Hotel, motel owners said after soft 2024, local tax would hurt them, city
OCEAN CITY — After impassioned pleas from representatives of the resort’s hotels and motels, who said they faced a soft 2024 season and don’t want visitors priced out of the market, Ocean City Council unanimously voted down a 3 percent transient space occupancy tax Dec. 5.
Two weeks earlier council supported the tax on first reading in a 4-3 vote.
The tax would have applied to all transient rentals in the resort made through online platforms such as Airbnb and VRBO. Council voted 4-3 Nov. 21 to amend the original ordinance to include hotel and motel rooms in the tax, a move that prompted a deluge of calls to council members.
The transient space marketplace is the technical term referring to property rentals made through third-party online platforms, not rentals made through local realtors or property owners directly, according to City Solicitor Dorothy McCrosson. The state would collect the tax and send it back to the resort.
Councilman Sean Barnes made a motion to amend the original ordinance that did not include hotel and motel rooms, saying adding them would be fair and equitable and allow the city to raise more revenue.
Council President Pete Madden and Vice President Terry Crowley Jr. argued to keep the ordinance as written. Barnes and Councilmen Keith Hartzell, Dave Winslow and Tony Polcini voted to approve the amendment. Madden, Crowley and Councilman Jody Levchuk voted against it.
That sent it to the public hearing and second reading Dec. 5.
At the Dec. 5 meeting, some of the representatives spoke at the public hearing on the ordinance.
Pete Voudouris, president of Flanders Hotel, told members of council he was grateful almost everyone responded to his emails. He said this isn’t the right timing after hotels and motels struggled through the COVID-19 pandemic and then Airbnb and VRBO “exploded” because of their advantage of not paying the same taxes.
Voudouris said 2024 was soft in reservations while municipal parking fees and beach tag fees increased. He said he was stunned at how many merchants told him business was down this past summer season.
“We need to bring people back to Ocean City,” he said. Voudouris noted he has already booked about $1 million in reservations for the 2025 season and could not go back to his patrons and ask them to pay an additional 3 percent tax, nor could he afford to cover the $30,000 tax.
Karen Barlow, representing the Beach Club Hotel and Suites, also asked council not to add the fees.
She concurred there was a lower occupancy rate for hotels and motels in 2024 and that the tax would cost more business.
“Ocean City is pricing itself out as a middle-class resort,” she said, adding those are the people who made Ocean City America’s Greatest Family Resort.
The occupancy tax would prompt guests to stay fewer nights, spending less at local businesses, she said.
“We need to work together to keep this a family destination,” she said.
Michele Gillian, executive director of the Ocean City Regional Chamber of Commerce, said the chamber supports the hotel and motel association and “all the good things they do.” She asked council to reconsider the ordinance and not move forward.
Council voted 7-0 against the ordinance, killing it.
Hotel and motel stays are subject to the state sales tax of 6.625 percent and a 5 percent state occupancy tax. The 3 percent occupancy tax would have been in addition to that.
Hartzell said it was good that the ordinance was amended because “it stimulated conversation” and he was glad council did not go through with it.
– By DAVID NAHAN/Sentinel staff
