Escaping to Cancun or Maui? Tourism destinations eye new taxes as economies reopen

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Make that one less margarita on Cancun’s sandy beaches. Tourists to Mexico’s Quintana Roo state will soon be slapped with a new tax of about $11 to be paid before tanned and relaxed visitors leave the region. The new 225 peso tax begins April 1, just as demand is rising […]

Make that one less margarita on Cancun’s sandy beaches.

Tourists to Mexico’s Quintana Roo state will soon be slapped with a new tax of about $11 to be paid before tanned and relaxed visitors leave the region.

The new 225 peso tax begins April 1, just as demand is rising for spring and summer travel from tourists stuck indoors for more than a year due to the COVID-19 pandemic. And Mexico isn’t the only travel spot where tourists may face new travel taxes.

Hawaii is floating an added tax on car rentals. Thailand added a $10 per tourist fee, and even Montana, another outdoor spot that’s grown in popularity during the pandemic, is looking to raise more tourism tax revenue.

Quintana Roo, which is also home to Playa del Carmen and Cozumel, has been among the hottest getaway destinations for American travelers who have been cautious to travel too far abroad with constantly changing travel restrictions.

Airlines and others in the travel industry are throwing their support behind vaccine passports to boost pandemic-depressed travel.

“Tourism taxes aren’t a new topic, but they have resurfaced because of COVID,” said Skift global tourism reporter Lily Girma in an interview. “When COVID hit, a lot of tourism organizations saw their taxes disappear or drop or pause. Now the discussion has surfaced about how to keep those revenues coming in.”

Tourism taxes are a staple for local governments across the world. Before COVID-19, the city of Dallas would typically collect $4 million to $7 million a month in hotel occupancy taxes, which mainly went to fund the Kay Bailey Hutchison Convention Center. That’s dropped by more than two-thirds during the pandemic, according to the city’s budget figures.

The American Hotel and Lodging Association estimates that state and local governments lost about $13 billion in hotel tax revenue in 2020 in the United States alone.

Usually, tourism taxes come from hotel stays and car rentals, but Girma said states are looking for ways to generate more reliable revenue since hotel stays have dropped during COVID-19.

Quintana Roo’s State Secretary for Tourism Marisol Venegas told reporters that the tax is needed “due to the deficit that the state of Quintana Roo will have due to the fall in tourism as a result of the pandemic,” according to the Riviera Maya Times.

Tourists in Quintana Roo will be able to pay the tax at their hotel, when booking through agents at the hotel or when they leave. The state has even set up a collection point at airports to pay the tax.

Tourism destinations are also looking to add tax dollars for “regenerative” purposes, Girma said. That includes education for local populations, environmental projects or even spending money to restore historic heritage sites.

There are also risks.

“The tourism stakeholders are not happy because they think tourists won’t pay it and will go elsewhere,” Girma said.

It’s clear there is high demand for places like Cancun from U.S. travelers.

Airlines have 692 flights from DFW International Airport scheduled to land in the state of Quintana Roo in March, the most for any month ever, according to airline data company Cirium data. American Airlines has ramped up flights to Cancun, as well as other Mexican beach destinations. Spirit Airlines and Sun Country Airlines are also adding hundreds of flights from DFW to the Yucatan Peninsula state to catch up with demand.

Hawaii, which faced issues with overtourism before the pandemic, is considering a “climate impact mitigation fee” to be charged on rental cars. A dollar figure on each car rental hasn’t been set, but the bill has already passed Hawaii’s House of Representatives and is working its way through the Senate.

Thailand started charging a new tourism tax in January, which is about $10 per tourist.

Montana, a pandemic hot spot for outdoor travelers looking for social distancing, is considering a law that would make sure that out-of-state travel booking firms pay the same tax as in-state companies.

Any new tax could hinder tourism in a climate when travelers are looking for cheap getaways, said Steve Schur, president of the Travel Technology Association.

“Leisure travelers are hypersensitive to price,” he said.

A Spirit Airlines plane taxis at DFW International Airport.
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