Cornell Study: Tax Bill Could Revitalize US Hospitality Sector

A new study by Cornell University, commissioned by the American Hotel & Lodging Association, reveals the potential impact of the Tax Relief for American Families and Workers Act of 2024 on the hospitality industry.

The research suggests that the proposed tax reforms could significantly benefit hotels across the United States by encouraging investments in improvements and enhancements.

According to the study from Cornell’s Center for Hospitality Research, hotels of varying sizes and service levels could enjoy substantial tax savings from the act’s measures. These include extended 100% bonus depreciation and increased business interest deductibility. The bipartisan bill, H.R. 7024, passed the House in January and is currently under Senate review.

The provision to restore 100% bonus depreciation is designed to spur investment in qualified improvements. For instance, a hotel investing $2.75 million in commercial kitchen equipment could see over $175,000 in additional tax relief, the study notes.

Temporarily expanding business interest deductibility provides additional tax relief. The study outlines a range of tax relief scenarios, sampling 25 hotel properties of different sizes that could benefit from the bill, including:

  • Nine hotel properties with up to 150 rooms would see tax relief ranging from $17,000 to nearly $500,000.
  • Nine other hotel properties with more than 200 rooms but less than 500 rooms would see tax relief ranging from $37,000 to $1 million.
  • Seven properties with more than 500 rooms would see tax relief ranging from $600,000 to nearly $6 million.

“The bipartisan tax package would help hoteliers invest in renovations and upgrades to stay competitive and improve the guest experience. This means more jobs, employee benefits, and economic growth,” said AHLA Interim President & CEO Kevin Carey.

“This study is proof that the bill would help hoteliers navigate the economic challenges created by persistent inflation, a nationwide workforce shortage, and an aggressive federal regulatory agenda. On behalf of America’s nearly 62,500 hotels, we call on the Senate to pass the bipartisan Tax Relief for American Families and Workers Act as soon as possible.”

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