REVENUE & EXPENDITURE ASSUMPTIONS
HOTEL TAX
Description Hotel tax (also known as transient occupancy tax or TOT) is an 8 percent tax applied to the cost of hotel or other lodging stays of less than 30 days. The recovery of the hotel industry is driven by leisure travel from domestic markets, as well as smaller groups and events. Factors influencing hotel tax revenues include business and leisure travel, new hotels, hotel expansion, and room rates. Hotel taxes account for 7 percent of projected General Fund resources. Trend The hotel industry is projected to recover by 2023, reaching or surpassing the pre-pandemic levels of occupancy as travel confidence improves and demand rebounds. Hotel occupancy is slowly recovering to pre-pandemic levels and future growth will be dependent upon consumer confidence and the overall strength of the economy. The City added one new hotel in FY 2021-22, with four new hotels opening within the next five years. Outlook The hotel industry in 2023 is expected to be dynamic and innovative, with several trends and changes shaping the future of hospitality. Hotels are offering flexible and comfortable workspaces for guests and locals and focusing on the health and well-being of their guests, offering services such as fitness, spa, and yoga. Hotels are becoming more environmentally conscious and adopting green practices such as renewable energy, water conservation, waste management and local sourcing. For FY 2023-24 and 2024- 25, hotel tax revenue is estimated at $17.7 million and $19.1 million.
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FY 2023-25 Adopted Budget
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