REVENUE & EXPENDITURE ASSUMPTIONS
HOTEL IMPROVEMENT DISTRICT ASSESSMENT
Description The City’s hotel improvement district (HID) assessment is a 2 percent assessment applied to the cost of hotel or other lodging stays of less than 30 days. The HID assessment is charged in addition to the City’s base 8 percent hotel tax rate. Starting in FY 2023-24, 75 percent of the proceeds will be designated for the HID special fund in support of the hotel industry and the remaining 25 percent used to support City cultural activities. The City’s hotel improvement district was formed in late 2002 with the approval of area hoteliers. Factors influencing HID revenues include business and leisure travel, new hotels, hotel expansion, and room rate fluctuations. In Irvine, HID revenue is significantly correlated with the level of local business activity. 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. 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.
FY 2023-25 Adopted Budget
55
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