GHRA rallies against HOT increase

GHRA President Mary Rhodes (PNC file photo)

Guam – The island’s tourism industry has begun its charge against the Hotel Occupancy Tax hike.

During yesterday’s session, legislators reached a majority in favor of Senator Jim Espaldon’s amendment to raise the HOT from 11% to 13%. The Guam Hotels and Restaurants Association has since launched an email outreach campaign asking its constituents to help them reverse the increase in the finalized Bill 323-34 for FY19.

According to GHRA’s latest message this morning, Espaldon’s proposal has the net effect of bringing the levy on hotel rooms to 18% — “the highest taxed item on Guam.”

On the legislative side, Senator Michael San Nicolas’s analysis of the industry’s wage practices left the island with a lot to ponder about the “inordinate amount of burden” tourism places on local residents. Drawing from labor statistics reports from 2017, the congressional candidate stated that of all service personnel in the private sector, hotel employees had the lowest wages: an average of $9.40 an hour.

San Nicolas continued his analysis, explaining that with 6,730 Guam residents earning just a fraction above minimum wage and making up the EITC workforce, the island’s taxpayers end up subsidizing hotels’ costs of their workers. By comparison, the remaining two-thirds of service employees not working in hotels were paid an average of $16 an hour.

When asked to comment about this statistic on K57’s Andrea Pellacani Show yesterday, GHRA President Mary Rhodes said that the issue “has nothing to do with anything with regards to Hotel Occupancy Tax.”

Rhodes further told PNC, in response to San Nicolas’ assertions, that similar to all other markets, wages are determined by what the market can absorb in order to remain competitive.

“The $9.40 per hour wage is not the only form of compensation employees receive. Employees also receive service charge, tips and fringe benefits like free meals, laundry, insurance and other forms of benefits,” she said. “I think it’s also important to note that while they’re comparing one-third of employees at $9.40 an hour and the rest make an average of $16 an hour, a lot of the employees in the hotel industry have different jobs while working part time. The industry has had to scale back because of the economy. It’s been extremely difficult with the decreases in arrivals in markets like Japan. And like any other industry, $9.40 an hour is still higher than Guam’s minimum wage.”

Guam has retained an 11% HOT since 1995. If Espaldon’s amendment makes it to the finalized FY19 budget, the 13% levy on hotel rooms would be the law of the land from October 1, 2018, to September 30, 2019. Afterwards, the 11% rate will be restored.