Why dining out costs more in parts of Virginia
Add Axios as your preferred source to
see more of our stories on Google.
Illustration: Sarah Grillo/Axios
A new report from the state's restaurant and hotel lobbying group is out with a rare and comprehensive overview of the additional taxes levied on hospitality businesses in Virginia.
Why it matters: These taxes are creating a challenging environment for local business operators — and they're on the rise, the report found.
State of play: The Virginia Restaurant, Lodging & Travel Association (VRLTA) reviewed meals, transient occupancy (aka hotel) and sales tax rates charged by all 133 localities in Virginia.
- Its goal was to show the prevalence of additional taxes levied by local governments on restaurant meals and hotel stays.
- And to illustrate the wide variation in tax rates across the state.
What they found: In the last decade, around 43% of Virginia localities levied or raised at least one of these taxes.
- The Shenandoah Valley and Coastal Virginia regions have the highest concentration of the additional hotel and meals taxes, respectively.
- Cities are overwhelmingly more likely to enact the taxes than counties.
Be smart: Virginia localities can adopt and levy taxes on meals and hotel stays on top of the state's 5.3% sales tax.
- They can also opt to charge more than the state's 5.3% rate — and nearly one-third of all localities in Virginia do, VRLTA found, with some as high as 7%.
- All of those are added onto a customer's bill, meaning the prices diners and lodgers pay can vary widely from one county to the next.
Threat level: The tax increases come at an especially challenging time for the state's restaurant and travel industries, VRLTA notes.
- Restaurants specifically are contending with rising labor, rent and food costs, and diners are pulling back on dining out because of changing habits and budget worries.
- Meanwhile, local governments are looking to restaurants and hotels as "convenient targets" for post-pandemic additional revenue, the report found.
What they're saying: "Virginia's hospitality and tourism businesses are operating in an increasingly tenuous environment," VRLTA president Eric Terry said in a statement.
By the numbers: Bristol and Norton, in Southwest Virginia, have the highest meals tax rate in the state at 10% and 8.5%, respectively.
- They're followed by Appomattox and Covington, which each levy an 8% meals tax.
- At 7.5%, Richmond and six other cities, including Hampton, Portsmouth and Emporia, have the fourth highest meals tax rate.
- Bristol also has the highest hotel tax at 15%, followed by Stafford and Emporia (11%).
The bottom line: Virginia's hospitality tax map is increasingly fragmented — and for restaurants and hotels, where you operate can matter almost as much as how well you do.