This matter is playing itself out across the U.S. Florida, like Hawaii before it, is one of the most important markets where a decision will be made.
The Florida Supreme Court has set oral arguments for April 30 in a closely watched case that should ultimately determine how sales and bed taxes are calculated on hotel rooms sold through travel websites.
The tax controversy, which pits companies such as Expedia Inc. and Priceline.com Inc. against local governments, has been burning for a decade, with the Florida Legislature repeatedly refusing to take sides. The dispute revolves around whether taxes should be paid based on the wholesale rates online-travel companies negotiate with hotels, which is how the industry currently does it, or on the higher price the companies charge travelers, which is how counties say it should be done.
The battle has divided some of the biggest tourism businesses in Florida. Theme-park giants Walt Disney World and Universal Orlando, which benefit from a similar tax advantage for their vacation package businesses, have lobbied on behalf of the online-travel companies. Hotel chains such as Marriott International Inc., which compete with the Internet companies, have lobbied on behalf the counties.
Among those intervening in the court case: The Florida Chamber of Commerce, which was recently allowed to submit a brief in support of the online-travel industry. Disney is one of the chamber’s most influential members.
The chamber argues that requiring online-travel companies to collect taxes based on the full retail rate would ultimately hurt consumers by increasing the cost of a vacation to Florida. Others have argued that the extra money is more likely to come out of the companies’ profit margins, as they must compete for business and can raise prices just so much.