Hotel conversions to bring in more taxes
A projected increase in statewide visitor accommodations, driven primarily by development of new timeshare and resort condominium properties, is expected to help augment hotel room tax and general excise tax collections, according to a new study.
Hawaii's accommodations inventory is anticipated to grow to 77,734 units by 2010, a 7.2 percent increase over 2004, according to the study -- "Analysis of Trends in Accommodations Supply, with Focus on Condominium and Timeshare Conversions" -- released yesterday by the Hawaii Tourism Authority.
During the next several years, an estimated 3,225 traditional hotel rooms are expected to undergo condominium and timeshare conversion, said the study prepared by Hospitality Advisors LLC.
Although most of the units will continue to be available for visitor use through rental pools, 723 are estimated to be permanently removed because of reconfiguration and consolidation of units, according to the study, which is available on the state agency's Web site. An additional 323 units are assumed to be reserved for owner occupancy, the study said.
An increase in inventory and a rise in average daily room rates are expected to boost hotel room tax, or transient accommodation tax, collections, with the midpoint range estimate for 2010 of about $217.9 million, or 19.9 percent over 2004, the study said.
At the same time, the midpoint range estimate for general excise tax collections in 2010 was $123.2 million, a 26 percent increase, it said.
Until now, information on Hawaii's changing visitor accommodations has been largely anecdotal, said Rex Johnson, president and chief executive officer of the Hawaii Tourism Authority.
"This report attempts to quantify what's been happening and what will occur by providing an accurate historical picture of Hawaii's visitors accommodations since the 1990s and possible scenarios in 2010," Johnson said.
"As an example, there has been a lot of discussion about potential (transient accommodation tax) loss due to conversions," he said. "However, based on the information provided in the report, it appears that the situation will not be as significant as anticipated and that TAT collections from 2004 to 2010 are projected to increase."