Suffolk hotel tax revenue, up 53%, to fund tourism promotion, convention center

Revenue from a tax on hotel stays in Suffolk County — money that is used to promote the region as a tourism destination —  increased by 53% after the county nearly doubled the tax last year.

Collections from the 5.5% per-night tax on hotel stays and homeshare rentals brought in $21,555,345 in 2023, up from $14,088,391 the previous year, when the tax was 3%.

The Suffolk County Legislature approved raising the tax last April, largely to increase the amount of money given to a regional tourism agency and to provide a stable revenue source for a planned convention center that would be Long Island's first. The tax increase, signed by former County Executive Steve Bellone, went into effect in June and is levied in addition to Suffolk’s 8.623% sales tax.

The Montauk ZIP code brought in the most hotel-motel tax revenue: $4,653,241 in 2023, up from $3,503,701 the previous year.  

While most of the revenue comes from the East End, where the highest-priced hotels are located, other top ZIP codes include Melville, with $1,177,323, up from $859,241 in 2022; and Hauppauge, with $1,047,835, up from $642,184.

Here’s how the additional funds will be used:

Tourism promotion

The county has raised the amount of annual funds it provides to the nonprofit tourism promotion group Discover Long Island from $2 million to $6 million. The additional funds allowed the organization, whose entire annual revenue was $3.5 million in 2022, to expand its marketing and hire more support staff, according to executive director Kristen Reynolds.

“We have been grossly underfunded for decades,” Reynolds said. “And so we have a lot of catching up to do.”

The organization plans to add marketing in cities like Philadelphia, Washington, D.C., Boston and potentially in “long-haul” markets like Atlanta. 

“The goal is always to have the visitors that are going to stay longer and spend more money as opposed to day-trippers and people that come and have more of a burden on your infrastructure or your quality of life," she said.

Convention center

Of the revenue collected, $17,250,000 is committed to various agencies and regions, including the $6 million to Discover Long Island, $3.25 million to Suffolk parks and $1.25 million to the Vanderbilt Museum, Mansion and Planetarium in Centerport. The remaining money is allotted for the recently created Suffolk County Infrastructure Fund, which will be used to build a convention center in Ronkonkoma, part of a $2.8 billion redevelopment project known as Midway Crossing.

“It is a way for Long Island to get into the association and convention business, which we've never been able to before, while other much smaller communities like Syracuse and Albany and Hartford and Buffalo have convention centers and attract a sizable amount of business,” said Mitch Pally, chairman of the Midway Crossing project’s nonprofit local development corporation board and chairman of the board of Discover Long Island.

The convention center is expected to cost about $300 million, and the tax revenue will fund construction bond payments, Pally said. Officials are hoping construction will begin in 2025, he said.

A December study from global consulting firm HVS, commissioned by the county and Discover Long Island, estimates the convention center could generate $88.6 million in annual economic impact.

Heywood Sanders, a professor at the University of Texas at San Antonio who has studied convention centers for 25 years, said consultants often overestimate their economic benefit. He noted the HVS study estimated that 150,000 of the 259,000 annual attendees would be for consumer shows, which often do not attract out-of-town visitors.

“It doesn't necessarily play out the way folks say it will,” Sanders said. “It is not uncommon for convention centers to do, in terms of hotel room nights or convention attendance, less than half of the business that consultants forecast.”

More houseshare rentals paying 

Suffolk last year began contracting with international government software provider Granicus to find people who rent homes on Airbnb and other websites and notify them of the tax, which also applies to vacation home rentals. The software uses A.I. technology and employees to determine which properties are available for rent and notifies the property owner that they must pay the tax.

As a result, Suffolk County Comptroller John Kennedy said the number of owners paying the tax has increased from 2,400 to about 3,400.

Kennedy, who said his office does not have the staff to find vacation home rentals and enforce payment of the tax, said there may be less expensive solutions than Granicus' $269,000 annual fee for the service. 

Granicus representatives did not immediately respond to a request for comment.

By Vera Chinese

vera.chinese@newsday.com@VeraChinese

Vera Chinese joined Newsday in 2017 after working as an editor for the East End lifestyle publication northforker and a general assignment reporter for the New York Daily News.