Your guide to L.A.’s Measure TC: tax on hotel bookings by online companies

Travelers to Los Angeles may not realize it, but they often pay less in city taxes by booking a hotel room through an online company like Hotels.com or Trivago.

A measure on the June 2 ballot could change that.

Measure TC, if passed by voters, would require online travel companies and other intermediaries to pay the city’s hotel tax based on the markup price they charge to customers, not the discount price they paid for the room.

As the city faces another budget shortfall, officials are looking for additional revenue to pay for basic services. The measure also would level the playing field for a struggling hotel industry, proponents say.

A related measure also on the ballot raises the tax on hotel rooms in L.A. from 14% to 16% until the end of 2028, then dropping to 15% thereafter. If passed, it also would apply to online companies.

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Hotel operators sell rooms to online travel companies at a discounted rate, and the companies then charge a markup to consumers.

By law, online companies pay taxes on the price they paid for a room but are not required to factor in the higher price they charge the consumer, said City Councilmember Tim McOsker, a proponent of Measure TC.

The city’s transient occupancy tax, also known as a bed or hotel tax, is 14% of the room rate. Measure TC, if passed, could raise $5 million per year for sidewalk and street repairs, parks and other necessary services, according to city estimates.

The City Council unanimously voted to put the measure on the ballot, with McOsker selected to draft the official argument in support. This is not a new tax, he said in an interview, but an adjustment to make the system more fair.

“It is closing a loophole and is making sure that the online providers and the ultimate occupier are collectively getting taxed at the full amount, just as any other consumer would,” McOsker said.

Measure TC would level the competitive advantage the online companies gain over the city’s hotels and also provide more revenue for constituents, he said.

There were no opponents listed in the measure’s City Council file, and no ballot arguments against the measure were submitted to the city.