencies.

"If the travel companies could escape the tax merely by changing the form of the transaction, the hotels could do the same thing on their own," Padovano wrote. "There would be nothing to prevent a large hotel chain from setting up a wholly owned subsidiary and then using that company for the exclusive purpose of advertising and promotion and for booking hotel rooms. The subsidiary could then charge the hotel a portion for the room rate for every booking it makes, and retain its portion of the bill tax free.

"In my view, a scheme like this is no worse than the one the travel companies have devised here, nor is it any better," he added. "Both schemes seek to avoid taxation by making the transaction appear to be something other than what it is."

Cuts could hurt travel

Hoping to pressure the White House and Congress to strike a deal, tourism-industry lobbyists are warning that the $1.2 million in automatic spending cuts known as the "sequester," which formally began last week, will reverberate across travel businesses.

For instance, the American Hotel & Lodging Association says hotels "can expect to see meetings postponed, travel bookings shortened and government planners delaying contract signings" as federal agencies immediately slash their travel budgets.

Industry lobbyists also warn of delays at airports, as the Federal Aviation Administration imposes furloughs on its 47,000 employees. The furloughs could force some busy airports to close runways and eliminate certain control tower shifts.

The Department of Homeland Security is also expected to impose furloughs, leading to longer wait times at security checkpoints in airports and border crossings.

And some national parks will likely close. According to the lodging association, during the 1995 government shutdown, the parks service shut down 386 sites, turning away 7 million visitors.

Sports exec joins Visit Florida

Visit Florida has hired Paul Phipps as its chief marketing officer, replacing Will Seccombe, who took the top spot at Visit Florida in November after chief executive Chris Thompson went to Brand USA, the nation's tourism-promotion corporation.

Phipps' experience includes: general manager of Seminole IMG Sports Marketing and assistant athletic director at Florida State University; chief marketing officer for International Speedway Corp.; and executive vice president for Major League Soccer, Visit Florida said.

New airport hotel opens

Homewood Suites by Hilton opened its new, 128-room hotel at 5425 Gateway Village Circle last week. The property, near Orlando International Airport, is managed by McKibbon Hotel Management Inc., with Stephano Anamisis as general manager and Vanessa Faberlle as sales director.

jrgarcia@tribune.com or 407-420-5414 skclarke@tribune.com or 407-420-5664

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(c)2013 The Orlando Sentinel (Orlando, Fla.)

Visit The Orlando Sentinel (Orlando, Fla.) at www.OrlandoSentinel.com

Distributed by MCT Information Services



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