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Sharp declines in Maine’s tourism industry that are already cutting into the state’s budget are expected to nearly halve lodging tax revenues between 2019 and 2020, according to a new report released Thursday.
Maine is expected to incur $65.9 million in lodging tax losses, according to an Oxford Economics report released by the American Hotel & Lodging Association, an industry group based in Washington, D.C.
It would be a 41 percent decrease from the $111.7 million in Maine lodging taxes collected in 2019, according to state data. At 9 percent, the state’s lodging tax is among the highest in the nation in a state whose economy is heavily reliant on the tourism industry.
The state already has seen taxable lodging sales plummet from the start of pandemic restrictions in mid-March into April. Lodging taxable sales in March were down 45.5 percent to almost $24.1 million, according to Maine Revenue Services. The situation turned more dire in April, when taxable sales plummeted 80.2 percent to $9.8 million compared to $47.63 million in May 2019.
“We track this data monthly and report it to members,” said Steve Hewins, president and CEO of HospitalityMaine, an industry group. “I don’t recall ever seeing it negative until March.”
He said the drop in April is “incredible,” especially since the lodging industry has entered its peak season, and that the percentages in May and June “will be even worse, while at the same time the hard dollar losses become even greater.”
May taxable sales will be released in late July, a revenue department spokesperson said. He said monthly figures also are updated each month.
Hewins and other lodging industry representatives say they are not sure they can recover this year from pandemic-related business restrictions. Lodging establishments were required to wait until July 1 to serve residents from other states under Gov. Janet Mills’ reopening plan.
Last week, however, she relaxed the deadline to June 26 if visitors get a negative virus test or self-quarantine for 14 days. Last Friday, tourism groups asked Mills to allocate $800 million in federal funding to help businesses stay afloat.
But even with the earlier deadline and the testing option, Hewins questions how much business the lodging industry can recover.
“The testing alternative to the 14-day quarantine will do nothing to raise revenues in our view,” he said.
Lodging sales are a key economic engine for the state. Sales in Maine were up just before the pandemic restrictions hit. In February they rose 20.6 percent over the previous year to $45.8 million.
The 45.5 percent drop in March reflected restricted activities among other Maine businesses. The state brought in only half of its total expected revenue. The impact of the coronavirus on travel is nine times worse than the 9/11 terrorist attacks, said Chip Rogers, president and CEO of the American Hotel & Lodging Association.
“We expect it will be years before demand returns to peak 2019 levels,” he said.
Hotels have a ripple effect on communities, he said, creating jobs, investing in communities and supporting billions of dollars in tax revenue. He said the pandemic has caused more than 70 percent of hotel employees to be laid off or furloughed. Hotel occupancy is expected to show the worst year on record.
Nationally, taxes from hotel operations are expected to drop by $16.8 billion in 2020, the Oxford Economics report said. The figure does not include the nearly $9 billion in hotel-associated property taxes.
Maine’s neighboring states are also expected to be hit hard this year. Vermont is expected to lose a little more than $60.4 million, New Hampshire $46.5 million and Massachusetts $306.8 million in lodging revenue.