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Online Travel Companies and Hotel Chains Spend Big in
Effort to Influence Florida's Hotel Tax Fight

By Jason Garcia, The Orlando Sentinel, Fla.McClatchy-Tribune Regional News

Nov. 07, 2011--For several years now, competing interests have been warring in front of the Florida Legislature over how taxes should be calculated on hotel rooms sold through Internet intermediaries. And lawmakers are expected to take up the debate again in January when they convene for their 2012 legislative session.

They may want to think twice about resolving it.

That's because the long-running battle -- which pits a pair of deep-pocketed rivals against each other -- has opened up a lucrative new faucet of campaign contributions for candidates across Florida, as online-only travel companies and hotel chains pour hundreds of thousands of dollars into the political system.

Take Expedia Inc., one of the best-known Internet-based travel companies. Before 2008, the Bellevue, Wash.-based company had never before given money to a state candidate or political party, according to campaign-finance records (though its former parent company, IAC/Interactive Corp., had made a handful of small donations.)

Since then, however, Expedia has pumped approximately $128,000 into campaign accounts across the state. More than half of that money -- $86,000 -- went to the Republican Party of Florida, which commands sizable majorities in both the state House of Representatives and the state Senate.

"It's important to support policymakers who share our goal of promoting a strong tourism industry in Florida," said Brent Thompson, vice president of government affairs for Expedia.

Other Internet companies have also opened their checkbooks. Orbitz Worldwide Inc. has donated approximately $57,000 to Florida candidates and groups (including $43,500 to the Republican Party), all since 2009. Sabre Holdings Inc., the parent company of Travelocity, has given about $47,500 to state candidates and committees ($33,500 to the state GOP), also all since 2009.

Representatives for Sabre did not respond to a request for comment. But Chris Chiames, a spokesman for Orbitz, said: "The online travel industry represents nearly 40 percent of travel sales, and helps direct millions of tourists to Florida each year. Given the leading role that travel and tourism plays in the Florida economy, the online travel industry has great interest in implementing favorable tax policies that allow the OTAs [online travel agencies] to offer consumers great deals and encourage more travel to Florida."

The money isn't flowing from just one side, however. In July, Starwood Hotels & Resorts Inc. cut a $10,000 check to the state GOP -- the first donation it has made to the party since at least 1996, the most recent year for which electronic records are available. Represents for Starwood did not respond to request for comment.

Meanwhile, Marriott International Inc. has given $20,000 to the Republican Party during the past year -- its first contributions to the party since 2006. The company, which has been a big Republican Party donor in previous years, says it has many regulatory issues in Florida on which it is engaged. "We obviously care about this fight, but it is by no means the only thing we care about," said Pete Dunbar, a lobbyist for Marriott.

And when the Florida Restaurant and Lodging Association hosted a fundraiser last June for the state GOP and Republican Gov. Rick Scott, an association executive said it had committed to raising $150,000 in hopes of influencing the online-travel tax fight.

"I can assure you the OTCs [online travel companies], having read this news, will be contributing large amounts of money! We need to raise more money than them and make our voice loud on these issues," Keith Overton, the chief operating officer of the TradeWinds Island Resorts in St. Petersburg Beach and a former FRLA chairman, said in an email that was obtained by the St. Petersburg Times/Miami Herald Tallahassee bureau. (Overton subsequently resigned his seat on the FRLA executive committee.)

The dispute revolves around how Florida should tax hotel rooms sold by the online travel companies. The Internet companies currently remit taxes only on the wholesale rate they pay to hotels for the rooms, rather than on the higher price they charge travelers. The companies argue that the difference between the two rates amounts to the price of the service they provide -- helping travelers shop for and compare hotels -- and so isn't subject to tax.

But hotels -- and local governments that collect the tax -- argue that tax is actually due on the price that the traveler pays for the room, and that allowing the online companies to calculate taxes on the lower rate gives them an unfair advantage over bricks-and-mortar competitors. The Florida Association of Counties estimates counties are losing $20 million a year in hotel-tax revenue because of the discrepancy. Sales-tax receipts are also affected.

The political donations from online travel companies and hotels amount to a fraction of the money generated by other special-interest slugfests in Tallahassee, such as casino legislation, which pits various gambling interests against each other and against Orlando's tourism industry, or lawsuit reform, which matches the unified business lobby against the state's trial lawyers.

Still, it helps explain why the tax issue has languished so long in the Capitol without being resolved: Both sides are pushing so hard, they effectively cancel each other out.

"I think you will find, as often as not, some of the most high-profile interests in each legislative session are private interests fighting for market share. And if everybody works as hard as they can, does as much as they can, frequently you get a stalemate that prolongs the resolution of an issue," said Mac Stipanovich, a veteran lobbyist in Tallahassee.

Legislators involved in the debate say the money has no influence on them.

"I don't think it has any impact. I think it's not unlike any heated issue that goes on. Interested parties try to have their voice heard somewhere, some way or another," said Rep. Jason Brodeur, a Republican from Sanford who sponsored legislation last year to protect the online-travel companies.

Brodeur says he plans to file similar legislation for the 2012 session, though he said he's considering some changes to his approach. One possibility: A bill that would change the hotel tax from a percentage-based tax to a flat, per-day fee, similar to the tax Florida levies on rental cars. or 407-420-5414


(c)2011 The Orlando Sentinel (Orlando, Fla.)

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