Online travel agents could owe cash-starved Monterey County cities big bucks.
Thursday, June 3, 2010
The city of Monterey says online travel sites like Expedia and Travelocity could owe them as much as $5 million, an amount equal to the city's current deficit.
That's because travel websites pay hotel taxes only on the discount rate they pay when they buy rooms in bulk, not on the higher rates they charge their customers, according to Deanna Sessums from the League of California Cities.
"Across the region, millions of dollars are at stake," Sessums says.
Monterey officials have hired the law firm of McKool Smith to recover the cash.
But the travel companies are fighting back. They believe they owe taxes only on the lower room rates they pay when they buy wholesale, and they're pushing for state legislation that would prohibit the cities from collecting the money—either retroactively or in the future.