US hotel stays cost more as cities raise bed taxes

Local tax hikes are reshaping travel costs and influencing traveler behavior

Hotel taxes are rising in many major U.S. destinations, adding significant percentages and nightly fees to room rates. Cities are using these increases to fund tourism initiatives, convention centers, and local programs, while travelers face higher total stay costs and may shift behavior as a result.

Key takeaways

• Widespread increases: More U.S. cities are lifting transient occupancy, bed, or tourist taxes, often pushing total lodging levies above 15%.
• Case in San Diego: A recent court ruling upheld Measure C, allowing increases of up to 13.75% with revenues dedicated to convention center expansion and homelessness programs.
• Large market variation: Cities like Washington DC (15.95%), New York City (~14.75% plus nightly fees), and Las Vegas (~13%) illustrate the wide range of current tax levels.
• Local vs statewide policy: Some states (e.g., California, New York) allow cities to set their own hotel taxes, while others like Hawaii impose both state and county surcharges, leading to some of the nation’s highest combined rates.
• Impact on traveler decisions: Rising taxes are encouraging some guests to consider suburban hotels or alternative accommodations; concerns continue over pricing transparency during online booking.
• Funding rationale: Cities argue the increases support tourism services and local infrastructure without raising resident property taxes.

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