Last July, the PA Tourism & Lodging Association had one of its biggest legislative victories in recent years with the passage of Act 39 of 2005.
After suffering decades of steady decreases in discounts for wholesale alcohol purchases, PTLA's persistent lobbying paid off with the inclusion of provision in Act 39 that states all Pennsylvania hotels with liquor licenses will receive a 10 percent discount on their purchases on wine and spirits instead of the previous seven percent, effective September 4, 2005.
Hotels can get wholesale discounts on many food items like bread, meats and dairy, because the businesses buy bulk quantities of these goods. They can negotiate a better price, or take their business to a different supplier.
That premise doesn't hold true when it comes to the purchase of alcohol beverages in the Commonwealth. Unlike many other states, Pennsylvania regulates alcohol sales through the Liquor Control Board. Taxes on sales of alcohol are a significant portion of the State's general revenues.
Since liquor licensees were not able to shop around for alcohol supplies, the State long ago created a discount for wholesale purchases. Initially, hotels received a 16.67 discount on wine and spirits. It was then reduced to 12.5 percent in the 1980s, and finally to only seven percent in 1991. Alcohol prices, however, went up significantly in the past 15 years.
Because in recent years the LCB has been bringing in record levels of revenue, PTLA recognized it was the right time to argue for a correct wholesale price discount. The Association started working to increase the discount after its Board of Directors took a formal position on this issue in December 2001.
Act 39 has had a positive impact on the bottom line of hotels with a liquor license saving them thousands of additional dollars. For example, if a hotel is spending $100,000 per year on alcohol, the additional savings will be $3,000.00.
Although Act 39 is a great first step in reinstating a correct wholesale relationship with the LCB, PTLA will continue to lobby for further increases in the wholesale discount for it's members.
