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Hotel Tax-Rate Changes Likely Coming in Several Big Cities

One hike will help fund a convention center rebuild, while another will help build a new football stadium. But one city is actually looking to reduce its levy.

Late April was a popular time for revisiting the hotel tax in several meetings-heavy cities.

First, Nashville got the go-ahead from Tennessee state legislators to raise its hotel-motel tax by one percent, which will bring the total to six percent once Governor Bill Lee signs the bill. Combined with the 9.25-percent state sales tax, individual travelers and meeting groups will soon pay a total of 15.25 percent in tax on every hotel-room bill in Nashville.

According to this article in The Tennessean, Nashville Convention and Visitors Commission CEO Butch Spyridon said the tax increase could generate about $20 million per year if traveler numbers return to 2019 levels. However, the tax increase is earmarked to help fund a new stadium for the city’s pro football team, the Titans. One opposing state legislator commented that “this isn’t a tax increase on [Nashville residents], but on all” in-state and out-of-state visitors.

In Dallas, the city council is seeking to increase the hotel-room tax by two percent to pay for a complete modernization of the Kay Bailey Hutchinson Convention Center. If approved by voters in November, the increase is expected to raise $1.2 billion for the multi-year project. According to this article from Fox4 News Dallas, the Hotel Association of North Texas supports the move. "For years, meeting planners have told us the convention center is subpar compared to others," said Carolyn Dent, managing director for Omni Dallas Hotel. "And we lose out to Houston, Chicago, Atlanta, Orlando, and New Orleans, who offer better, more modern facilities."

If the proposal passes, the tax increase will bring the total levy on a hotel room in Dallas to 15 percent.

And in New York, the city council is considering lowering the occupancy tax rate from 5.875 percent to 2.875 percent for at least two years to speed up the rebound in tourism and business travel. The Hotel Association of New York City and the Hotel Trades Council, which represents workers, are strongly in favor of the proposal. In 2021, the city cut the tax by that amount to help hotels draw more guests, but that was only for 60 days in the summer.

Recent studies have shown that without any changes, New York won’t return to pre-pandemic visitation levels until 2026. More than 5,000 hotel rooms were lost in the city due to hotel closings since early 2020, and most of the 20,000 hotel jobs that were eliminated since that time across all hotels have not returned. New York’s business-travel revenue is down more than 55 percent since early 2020, according to a recent report from the American Hotel and Lodging Association. Only San Francisco has seen a bigger drop in business-travel revenue.

At present, the total tax on a hotel room in New York City is 14.75 percent plus $2 per night. The proposed cut would bring the total rate to 11.75 percent plus $2 per night.

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