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.

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.

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.

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.

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.

For more information contact Carla Steffen, Assistant Director, at (512) 404-4014.

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