The Hilton Midtown, the largest hotel in New York City at 1,979 rooms, has decided to start adding a scam hotel resort fee in November 2017. They are calling their resort fee an "urban destination charge." This means that instead of listing one hotel room rate as the hotel had always done before November 22, 2017, the hotel rate now has two parts. Since the hotel room is now split into two, that means that one part of the room rate is advertised and the other part of the room rate is hidden as an "urban destination charge."
The hotel resort fee has long been a controversial charge by hotels. Hotel resort fees are currently under investigation by 47 Attorneys General. The Attorney General of DC subpoenaed Marriott Hotels on June 6, 2017 over this investigation due to their refusal to hand over documents to the investigation. Resort fees have been determined by the Federal Trade Commission to be detrimental to consumers. Still, these hotel fees allow hotels to lie about their advertised price. The fee breaks a hotels room rate into two parts and only one part is advertised. Hotels like to look like they are cheaper than they actually are, so the number of hotels charging hotel resort fees in New York City has more than tripled since May 2016.
Hotel resort fees are not just an issue for tourists to be concerned about in New York City. These hotel fees have massive tax implications for New York City. In New York City, only the advertised room rate is taxed hotel occupancy tax. The second part of the room rate (that until November 22, 2017 was part of the advertised room rate and has since broken off) is charged a lower sales tax. This means that each resort fee (or at this Hilton an "urban destination charge") causes a 5.875% tax loss from the resort fee on each room per night.
The Hotel Occupancy Tax in New York City is 14.75%. NYC sales tax is much lower at 8.875%. Until November 2017, the entire room rate at the Hilton Midtown was taxed 14.75%. After November 2017, the hotel is splitting their price in two. The first part is taxed 14.75%, the second part (the "urban destination charge") is only taxed 8.875%. So if the advertised rate is $200 and the urban destination charge is $25 the total price of a room is $225. New York City prior to November 2017 was collecting $33.18 in taxes on a $225 room at the Hilton Midtown. Now with their "urban destination charge" the city is only collecting $28.17 ($200 x .1475 = $29.5) + ($25 x .08875 = $2.22) and 29.5 + 2.22 = $31.72. So the city loses $1.47 in taxes per room per night on a $200 room. That is a lot of tax loss for a hotel with 1,979 rooms.
You can calculate this out by seeing what the resort fee would have been at hotel occupancy tax and seeing what it now is at the lower NYC sales tax. Resort fee at the Hilton Midtown is $25 so previously the city would get $3.69 from that (25 x .1475) when the fee was part of the room rate as it was previous to November 2017. Today the city gets less (25 x .08875), $2.22. That's a 1.47 loss per room per night. At full occupancy, that is a $2,909.13 tax loss to the City per day. That's a $1,061,832.45 tax loss to the city per year. It is sad to see the Hilton Midtown engage in such tax scams that deprive New Yorkers of tax revenue needed to keep the city going. Over a million dollars will be lost that could have funded the subway, affordable housing, public safety and a million other great things that protect and make New York great.
Not only do hotel resort fees cheat New Yorkers and the tourists who stay at the hotels, they cheat the people who work in the hotels as well. When tourists are charged bogus hotel resort fees like this urban destination charge, the tourists in the hotel are less likely to leave tips for the house keeper. They think these fees cover housekeeping tips. These fees have absolutely nothing to do with housekeeping or any service in the hotel. These fees are simply part of the room rate split off so that the Hilton Midtown can lie about their advertised price to lure in customers, cheat New York City of over a million dollars of tax revenue per year and even hurt their own house keepers who will be less likely to see tips after the implementation of this fee.
When people think hotel resort fees are just a tourist issue, just think about how this one hotel is causing New York City to lose over a million dollars a year in tax revenue.