Hotel Occupancy Tax Distributions
A Hotel Occupancy Tax of 15.0 cents per dollar is collected and remitted by hotels and is paid by hotel guests staying in Austin 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 receives 4.5 cents, Venue Project Fund receives 2.0 cents, Tourism and Promotion Fund receives 1.45 cents, and Cultural Arts receives 1.05 cents. Hotel Occupancy Tax is restricted by state law, which governs its uses. Hotel Occupancy Tax collections represent approximately 60% of the Convention Center’s revenue.
The amounts for this measure reflect 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.
*Hotel Occupancy Tax distributions include interest.
FY 2015-16 Results
In FY 2015-16, the hotel tax distributions totaled $87.6 million, $8.3 million above the established goal of $79.3 million.
Assessment of Results
FY 2015-16 distributions were $8.3 million higher than the target and $8.2 million higher than the actual taxes distributed in FY 2014-15. With the addition of new hotels, the overall total room nights in FY 2015-16 increased by 3% in the Austin market and increased by 4% in the downtown area over the last year. The Hotel Occupancy Tax is dependent upon trends within the leisure and travel industry, and are therefore, volatile in nature. In a strong economy, increases in distributions can be significant, as seen in the prior years. Conversely, during economic downturns, distributions can drop quickly and substantially. During FY 2015-16, JW Marriot Austin Downtown, Austin Hilton Convention Hotel, and Four Seasons Hotel Austin were the top three hotels in Hotel Occupancy Tax distributions.
Indicators within the hotel industry show that the distributions are projected to increase in FY 2016-17 with the opening of new hotels, including the 1,048-room Fairmont Austin as well as several other hotels. 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.