City of Austin Performance Report 2014-15
Hotel Occupancy Tax Distributions
Measure Description
A Hotel Occupancy
Tax of 15.0 cents per dollar is assessed to hotel guests staying in Austin
hotels, which is collected and remitted by the hotels. The tax applies to traditional
lodging such as hotels, motels, and bed and breakfasts, but also applies to condominiums,
apartments, and houses rented for less than 30 consecutive days. The amount of
revenue received is a function of the number of rooms sold, occupancy levels,
and the room rates.
Of the 15.0 cents
assessed, the State of Texas receives 6.0 cents and the City of Austin receives
9.0 cents. Per City Ordinance, the City’s 9.0 cent collection is distributed as
follows: Convention Center 4.5 cents, Venue Project Fund 2.0 cents, Tourism and
Promotion Fund 1.45 cents, and Cultural Arts 1.05 cents. Hotel Occupancy Tax is restricted by state
law, which strictly governs its uses. Hotel Occupancy Tax collections represent
approximately 60% of the Convention Center’s revenue.
Calculation Method
The amounts depicted in the graph below
represent the City’s distribution of the 9.0 cent collection of Hotel Occupancy
Tax. The taxes are remitted to the City of Austin’s Financial Services
Department, which collects and posts the receipts to the respective funds
according to City Code.
FY 2014-15 Results
The FY 2014-15 goal for this measure was $68.7
million; the Department exceeded the goal with actual tax distributions of $79.4
million, which was a 15.6% increase over the goal.
Assessment of Results
FY 2014-15 distributions were $10.7 million
higher than the target and $11.2 million higher than the actual taxes distributed
in FY 2013-14, setting another new record. With the addition of new hotels the overall
total room nights in the Austin market for FY 2014-15 increased 7% over prior
year. The Hotel Occupancy Tax is dependent upon trends within the leisure and
travel industry, and is therefore volatile in nature. In a strong economy,
increases in distributions can be significant, as seen in recent years. Conversely,
during economic downturns, distributions can drop quickly and substantially.
The downtown Hilton, JW Marriot, and Four Seasons were the top three hotels in
Hotel Occupancy Tax distributions during FY 2014-15.

Next Steps
Indicators within the hotel industry show that
the distributions are projected to increase in FY 2015-16 and FY 2016-17 with
the opening of new hotels. Among them is
the 37-story 1,068-room hotel, The Fairmont Austin, which is projected to open
in 2017. The additional hotel rooms will translate into an increase in tourism
dollars for the Austin economy, which in turn will be reflected in the Hotel Occupancy
Tax distributions. Conventions and trade shows held at the Austin Convention
Center facilities are a mechanism to attract out-of-town visitors to the City
of Austin and to stay in local hotels. The Austin Convention Center partners
with the Austin Convention and Visitors Bureau to attract clients with large
numbers of room night bookings to maximize the economic benefit. Because of the
volatility and the significance of this revenue source to the Convention
Center, collection trends of this tax are very closely monitored.
Contact Information
For more information contact Carla Steffen, Assistant
Director, at (512) 404-4014.