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What is Resort Tax?
Resort tax is a specific type of lodging tax applied to mandatory fees that are separate from the base nightly rate. Unlike occupancy taxes that are calculated on the cost of accommodation, a resort tax is calculated on the value of additional required charges like a 'resort fee' or 'amenity fee.' The property owner or manager is responsible for collecting this tax from the guest and remitting the funds to the governing jurisdiction.
Therefore, the resort fee is revenue for the property, while the resort tax is revenue for the government.
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How it works
First, a property establishes a mandatory, non-room fee, such as a $25 per night resort fee for services like pool access and parking. Next, the local tax authority's regulations determine if this fee is taxable and at what rate.
When a guest makes a reservation, the host adds both the resort fee and the applicable resort tax to the total bill. For instance, if the tax rate on the fee is 10%, the host would collect the $25 fee plus a $2.50 resort tax each night.
The host then segregates the collected tax amount to be paid to the tax authorities, while retaining the fee as revenue.
Why it matters
Correctly calculating, collecting, and remitting resort taxes is a critical component of legal compliance for vacation rental operators. Failure to do so can result in audits, back taxes, fines, and other legal penalties.
For guest transparency, clearly itemizing all charges, including the resort fee and any associated taxes, prevents confusion and disputes at checkout, fostering trust. To simplify this, hosts often use software to automate calculations; property management systems such as Lodgify allow for the setup of various custom taxes, ensuring accuracy in charges and reporting.
Examples
- A vacation rental manager in Miami Beach, Florida, bundles beach chair and umbrella access into a $35 per stay 'amenity fee.' This fee is subject to the same 6% Tourist Development Tax as the room rate. The manager must add $2.10 in tax to the guest's folio for this fee.
- A property in a gated community in Palm Springs, California, charges a required $50 'community access fee' per booking. The municipal code defines this as part of the total rental price subject to Transient Occupancy Tax. The owner must calculate the tax on the room rate plus this $50 fee.
- A host in Las Vegas renting out their condo must charge a 'resort fee' as mandated by their building's HOA. This fee is subject to Clark County's transient lodging tax. The host has to add this tax percentage onto the resort fee amount in the guest's final bill and remit it to the county.
- A host of a resort condominium in Aspen, Colorado, charges a mandatory $40/night 'destination fee' for ski valet and shuttle services. The city requires this fee to be taxed at the local lodging tax rate of 11.3%. The host must collect an additional $4.52 per night in resort tax from each guest.
Frequently asked questions
Is a resort tax the same thing as a resort fee?+
Who is responsible for collecting and remitting the resort tax?+
Do online travel agencies (OTAs) like Airbnb or Vrbo handle resort taxes?+
How can I find out if I need to charge a resort tax?+
Related terms
Resort Fee
A resort fee is a mandatory daily charge levied by hotels, resorts, and some vacation rental complexes to cover a bundle of on-site amenities and services…
Amenity Fee
An amenity fee is a mandatory charge for guests, separate from the nightly rate, to cover the cost and maintenance of specific property amenities like pools…
Lodging Tax
A lodging tax is a tax levied by government authorities (such as city, county, or state) on the rental of short-term accommodations, including vacation…
Occupancy Tax
Occupancy tax is a tax levied on the rental of short-term accommodations, which hosts are legally required to collect from guests and remit to local or state…