REVENUE AND 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. Factors influencing hotel tax revenues include business and leisure travel, new hotels, hotel expansion, and room rate increases. In Irvine, hotel tax revenue is significantly correlated with the level of local business activity. Hotel taxes account for 8.3 percent of projected General Fund resources. Trend Irvine hotel revenues have increased over the past five years with the opening of seven new hotels. The Courtyard by Marriott Irvine Spectrum opened in FY 2014-15, the Hilton Garden Inn opened in FY 2015- 16, the Homewood Suites and AC Hotel opened in FY 2016-17 and the Hyatt House, Marriott Irvine Spectrum, and the Hampton Inn opened in FY 2017-18. Orange County occupancy rates in 2018 were 79.7 percent despite increasing room rates and the addition of new rooms. Outlook In FY 2019-20 and FY 2020-21, year-over-year growth in hotel tax is projected to be 4.5 and 1.2 percent, respectively. Additional future growth is expected as a result of three new hotels, The Stay Bridge (FY 2019-20), Townplace (FY 2021-22), and Landmark (FY 2023-24) hotels are anticipated to open. The anticipated growth of an additional 1.0 million passengers traveling through the John Wayne Airport by 2021 will further support this projected growth. According to the Chamber of Commerce, hotels will continue to generate revenues that reflect the robust business climate in Irvine and the addition of new hotels will likely hold occupancy growth rates relatively flat as supply meets demand. However, room rates are expected to show continued strength among all hotels.
FY 2019-21 Proposed Budget
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