On behalf of Southern Delaware Tourism, the Convention and Visitors Bureau for Sussex County, and its board of directors, I am writing this letter to support House Bill 168 – an act to amend Titles 9 and 30 of the Delaware code relating to lodging tax to include short-term rentals.
The dramatic increase in short-term rentals in Sussex County over the past decade continues to increase the lodging tax inequity between hotels/motels and short-term rentals. Under current Titles 9 and 30, lodging business definitions, Delaware is doing itself a disservice by not including short-term rentals in its tax reinvestment toward promoting and supporting its $4 billion tourism economy. For far too long, hotel/motel businesses have been the only lodging tax sources supporting tourism in Delaware.
Fundamentally, visitors to Delaware, not Delaware residents, should financially support the expanding services and infrastructure needed to host and support more future visitors. Negating guests lodging at short-term rentals severely handicaps and limits this financial support. From a destination marketing perspective, short-term rentals need to promote short-term rental options to present all accommodation types to travel consumers, satisfying different needs and tastes. Yet doing so, under the current Titles 9 and 30, lodging definitions, does not increase tourism funding and has a negative effect on state public accommodation tax proceeds. Currently, Delaware is just one of three states that does not collect a visitor short-term rentals tax.
At a municipal level, Sussex County resort beach towns have been collecting a short-term rental tax for many years, but, with a few exceptions, have only recently started collecting a hotel lodging tax as a result of state legislation permitting municipalities to enact this tax (as it did the counties). In Sussex County, most visitors come and stay at either a hotel or a short-term vacation rental property. This results in hotels having to pass a lodging tax to guests at two different levels and short-term rentals having to pass a rental tax to guests at only one level. Both hotel lodging tax and short-term rental tax are separate taxes, but they need to work together to support and grow Delaware’s vibrant tourism economy. Both of these taxes are passed through to visitors and should be reinvested equitably, benefiting both visitors and residents. The proposed amendments to lodging tax make this possible.
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