No Solution Yet to Expedia Problem

Hotels stand to lose an estimated $1 million in bookings to the fallout from Expedia leaving the Arcadia market in protest of a 10 percent hotel occupancy tax.

Nearly six months have passed since and city leaders have yet to come up with a viable solution on how to offset the potential loss of up to $100,000 in annual revenue from hotel taxes and fees.

Expedia left when voters passed Measure D, which extended the city's 10 percent hotel occupancy tax to services provided by travel intermediaries ranging from brick-and-mortar travel agencies to Internet companies.

The situation has come to a standstill with neither the city nor Expedia willing to cave.

"There's a real sense of urgency," Chamber of Commerce President Scott Hettrick said. "It's already been the summer months and people have not been able to book in those hotels. No one at this stage is negotiating with Expedia. Expedia can kind of do what they want, and if they don't want to pay the tax, and they don't want to book the hotel, then that's their prerogative."

Hettrick added that the city also expects a huge influx of tourists next month for the Breeders' Cup at Santa Anita Park.

Before Expedia left, it booked around $1 million worth of rooms annually in Arcadia. Though a person might pay the same amount for a room whether they booked it through Expedia or the hotel directly, the city only taxed the base room price, minus the booking fee the hotel paid to Expedia.

For instance, a hotel might charge Expedia $90 for a room the travel intermediary turns around and books for $100, but the city would only receive $9 from that sale. If the guest had booked the same room through the hotel directly and paid $100, the city would have received the full $10.

By closing this loophole, Expedia would owe about $13,000 in taxes annually to Arcadia.

Unless the hotels can figure out a  way to make up for the Expedia bookings, the city stands to lose out on up to $100,000, in addition to the $13,000 it meant to collect through Measure D. Those figures don't include revenue from any ancillary taxes resulting from hotel guests taking advantage of local restaurants and shops.

And Expedia is not likely to back down anytime soon. If Expedia made an exception for Arcadia, it would have to make exceptions to other cities as well.

"Unfortunately, Expedia is one of the biggest, if not THE biggest provider of booking services, and they do have a lot of weight to throw around, and they're going to have the leverage in this situation," Hettrick said. "We understand where they're coming from, but at the same time it's their responsibility."

Expedia Senior Vice President Brent Thompson said his company was blindsided by the passage of Measure D.

"It would have been great if (the city) would have just given us an opportunity to discuss it with them," he said. "We're hopeful that the city is going to reconsider...We want to do business in Arcadia. We view ourselves as a partner with the cities, a partner with the hotels."

But repealing the measure is out of the question, Mayor Bob Harbicht said. It would require the city to call a special election, which would cost an estimated $200,000.

Harbicht declined to comment further on the situation, citing ongoing discussions between city government and business leaders.

They have been trying to figure out a way to get the city the $13,000 it wants to collect from Measure D, without charging Expedia, in the hopes the company would resume its Arcadia operations.

Hettrick said he couldn't offer up too many details, but the plan may involve the hotels covering Expedia's portion of the Measure D tax.

"The city's agreed to be flexible on who pays it, and how it comes," Hettrick said.

However, the city and its hotels likely won't come to a deal any time soon. Most of the hotels are franchises owned by large companies, and approval has to come up from a long chain of command, Hettrick said.

In the meantime, the city and hotel owners have little choice but to forge on until they reach an agreement.

"(Expedia) would probably take a second look at it if they had to give up all their bookings in a major city. They're not losing customers," Hettrick said. "They're not scared of little Arcadia."


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