Strengthening Lancaster's Tourism Industry & Broader Economy by Increasing the Excise Tax Paid by Visitors

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Lancaster County has an opportunity to strengthen and expand its tourism industry by building on a broadened brand and taking advantage of changing demographics and the County’s diverse tourism assets. Discover Lancaster believes that increasing the lodging excise tax from 1.1% to 3% is crucial to replenish funds for tourism marketing and promotion. The tax is paid by overnight visitors to County lodging properties—not by County residents or businesses.

Research shows that, in addition to our traditional Amish and farmland attractions, many current and potential visitors are drawn to the county’s array of outdoor activities; dining, food and spirits; arts, music, and culture; varied and unique shopping; small town and urban life; and history. Our diverse attractions match changing tourist demographics. Millennials now outnumber Baby Boomers, and they seek out exactly the kinds of tourism experiences Lancaster County offers. We need to expand our marketing efforts to reach these potential new visitors.

Unfortunately, the county is missing an opportunity to invest properly in our tourism industry. The current formula that funds tourism marketing puts the county at a disadvantage compared to our competitors. Since 2000, a significant portion of our funds for marketing and promotion have been generated by a 1.1% lodging excise tax, a portion (20%) of the 3.9% hotel room rental tax (the balance of which is dedicated to the Lancaster County Convention Center), and the Commonwealth of Pennsylvania.

However, the state reduced funding beginning in 2008 and eliminated it in 2011. In addition, since 2012 Discover Lancaster’s portion of the hotel room rental tax has been reallocated to support the Convention Center and it’s an open question if it will return on a consistent basis. As a result, funding for tourism marketing has fallen from $4.9 million in 2007 to $3.2 million in 2016. We are starting to see erosion in some key tourism metrics—data suggesting future declines in the county’s tourism industry. We risk falling behind competing destinations that have more robust marketing resources.

Increasing the excise tax will restore lost funding for tourism marketing, generating an additional $3 – 3.5 million annually to strengthen one of the Lancaster’s most important economic foundations. Tourism is one of the county’s largest industries, supporting more than 24,000 jobs and generating more than $2.6 billion in annual economic activity. The taxes paid by visitors reduce the tax burden of every county household by almost $1,000 per year. With additional marketing, over the next five years, we project 1.23 million additional visitors, $367 million in additional spending, 438,000 additional room nights, $81 million in additional room revenue, and an average of 550 new jobs per year.

Based on current rates, the change to the excise tax will add about $2.00 to the average overnight hotel cost. Because of the markets from which we draw, this nominal increase in cost should not discourage our visitors from coming. Lancaster’s average hotel rate is at the lower end of the scale of its competitors, so rates have room to grow while remaining very attractive.

Boosting the lodging excise tax is the proven, common, and expected way to support tourism marketing. York, Chester, and 28 other Pennsylvania counties have recently increased their lodging excise tax. The system to collect the tax is already in place, as is Discover Lancaster’s marketing operation that promotes the county. Additional marketing and promotion can be implemented quickly. An increased excise tax will ensure stable, dedicated, and more competitive funding for tourism marketing that benefits every county resident, business, and organization.