201007850L



July 26, 2010

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Dear **************:

Thank you for your questions concerning a hotel brand that has implemented a 
new policy for guests booking a prepaid room. I have restated the fact 
situation and your questions below, followed by my response.

For a $25 fee, the brand will allow the guest to modify a prepaid reservation 
by changing the dates of the reservation and/or allowing the guest to move the 
reservation to another hotel property within the corporation’s same family of 
brands. If the guest moves the reservation to another hotel property, the guest 
will pay any increased difference in the room rate for the new property.

The hotel that held the original reservation will treat a move to another 
property as a “cancellation” in their records. In a transferred reservation, it 
is the property that is “losing” the reservation that is credited with the 
proceeds from the $25 fee (the brand will retain a small commission, while the 
majority of the fee is passed through to the property owner). Furthermore, 
while the transfer will involve properties within the same family of brands, 
the actual properties would, in most cases, be owned by different franchisees 
and managed by different entities.

1. Is the $25 changed reservation fee subject to hotel occupancy taxes when the 
reservation dates are merely shifted, but the property remains the same?

Answer:  Hotel occupancy tax is due on the $25 changed reservation fee when the 
reservation dates are merely shifted and the hotel property remains the same. 
The fee is directly related to occupancy of the room and hotel tax is due on 
the fee. See Rule 3.162(a), regarding the hotel occupancy tax base.

2. Is the $25 changed reservation fee subject to hotel occupancy taxes when the 
reservation is moved to a new property and the property that “lost” the 
reservation is the entity that receives the fee? (This is similar to a standard 
cancellation fee.)

Answer:  The $25 changed reservation fee should be treated as a cancellation 
fee when the reservation is moved to a different hotel property. If the guest 
changes the reservation within 30 days of the date of arrival and the guest 
pays the consideration necessary to have occupied the room, hotel tax is due on 
the changed reservation fee. But hotel tax is not due if the fee is less than 
the reserved room rate or the change is requested more than 30 days from a 
scheduled stay, no matter the amount of the fee.

It was a pleasure to talk to you. If you have questions or would like to 
discuss this further, please contact me.

Sincerely,


Donald S. Dillard
Oil & Gas, Fuels and Miscellaneous Taxes
Tax Policy Division




ACCESSION NUMBER: 201007850L
SUPERSEDED: N
DOCUMENT TYPE: L
DATE: 07/26/2010
TAX TYPE: HOTEL