Higher hotel taxes may come with aloha

The Mauna Lani Bay Hotel and Bungalows in Mauna Lani, Hawaii.

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Bob Moon: Hawaii may have some things other states don't, like gorgeous beaches and spectacular golf courses. But the Aloha State is just like nearly every other state when it comes to revenue trouble. It's looking at a big shortfall this year. The state's tourism business is already suffering, so it's proposing a tax that will increase hotel bills. Jennifer Collins reports.


JENNIFER COLLINS: This is a great time to go to Maui. There are cheap flights, cheap rooms, it's hot and sunny, the beaches are open. But that's not helping Tanna Swanson. She owns Maui Guest House. Her business is off around 30 percent this year.

TANNA SWANSON: This month I'll have several nights where nobody is staying here. I can't even fill one room. That's a shock to me. That's how scared we are right now.

And the fear is growing. Hawaii has a nearly $2 billion budget shortfall. And to make up for it, it may hit up one of its biggest industries: tourism. Some state lawmakers want to boost one of the taxes on hotel rooms -- from around 7 percent to around 12 percent. Bill Connors is with the National Business Travel Association.

BILL CONNORS: Cities and municipalities and jurisdictions that decide to take their economic frustration out on their visitors, it's not a wise policy move and will hurt them in the end.

He says Honolulu has been one of the most tourist-friendly destinations when it comes to taxes. But the proposed increase could keep corporate visitors away.

CONNORS: So this is just another reason for people to stay away from Hawaii.

And that's the last thing the state needs. Tourists spend around $13 billion a year in the islands. And Hawaii's just come off one of its worst years in nearly two decades. If this measure passes it could go into effect this summer.

I'm Jennifer Collins for Marketplace.

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