Plan Your Meetings

Hoteliers warn value-added tax will stunt economic growth

If a value-added tax (VAT) is enacted to pay for universal health care initiatives, it will destroy the nascent growth the meetings industry is seeing, warned Marriott International Chairman and CEO J. W. “Bill” Marriott and President Arne Sorenson on the June 2 episode of “Your World with Neil Cavuto.”

The VAT, which is common in Europe, would be a national sales tax. U.S. policymakers are debating the benefits of levying a 10-25 percent VAT. At a rate of 25 percent, a national sales could pay for many of the proposed government initiatives and help pay some of its accrued debt, but it also would raise the price of a gallon of milk from $3.69 cents to $4.61 and add to the cost of everything from gasoline and home renovations to hotel rooms and clothing.

“If we want to stimulate the economy, which is obviously what the Fed and the Treasury and the president is about, to put a value-added tax on [at] the same time is schizophrenic, at best,” Sorenson said.

Marriott added that if a value-added tax plan was passed, he hoped that businesses would get some kind of tax break along with it. “We want to continue to spur consumption,” Marriott said. “The more [the government is] tax and spending, the less [consumers] are going to spend. They`re going to stay home. And we want to get them out of the bunker. We want people to travel again. The toxic rhetoric that has come out of Washington has really hurt the meetings and conventions business. Companies are afraid to hold meetings, for fear they will be criticized.”

Sorenson pointed out that it wasn’t just companies that had received Troubled Asset Relief Program funds who were afraid to meet. “Everybody was very bashful. And you had some politicians saying, if people attend meetings, we`re going to publish your name.”

On March 12, Marriott and a group of 12 travel industry CEOs had an audience with the president, during which they informed him of the impact negative rhetoric had on the industry. “We told him that it was hurting, that we’re losing jobs,” Marriott said. “The travel industry [has laid] off about a half a million people in the last 12 months.”

Criticism of the industry has dropped off sharply since. And there are signs the industry is starting to recover. Sorenson and Marriott said that more meeting planners were sending requests for proposals, conducting site inspections and booking meetings and events, a trend they hoped would continue.

“Business is good,” Marriott said. “Meetings are good for business. Meetings are part of this country. It`s what makes this country go.”

Sources: LexisNexis.com, WashingtonPost.com