State Lodging Tax

On March 3, 2016, Oregon lawmakers passed HB 4146, which increased the state transient lodging tax from 1 to 1.8 percent for four years effective July 1, 2016 and then effective July 1, 2020 reduces the state transient lodging tax from 1.8 to 1.5 percent. The legislation directs 20 percent of the state transient lodging tax to a Regional Cooperative Tourism Program and 10 percent of the state transient lodging tax to a competitive grants program.

The bill’s chief sponsor, Representative Nancy Nathanson, stated in her speech on the House floor, “This bill increases resources for the Oregon Tourism Commission to invest in furthering the state’s tourism industry, to promote all of Oregon. And we know that investing in tourism pays off, big time. Since the state lodging tax passed in 2003, there’s been an 84% increase in local taxes from visitor activity. Every $1 invested in Travel Oregon’s advertising campaigns generates $11 in state and local tax revenue. Since Travel Oregon started doing statewide marketing, there has been significant growth in out-of-state and international visitors. For example: international visitation to Oregon in 2014 increased 9% over 2013.”

Learn more about the lodging tax in the bullets below:

• HB 4146 raised the hotel lodging tax from 1% to 1.8% July 1, 2016 until July 2020, at which time it will lower to 1.5%.
  • The legislation directs 20% of the state transient lodging tax to a Regional Cooperative Tourism Program
  • The legislation directs 10% of the state transient lodging tax to a competitive grants program
• HB 4146 establishes a work group to review a variety of topics ranging from the policies for establishing regional boundaries and frequency of regional distributions, to the possibility of exempting homeless individuals from paying the state transient lodging tax, and barriers to expansion and maintenance to recreational tourism in each region.
• Once HB 4146 is enacted, the Commission will develop guidelines and processes for the evaluation of funding requests for potential projects of statewide significance brought forward from industry partners. Projects can pertain to marketing, sales, destination development, industry services, tourism-related facilities and tourism generating events. Of particular note is the opportunity for Oregon to host the 2021 IAAF World Championships. Proponents of the international event will be encouraged to submit a proposal for the Commission’s consideration, but no guarantee of funding for this or any other future largescale statewide initiative is guaranteed. In fact, no language specific to the championships is included in HB 4146.
• State lodging tax is largely paid by out-of-state visitors. In 2014, visitors from out-of-state accounted for 76 percent of overnight spending (64 percent out-of-state, with 12 percent international; Dean Runyan 2016): https://industry.traveloregon.com/research/archive/economic-impacts-domestic-international-overnight-travel-oregon/
• In 2003, legislators passed the Oregon Tourism Investment Proposal. Before that time, Oregon ranked 47th in the nation for state tourism marketing budgets. Currently, Oregon ranks 23rd nationally.
  • Before the passage of HB 4146, Oregon ranked 9th out of 13 western states in overall budget, behind California, Hawaii, Arizona, Alaska, Colorado, Nevada, Montana and Utah.
• Since the passage of the Oregon Tourism Investment Proposal in 2003, Travel Oregon has been able to compete more effectively for visitor dollars, resulting in incredibly positive impacts for the state. Since 2003: State and local taxes are up 89% (from $246 million to $466 million); Direct employment is up 25% (from 84,500 jobs to 105,500); Employee earnings are up 65% (from $1.7 billion to $2.8 billion); Visitor spending is up 66% (from $6.5 billion to $10.8 billion)
  • In 2004, a Longwoods Ad Accountability study showed that Oregon was running one of the most effective ad campaigns in the country generating $169 in visitor spending for every $1 invested; in 2008 the return increased to $193 for every $1 invested, with the most recent study showing our advertising generated $237 in visitor spending for every $1 invested.
• Travel and tourism is a vital economic driver and job creator for Oregon. In 2016, the positive impact of travel and tourism reached an all-time record: travelers injected $11.3 billion into the state’s economy, directly employing more than 109,000 Oregonians. (Dean Runyan Associates, Oregon Travel Impacts Study, 2016).
  • The travel industry generates $507 million in state and local tax revenue for Oregon in 2016.
• According to an independent report by Dean Runyan, Oregon had an estimated 28.4 million overnight visitors in 2016 (pg. 16): http://www.deanrunyan.com/doc_library/ORImp.pdf
  • In a report from the state’s employment department, issued in January 2016:
    “Oregon’s job growth over the last year has been really strong. Payroll employment rose by 59,600 jobs, or 3.4 percent, between January 2015 and January 2016. During this period, the industries seeing the fastest growth and adding the most jobs were professional and business services (+11,000 jobs, 4.9 percent), health care and social assistance (+8,800 jobs, 4.0 percent), leisure and hospitality (+8,700 jobs, 4.6 percent), and construction (+4,100 jobs, 5.0 percent).”

To read HB 4146 in its entirety, go to:

https://olis.leg.state.or.us/liz/2016R1/Downloads/MeasureDocument/HB4146

For information regarding the collection of lodging tax funds, visit the Oregon Department of Revenue:

http://www.oregon.gov/DOR/programs/businesses/Pages/lodging.aspx