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March 01, 2017

Philly's tourism boom leads to steady increase in hotel tax revenue

Taxes Tourism
01282015_FourSeasonsNewHotel Courtesy/Comcast

The Four Seasons Philadelphia Hotel will move into the top floors of the new Comcast tower.

Philadelphia has hosted several high-profile events during the last five years, and a recent analysis shows the city and the local hotel industry are now reaping the rewards.

A report released Wednesday by City Controller Alan Butkovitz revealed that the city's hotel tax has generated $264 million in revenue since 2012 and has risen about $2.9 million per year on average.

The tax is currently applied to anyone who temporarily rents a room in a traditional hotel or private home through services like Airbnb. Revenue collected through this tax is distributed to agencies to market and promote the city.

Recent legislation has been enacted to take advantage of the booming tourism industry. In July 2013, Philly's hotel tax rate bumped up to 8.5 percent from 8.2 percent. Two years later, lawmakers amended the city's tax code to legalize home-sharing services, allowing homeowners to offer short-term leases that are subject to the hotel tax.

During Fiscal Year 2016, the hotel tax brought in $58.6 million, 25 percent more than in 2012 when $47 million was collected.

Source/Office of the Controller

Over the last two years, the City of Brotherly Love welcomed two major events that helped spur the local economy. An estimated 900,000 people swarmed Philly during Pope Francis' visit for the World Meeting of Families in September 2015 and another 800,000 visitors were drawn to the city by the Democratic National Convention in July 2016.

The Office of the Controller noted that the city is on pace to exceed last year's tax revenue again in Fiscal Year 2017. From July 2016 through January, the hotel tax has generated $40.8 million. The number could surge when the city hosts the NFL Draft in April.

The city's coffers also benefit from rented rooms, which are subject to the city's 8-percent sales tax.

City officials estimate that the hotel industry has "provided billions of dollars in economic impact for the region" in the last five years, according to the report.