Economist Writing Every Day

Every year my family travels from SW Florida to the mid Atlantic area. Without stops it takes 16-17 hours. With small children, it’s definitely a two day trip. We find that they handle it better if we leave super early, take a longer leg on the first day, then stop at a hotel midway and get the kids in the pool to help burn off some energy. We also rent a suite whenever possible.

We’ve made this trip many times. I use the Bonvoy app which is for Marriott hotels. We even have a particular hotel that we prefer: The Fairfield Inn in Santee, SC. It’s clean, spacious, the employees are welcoming and kind, the breakfast includes cooked items that aren’t bad, it’s within walking distance of a grocery store, and the price isn’t bad at all. Fairfield Inns are generally a great price per quality…. But not in Georgia.

I’ve stopped at several Fairfield Inns in GA: near Atlanta, near Savannah, and we’ve been disappointed. Every. Single. Time. All the margins on which the Fairfield in Santee is great are the same margins on which Georgia ones are poor. I’m sure that there is not just one reason. Maybe there is a bad regional manager or bad assistant to the regional manager. That’s not my primary hypothesis though.

I think that the answer is taxes. South Carolina has a 5% sales tax and another 2% tax added to accommodations. A two queen bed room is $156.07 pretax and then $167 after tax.

Go across the border to Georgia and you face a 6% state sales tax, a $5 per night state hotel fee, and will also face a local hotel occupancy tax. Across the border from Santee it’s 6%. The same two queen bed room is $157.14 pretax and then $181 after tax. Importantly, these are only the taxes that face the consumer. Since poor economic policies are correlated, there’s good reason to think that the SC Fairfields have higher net income too. For example, the corporate income tax in SC is 5% and in Georgia it’s 5.75%. Similarly, the individual income tax is 3% in South Carolina and 5.5% in Georgia. To the consumer, it’s no surprise that the price per quality in South Carolina is lower than the price per quality in Georgia. The cost per quality in South Carolina is lower too.

Whereas I previously thought that I just had bad draws from the Georgia Fairfield urn, the pattern of poor performance with a 100% rate has become overwhelmingly convincing. The higher taxes reduce the profits that hotels take home, increase the price that consumers pay, and reduce the quality of hotels per dollar spent.

I don’t know if I can entirely avoid staying overnight in Georgia. I know that I’m done staying at Georgia’s Fairfields. Because the state occupancy tax is a flat amount, it’s a lower proportional burden as one moves up the quality ratings. I’ll try staying at Sheratons in the future and see if that’s any less disappointing or provides a better quality per dollar.