Is dormitory-style educational housing that only training-course and conference attendees may use — not the general public — a 'hotel' subject to Texas hotel occupancy tax?

Plain-English summary

A nonprofit (based outside Texas) plans a training center and a dormitory-style residential educational housing facility in Texas for people associated with a union — members, employees, agents, advisors, and community partners. It asked whether the Educational Housing is a "hotel" for hotel occupancy tax purposes.

The ruling: No. Under Section 156.001(a), a hotel is "a building in which members of the public obtain sleeping accommodations for consideration." The Educational Housing is not open to the public, so it isn't a hotel. The controlling facts:

• Only union members and invited affiliates may stay, and only while attending a training course or conference.
• Members may not stay unless they are also attending a course/conference; family members may not stay unless they too attend.
• Guests may arrive only one day before and stay only one day after the program; it is simple, single-tenant dorm housing.

Because the public cannot obtain accommodations there, it fails the hotel definition. The Comptroller relied on prior guidance (STAR 200501966L, Jan. 19, 2005) that higher-education lodges limited to students, faculty, staff, and alumni were not hotels because they were not available to the public — so no hotel occupancy tax was due.

What this means for you

Colleges, nonprofits, retreat centers, and conference facilities with on-site lodging

Whether your lodging is a taxable "hotel" turns on public access, not on whether it looks like a dorm or charges a fee. If accommodations are genuinely restricted to a defined group tied to a program (and not offered to the general public), the facility is not a hotel and stays are not subject to hotel occupancy tax. Conversely, opening rooms to the general public — even occasionally — can flip a facility into "hotel" status (compare the fractionally owned homes that were held to be hotels because they could be rented to the public).

Documentation

Keep your access restrictions in writing (who may stay, the requirement to attend a program, limits on family and on arrival/departure days). Those restrictions are exactly what the Comptroller looked to here.

Common questions

Q: Why isn't this dorm a hotel even though guests pay to stay?
A: Because members of the public can't obtain accommodations there — only program attendees may stay. The hotel definition in Section 156.001(a) requires public access.

Q: Would occasional public rentals change the answer?
A: Potentially yes. Public availability is the key factor; a facility open to the public for overnight stays can meet the hotel definition.

Q: Does charging a fee or invoicing attendees make it a hotel?
A: No. The ruling turned on public access, not on how the stay was billed (whether bundled in the course fee or invoiced separately).

Q: Can another organization rely on this ruling?
A: No. A Texas private letter ruling binds the Comptroller only as to the requesting taxpayer and its specific facts.

Citations and references

• Tex. Tax Code § 156.001(a) — defines "hotel" as a building where members of the public obtain sleeping accommodations for consideration; the public-access requirement the facility failed to meet.
• Tex. Tax Code § 156.051(a) — imposes the hotel occupancy tax when a person stays in a hotel.
• Tex. Tax Code § 156.053 — requires the operator of a hotel to collect the tax.
• STAR 200501966L (Jan. 19, 2005) — prior guidance that higher-education lodges limited to students, faculty, staff, and alumni are not hotels because not available to the public.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=HOT
• Opinion: https://star.comptroller.texas.gov/view/201807038L

Original ruling text

July 17, 2018

RE: Private Letter Ruling No. 20171108135756

Dear **:

We issue this private letter ruling in accordance with Rule 3.1 (Private Letter Rulings and General Information Letters).[ENDNOTE 1] We are responding to your requests dated Nov. 8, 2017 and Dec. 19, 2017. Detrimental reliance relief is provided in accordance with Rule 3.10 (Taxpayer Bill of Rights).

You requested guidance on the statutory definition of “hotel” for purposes of hotel occupancy tax obligations.

Facts Presented

** (Taxpayer), is a Texas nonprofit corporation located OUTSIDE TEXAS, that provides and engages in educational opportunities. Taxpayer plans to open a training center (Center) and residential educational housing facility (Educational Housing) in COUNTY, Texas.

At the Center, Taxpayer will provide training and educational services to individuals associated with the ** (Union), including union members, employees, agents, advisors, and local union members. The Union or its affiliates will select the attendees and pay all costs associated with the training opportunities.

Taxpayer will also host educational conferences at the Center. The educational conferences will be invitation only. Attendees and facilitators of the conference will be associated with the Union as members, employees, agents, advisors, and specific community partners.

All attendees and facilitators of the training courses and educational conferences may stay at the Educational Housing. However, the Educational Housing will not be open to the public for overnight stays. Union members and affiliates may not stay at the Educational Housing unless they also attend or facilitate a training course or conference during their stay. Educational Housing guests may only arrive one day prior to and stay one day past the training or conference. Attendees’ family members may not stay at the Educational Housing unless they also attend the training course or conference. The Educational Housing will be simple, dormitory-style housing for single tenants only.

The Educational Housing is not yet operational and does not have any existing contracts to share. Taxpayer instead explained that the fee to attend a training course, including a stay at the Educational Housing, will be paid for by Union, its affiliates, or the sponsoring union entity. However, Taxpayer will individually invoice those attending an educational conference and staying at the Educational Housing.

Question, Ruling, and Analysis

Our restatement of your question is shown below, followed by our response and analysis.

Question: Is the Educational Housing considered a “hotel” for hotel occupancy tax purposes under Section 156.001(a) (Definitions)?

Ruling: No. The Educational Housing is not considered a “hotel” for hotel occupancy tax purposes under Section 156.001(a).

Analysis:

Section 156.001(a), in part, defines hotel as a building in which members of the public obtain sleeping accommodations for consideration. Section 156.051(a) (Tax Imposed) imposes the hotel occupancy tax when a person stays in a hotel. A person owning, operating, managing, or controlling a hotel must collect the hotel occupancy tax due on the amount paid for a room in the hotel. Section 156.053 (Collection of Tax).

The Comptroller previously examined whether a facility met the definition of a “hotel” based on the public’s ability to access the facility. The Comptroller determined that lodges at an institution of higher education offered to students, faculty, staff, and alumni were not a hotel because the lodges were not available to the public. Therefore, the institution of higher education was not required to collect hotel occupancy taxes on the rental of its lodges. STAR Accession No. 200501966L (Jan. 19, 2005).

The Educational Housing is not a “hotel” for hotel occupancy tax purposes. It is not open to the public and Taxpayer only allows Union members and invited affiliates to access the Educational Housing when attending a training course or conference.

STAR documents cited can be found on the Comptroller’s State Tax Automated Research (STAR) system. The Texas Tax Code, Texas Administrative Code, and the STAR system are accessible at www.comptroller.texas.gov/taxes/.

If you have questions about this private letter ruling, please email us through our website at https://comptroller.texas.gov/web-forms/tax-help/ and reference Private Letter Ruling No. 20171108135756.

Sincerely,

Tax Policy Division – Indirect Taxes

Texas Comptroller of Public Accounts

ENDNOTE

[1] Unless otherwise indicated, all references to “Section” are to the Texas Tax Code, and all references to “Rule” are to Title 34 of the Texas Administrative Code.