Monday, July 22, 2024

Room occupancy tax: how tourism helps with more than just local business

Room occupancy tax from hotels, motels, and vacation rentals help fund local projects (Port City Daily photo/BEN SCHACHTMAN)
Room occupancy tax from hotels, motels, and vacation rentals help fund local projects (Port City Daily photo / BEN SCHACHTMAN)

WILMINGTON — Tourism is a large part of the economy in New Hanover County. From the beaches to downtown Wilmington, the tiny county has a lot to offer. When visitors come to New Hanover County, they not only help by visiting local restaurants and stores, but they also help contribute to help renourish beaches and promote tourism.

All of this is provided through the county’s room occupancy tax (ROT), which is a tax paid by visitors to the county and its municipalities, not by residents.

“Room occupancy tax is a tax paid on short-term rental accommodations.  Anyone who rents a room, lodging or accommodations, which is typically a hotel, motel, or inn but can also be a rental home, corporate housing, or similar place, for less than 90 days must pay room occupancy tax on the gross receipts of the rental,” New Hanover County’s Chief Financial Officer Lisa Wurtzbacher said.

The tax money goes to fund a number of projects depending on where the room being rented is located and is a 6 percent of the gross value of the stay in all of the districts within the county.

“In New Hanover County, the room occupancy tax is used to pay for coastal storm damage reduction, tourism promotion and activities as well as the Wilmington Convention Center,” Wurtzbacher said.

What goes where?

The distribution of ROT funds might seem convoluted, but New Hanover County makes it easy to track who gets what.

“The county’s Finance Department is responsible for collecting room occupancy tax for the entire county and distributes the money according to North Carolina General Statutes,” Wurtzbacher said.

Wrightsville Beach, Kure Beach, Carolina Beach, the City of Wilmington, and New Hanover County are the main districts, but there is also a Wilmington Convention Center District within the city limits.

In the unincorporated portions of the county, “The first 3 percent collected will be distributed with 60-percent for beach nourishment. The remaining 40 percent is to be used by the TDA (Tourism Development Authority) to promote travel and tourism throughout New Hanover County … The additional 3 percent collected in the unincorporated area will be distributed for beach renourishment,” according to New Hanover County’s website.

Within the City of Wilmington, any lodging within the convention center district has all 6-percent of taxes directed to the convention center.

Outside of the convention center district, “The first 3 percent collected will be distributed at 60 percent for beach nourishment and the remaining 40 percent is to be used by the TDA to promote travel and tourism throughout New Hanover County … The additional 3 percent collected will be used exclusively for the convention center,” according to the tax website.

In all three beach municipalities, according to New Hanover County, “The first 3 percent collected will be distributed at 60 percent for beach nourishment and the remaining 40 percent is to be used by the TDA to promote travel and tourism throughout New Hanover County … The additional 3 percent collected in each individual beach community is dedicated to establishing two funds each to be used exclusive for that beach.”

The two separate funds include a fund used to promote travel and tourism, while the second fund is for TDA approved tourism-related expenditures.

The ROT plays a role in providing for the local economy, which is part of the reason the issue of short-term rentals has been a topic of discussion not only in Wilmington, but other municipalities across the state. At the end of each month, owners are supposed to fill out a room occupancy tax report, and submit it to the county, Wurtzbacher said.


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