BRISTOL, Tenn. — City leaders are interested how the revenue from Sullivan County’s new hotel/motel tax will be invested.
Last week the Sullivan County Commission approved the tax which adds an additional 3% tax onto Bristol Tennessee’s current 5% occupancy tax, charged on hotel room and other short-term rentals.
City Manager Kelli Bourgeois explained that she is less concerned about the tax and more interested in seeing what the city and Sullivan County can achieve together in the future as partners.
In 2022, the city received more than $527,200 from its occupancy tax.
“Monetarily, it shouldn’t affect us because we still have the ability to continue to charge our tax,” Bourgeois said. “They have to use whatever revenue they receive for tourism or tourism development. So, hopefully, that will help us in that we can partner and do things collaboratively to bolster our tourism, as well.”
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Under Tennessee code, the 2021 law states “revenue received by the county from the tax must be used for tourism purposes.”
Sullivan County’s new hotel/motel tax also levies a 4% occupancy tax on unincorporated Sullivan County, which has never had an occupancy tax, as well as a 1% tax on Johnson City and Kingsport’s hotels and motels that lie within county boundaries.
Sullivan County Commissioner Zane Vanover, who sponsored the resolution, explained that it has less impact on county residents.
“I’m not for any kind of tax at all. But this is the least intrusive type of tax I could possibly think of where someone from outside our area actually comes and pays the tax for us,” Vanover said. “The reason for it, actually, is just to create another stream of revenue for our county. For so long, we’ve been relying on property taxes and sales taxes to fund our government agencies.”
When asked why Sullivan County was imposing a higher occupancy tax on Bristol than on its sister cities Kingsport and Johnson City, Vanover explained that the highest occupancy tax rate that can be set according to Tennessee’s 2021 occupancy tax law is 8%; he pointed out that Kingsport already has a 7% occupancy tax.
“Before we did this resolution, Kingsport was already at seven for their occupancy tax. Bristol was at five, so adding three to the five in Bristol made eight,” Vanover said. “The most we could do at one time was four, which is what we did in the county.”
Vanover highlighted that the main reason why Sullivan County did not have an occupancy tax in the past was because of the law. However, the Tennessee legislature passed a new occupancy law in 2021, which has made it easier for counties in Tennessee to set one up.
“Before the law was changed in 2021, you had to go to our state legislature and get a private act done to allow for an occupancy tax in counties,” Vanover said. “When the law was changed in 2021, it gave that authority to County Commission to do it without having to go to the state legislature and ask for a private act. So it became much easier and that’s why there are so many counties that have one now.”
Vanover also emphasized that under the definition of hotel in the 2021 law, Airbnb’s and other short-term rentals are considered hotels, which means they are also subject to Sullivan County’s new hotel/motel tax.
“This is a way to try to regulate those a little bit and make sure they’re safe, first of all, and try to give them a chance to contribute to our tourism promotion, and hopefully, they’ll have more customers,” Vanover said.
One of the main concerns that Sullivan County had was that the occupancy tax on Bristol, Tennessee, would push visitors towards seeking lodgings in Bristol, Virginia. However, Bristol, Virginia, just raised its own occupancy tax to 13%, effective July 1.
“I don’t think that gives them an advantage in any way,” Vanover said.
With the 2024 arrival of the Hard Rock Casino in Bristol, Virginia, Vanover explained that through the occupancy tax on Bristol, Tennessee, rooms. the county hopes to get ahead of the curb of economic development that will inevitably continue to grow as the Hard Rock Casino settles into Bristol, Virginia.
“That casino it’s a regional facility now. It’s going to affect the entire region,” Vanover said. “We’re just trying to get ahead of the curve a little bit and try to be prepared for future development.”
Bourgeois emphasized that her big concern is that people who would otherwise would visit the Tri-Cities might be put off by Sullivan County’s occupancy tax.
“Hopefully, those new taxes don’t impact people’s decision whether or not the visit here or Kingsport or Sullivan County in general,” Bourgeois said. “That would be the only concern is that it gets to the point where people just decide to go elsewhere, where the tax is lower, or there’s no tax.”
