The bustling corridors of Capitol Hill recently echoed with the determined footsteps of over 200 hoteliers participating in the American Hotel & Lodging Association’s (AHLA) annual event, “Hotels on the Hill.” Held from September 24-25, 2024, this gathering aimed to influence crucial legislative policies that would foster the growth, sustainability, and consumer transparency of the hotel industry. With delegates traveling from 36 states, the event was a significant demonstration of the collective power of the hotel industry. This article delves into the crux of their advocacy, exploring how their efforts might shape future-friendly policies for hotels.
The Economic Backbone of the Hotel Industry
The Magnitude of Industry Contribution
With nearly 64,000 hotels dotting the American landscape, the hotel industry is an economic powerhouse supporting close to 1 in 25 American jobs. These establishments, of which more than 33,000 are small businesses, are projected to pay a record $123 billion in wages in 2024. The industry is also expected to generate approximately $83.4 billion in tax revenue, signifying its substantial contribution to the national economy.
Hoteliers argue that this economic input must not be overlooked, as it underscores the necessity for policies that facilitate continued growth. By ensuring a favorable legislative environment, hoteliers believe they can sustain their contributions and further bolster the U.S. economy. The AHLA emphasizes that without targeted support, the industry might face significant hurdles that could dampen its expansive influence on job creation and economic stability.
Policy Advocacy for Economic Growth
A critical element of the AHLA’s advocacy is pushing for policies that squarely support economic expansion. This includes not only retaining the industry’s current workforce but also addressing significant labor shortages by proposing changes to the visa system. The stability and growth of small businesses within the sector remain at the forefront of this push, as they are key to community development and job creation.
The “Closing the Workforce Gap Act” (H.R. 7262) is a legislative proposal aimed at overhauling the current cap on H-2B temporary visas. Hoteliers argue that the existing 66,000-visa cap is insufficient to meet their staffing needs. By introducing a needs-based system, this bill advocates for a more responsive framework that ensures hotels can operate at full capacity. This flexibility is critical in maintaining the high standards of service that guests expect while also driving economic activity through full employment.
Addressing Workforce Challenges
The Workforce Shortage Dilemma
The hotel industry has long struggled with workforce shortages, an issue exacerbated by the pandemic and evolving labor market dynamics. Currently, the cap on H-2B temporary visas stands at 66,000, a figure that hoteliers argue is grossly insufficient to meet the industry’s needs. The “Closing the Workforce Gap Act” (H.R. 7262) is a legislative proposal championed by the AHLA to replace this outdated cap with a needs-based system.
This bill aims to create a responsive and adaptable framework, allowing the industry to hire seasonal and temporary workers as required. Advocates argue that this would not only help fill crucial positions but also spur economic activity by ensuring hotels operate at full capacity. By doing so, the industry can mitigate the operational disruptions that have plagued it in recent years, ensuring a smoother, more consistent guest experience and dependable job opportunities.
Stories from the Frontline
One of the most compelling aspects of the Hotels on the Hill event was the personal testimonies from hoteliers and their employees. These stories underscored the real-world impact of workforce shortages on daily operations and the overall guest experience. By sharing their experiences directly with legislators, advocates aimed to humanize the issue, making a compelling case for policy reform.
For instance, a hotel manager from Florida shared how difficulty in securing sufficient staff led to reduced service offerings and longer wait times, impacting customer satisfaction. Another story from an employee in a boutique hotel in Colorado highlighted how overworked staff had to juggle multiple roles, leading to burnout. These narratives personalize the statistics, providing a poignant reminder that behind every shortfall is a human experience. This grassroots approach to advocacy has the potential to sway policymakers by highlighting the direct, tangible benefits of legislative change.
Tax Provisions: A Pillar of Small Business Support
The Importance of the Pass-Through Tax Deduction
Small businesses form the backbone of the hotel industry, and tax provisions like the pass-through tax deduction (199A) have provided critical financial relief. However, this deduction is set to expire in 2025. Hoteliers are urging Congress to extend this provision, emphasizing that its expiration could have severe financial repercussions for small businesses and franchisees alike.
The pass-through tax deduction allows small businesses to deduct a portion of their income, thus significantly reducing their tax burden. For many small hotels and franchises, these savings are crucial for reinvestment in their properties, improving services, and expanding their workforce. The AHLA’s push to extend this deduction is not just about immediate financial relief but about long-term sustainability and growth, ensuring that these establishments can continue to contribute robustly to the local and national economies.
Preserving the Like-Kind Exchange
Another significant tax provision under threat is the like-kind exchange (Section 1031), which allows hoteliers to defer capital gains taxes when reinvesting in new properties. Many in the industry view this as vital for fostering economic growth and job creation. By advocating for the preservation of Section 1031, hoteliers aim to ensure that reinvestment remains an attractive and viable option, promoting continuous improvement and expansion within the industry.
The principle behind the like-kind exchange is rooted in encouraging reinvestment, which fosters business growth and development. For example, a hotel owner in New York who sells an older property can defer capital gains taxes by using the proceeds to acquire a more modern facility. This deferral allows for a more fluid transition of capital, enabling property upgrades and expansions that might otherwise be financially unfeasible. Robust support for Section 1031 is thus a cornerstone of the AHLA’s advocacy, with hoteliers emphasizing that this policy is integral to maintaining a dynamic and progressive industry landscape.
Defending the Franchise Business Model
The Franchisee-Franchisor Relationship
The franchise business model is integral to the hotel industry, offering a framework for widespread brand consistency and operational support. Hoteliers are calling for federal-level protection of the franchisee-franchisor relationship to stave off any potential legislative changes that might disrupt this dynamic.
Franchises provide a symbiotic relationship that benefits both parties; franchisees gain access to established brand recognition, marketing, and operational support, while franchisors expand their market presence and cultivate brand loyalty. Legislative changes that threaten this relationship could lead to increased operational difficulties and financial strain on smaller franchise operators. The AHLA maintains that preserving this model is essential for industry stability and growth, and their advocacy efforts are focused on ensuring that federal policies continue to support this proven business structure.
Economic and Operational Benefits
Federal protection would safeguard the economic and operational benefits that franchises provide, ensuring that smaller operators can continue to thrive under the umbrella of established brands. This, in turn, supports job creation and stable employment within local communities, aligning with broader economic goals.
Franchises not only bring consistency in service and quality but also empower local entrepreneurs to succeed within a supportive framework. For instance, a local franchisee may hire dozens of staff, contribute to local taxes, and participate in community events, thus embedding the business within the local economy. Protecting the franchise model ensures that these local operators can leverage the strengths of a global brand while enriching their communities. The AHLA’s advocacy in this area underscores the broader economic and social benefits that a healthy franchise system can provide.
Enhancing Consumer Transparency
The Push for Transparent Fee Structures
In an era where consumer trust is paramount, the issue of hidden fees has become a flashpoint. Hoteliers are advocating for the bipartisan “Hotel Fees Transparency Act” (S. 2498) and the “No Hidden FEES Act” (H.R. 6543) to establish a standardized and transparent method for displaying mandatory lodging fees.
These acts aim to create a level playing field among hotels, short-term rentals, and online travel agencies by ensuring that guests are fully aware of all mandatory fees upfront. Transparency in fee structures is not only a matter of fairness but also consumer trust. When guests feel deceived by hidden costs, it undermines their overall experience and erodes trust in the brand. By advocating for clear and transparent disclosure of all fees, the AHLA aims to enhance consumer confidence and create a more competitive marketplace where guests can make informed decisions.
Aligning with Consumer Expectations
The corridors of Capitol Hill recently buzzed with the activity of over 200 hoteliers who participated in the American Hotel & Lodging Association’s (AHLA) annual “Hotels on the Hill” event. This influential gathering took place from September 24-25, 2024, and aimed to shape key legislative policies to promote the growth, sustainability, and transparency of the hotel industry. Representatives from 36 states attended, showcasing the united and formidable presence of the hotel sector.
Throughout the event, hoteliers engaged in discussions and advocacy efforts to highlight the industry’s needs and priorities. They met with lawmakers to address pressing issues such as fair taxation, workforce development, and environmental sustainability. By highlighting these critical topics, the AHLA demonstrated their commitment to ensuring a prosperous future for the hotel industry.
The event symbolized more than just networking; it was a powerful display of the industry’s collective strength and influence. These efforts are expected to have a significant impact on future hotel-related legislation, potentially leading to policies that benefit not only hoteliers but also consumers.
As the hotel industry continues to evolve, events like “Hotels on the Hill” play a crucial role in steering its direction. The dedication and proactive stance of these hoteliers signal a promising future, with policies that could enhance industry standards and improve transparency for its customers.
