MT gov confronts Travelocity over tax dispute; company says it wants to help promote state

By Matt Gouras, AP
Tuesday, September 14, 2010

MT governor hammers Travelocity over tax dispute

BUTTE, Mont. — Gov. Brian Schweitzer publicly hammered Travelocity leaders Tuesday over a growing tax dispute — the same day the online travel reservation company announced a program aimed at promoting the state.

The Internet travel giant rolled out sponsorship of Montana festivals and highlighted its promotion of the state at the Montana Economic Development Summit in Butte on Tuesday.

Schweitzer took some of the wind out of the announcement by publicly confronting company leaders earlier in the day on the tax dispute. The governor has been increasingly critical of the online travel booking industry for shorting the state on the bed tax for hotels, and fighting other states in court over the issue.

“You have an obligation to pay that tax to Montana and make your books available to Montana,” Schweitzer told the head of Travelocity’s parent company. “This bed tax is pretty straightforward.”

Schweitzer extracted a promises of a very quick meeting on the tax issue, perhaps Wednesday with state tax officials.

Sabre Holding’s CEO Sam Gilliland said he expects the issue can be resolved in meetings with Schweitzer’s staff. He said the company believes it has been winning its disputes elsewhere on the issue, and is seeking fewer local bed taxes because of the difficulty in tracking them all.

“We are right on the issue of these hotel taxes,” he told the governor.

Schweitzer said the state has been seeking information from the Internet booking industry with little response. Travelocity countered that it has responded to all letters it has received from Montana.

Gilliland told Schweitzer, during a somewhat tense meeting, that company officials would be in Helena the following day — as long as planes weren’t full of tourists Travelocity was sending to Montana.

“Let’s not correspond through letters. A lot can be misunderstood,” Gilliland said.

Schweitzer, like other state and local government leaders, believes that the bed tax should be paid on the full retail amount charged by the Internet companies. He argues those companies are wrongly paying the tax just on the wholesale portion of the room cost that is sent to the local hotel.

The executive diplomatically dealt with the issue later in a speech to hundreds of business leaders, government officials, aspiring entrepreneurs and others gathered at the summit. The ongoing tax issue should not get in the way of partnerships promoting travel in Montana, he said.

“It is critical that we get these policies right so that we can continue to reap the mutual benefits of our partnership,” Gilliland said in the speech.

Travelocity has seen a big spike in bookings to Montana since it recently launched promotion highlighting tourism events and destinations in the state, Gilliland said. The company also announced a sponsorship of the folk festival in Butte, along with a $10,000 donation, and new plans to showcase more Montana events next year, such as the Miles City Bucking Horse Sale.

Gilliland used his podium spot to thank another state leader for helping set up the partnership.

“The person who has been our steadfast partner in this is U.S. Sen. Max Baucus,” Gilliland said. “Through the reach of Travelocity we are showcasing Montana to the people of the world everywhere.”

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