/  Comstock
updated 9/28/2006 5:52:05 PM ET 2006-09-28T21:52:05

Travel has been booming this summer, despite higher gasoline, hotel and airline prices. Demand has also remained strong notwithstanding another set of costs--hidden ones.

These are the taxes and fees that U.S. jurisdictions impose on travel-related purchases: hotel rooms, rental cars and general sales. Most travelers, business or otherwise, pay little attention to those extra costs, despite the fact that they can add 10% or more to your total bill. And short of not traveling, there is little that can be done to avoid them.

We've measured those costs for a dozen popular destinations to come up with a Travelers Misery Index. Our measure is a cumulative one--it doesn't translate exactly into taxes paid. But it's a good guide.

Our data show that car rental taxes at on-airport sites tend to be the highest, followed by taxes on hotel rooms, then sales taxes. These add-ons can make a big difference, especially if you are doing an airport rental and staying in a hotel in Houston (Misery Index: 47.76) versus Los Angeles (22.25).

To arrive at the Travelers Misery Index, we added together the following rates: hotel occupancy tax, general sales tax (we avoided double-counting where the sales tax is applied to hotel rooms) and the rental-car tax (again, avoiding double counting) for a car obtained on airport grounds. Airport rentals often carry higher local fees, because many airports charge rental companies a fee for operating there; most or all of that usually gets passed on to consumers through a concession recovery fee.

Because some charges are imposed as a percentage and some as a fixed amount, we assumed a one-night hotel stay at $100 (about the average daily rate, according to Smith Travel Research of Henderson, Tenn.) and a two-day car rental totaling $200, an approximation of the base rate for a luxury car in these cities.

Let's consider how this might play out for Houston and L.A.: A $200 rental (you chose a nice car), a $100 hotel room (you were far more modest about your sleep) and a $100 souvenir--say, an original Hollywood movie poster in L.A. or a Stetson hat in Houston.

In L.A., you'd pay an additional $8.25 in sales tax for that poster, $16.50 in sales tax for the car and $14 in accommodation tax for the hotel room. In Houston, it would also cost you $8.25 more for the cowboy hat, but $61.50 for the car, because of sales and rental taxes, and $17 for the hotel room. The difference between the two cities for $400 in purchases: $48.

Increasingly, localities are raising these charges to boost revenues without having to hit resident taxpayers, who are voters. Many travelers neglect to ask about the hidden costs, even as they might try to save a few bucks on a fare. The penalties are not painless, however--either to travelers or to local enterprises.

Certainly, these are charges that convention or meeting planners should recognize. If they do, that will be bad news for high-Misery destinations like Houston and Chicago that might try to pitch the relative affordability of those places.

Bill Connors, executive director of the National Business Travel Association, based in Alexandria, Va., says he is hearing about the rising charges from his members.

"These are major companies that spend tens of millions of dollars a year on travel and pay ever-higher taxes on that spend," says Connors, who traveled to Florida in April to testify about the potential impact of a proposed $2 per day increase to car rental taxes, a bill that Gov. Jeb Bush eventually vetoed. "With travel tax rates often topping sin taxes, businesses are forced [to] constantly reevaluate how they will absorb those added costs--by cutting back on travel or by boosting travel budgets and cutting back elsewhere."

One grace note for Houston: Most U.S. metros now impose the maximum Passenger Facility Charge of $4.50 for boarding at the airport. (We didn't include this tax in our index because it is so widespread.) Houston Intercontinental is the rare exception: no PFC. Enjoy the spare change!

Car rental tax information from Avis and Hertz. Hotel occupancy tax and sales tax figures from the Massachusetts Department of Revenue, Chicago Convention & Tourism Bureau, Denver Metro Convention & Visitors Bureau, Hotel & Motel Association of Greater Houston, Las Vegas Convention & Visitors Authority, Los Angeles Convention & Visitors Bureau, Greater Miami Convention & Visitors Bureau, Greater Nashville Hotel & Lodging Association, New Orleans Hotel Association, San Francisco Convention & Visitors Bureau, Texas Comptroller of Public Accounts, Houston Convention & Visitors Bureau, NYC Visitors & Convention Bureau, City of New York Department of Finance, and Washington Department of Revenue.

© 2012


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