What's Happening?
A recent analysis of over 6,000 hotels, utilizing CBRE’s Trends® in the Hotel Industry database, reveals significant disparities in property tax burdens based on location and hotel type. The study highlights that hotels in the New England and Mid-Atlantic regions face the highest tax burdens, with full-service hotels experiencing the most substantial financial impact. Conversely, the South Atlantic and Mountain & Pacific regions generally have lower tax burdens, particularly for resort hotels. These findings underscore the importance of a proactive property tax strategy tailored to geographic and property type variations.
Why It's Important?
Understanding and managing property tax liabilities is crucial for hotel owners and investors, as these taxes represent a significant expense impacting profitability. The disparities in tax burdens can influence investment decisions, operational strategies, and financial planning. By adopting a strategic approach to property tax management, stakeholders can optimize their tax liabilities, enhance asset value, and improve long-term financial performance. This is particularly important in regions with high tax burdens, where even small discrepancies in valuation can have substantial financial implications.
What's Next?
Hotel owners and investors are likely to increase their focus on property tax assessments and appeals, especially in high-burden regions. This may involve detailed reviews of property valuations and exploring opportunities for tax reductions through appeals. Additionally, there may be a push for more transparent and equitable tax assessment practices across different jurisdictions to ensure fair treatment of hotel properties. As the industry adapts to these challenges, stakeholders will need to stay informed about local tax regulations and valuation methodologies to effectively manage their tax liabilities.
