Lodging Industry Overview
Since room sales generate lodging tax revenues, an overview of hotel market trends provides insight into the industry’s current and future fiscal impacts. As documented in our 2024 HVS Lodging Tax Study, the national lodging market has experienced recent growth in average daily room rates and revenue per available room. However, occupancy levels have remained relatively flat. The Average Daily Room Rate (“ADR”) represents the average revenue earned for each room rented in a hotel. Revenue per available room (“RevPAR”), the product of ADR and occupancy rate, is a standard industry metric that combines the effects of occupancy and room rates on overall revenue performance. ADR and RevPAR increased in 2024 but has seen slower growth through the first eight months of 2025 compared to the same period in 2024. The figure below compares year-over-year growth in the national lodging market from 2023 through August 2025.
National Lodging Market Figures From 2023-2025
Source: STR Global
Source: STR Global
Occupancy levels have declined in early 2025 compared to the same period in 2024, with ADR growth also slowing due to reduced leisure travel and greater consumer price sensitivity. Preliminary 2025 data through August suggests minimal RevPAR growth, reflecting weaker travel sentiment across many markets, particularly among international travelers, despite modest gains in ADR. The figure below illustrates year-over-year RevPAR trends for the top 25 major U.S. markets.
Top 25 US Lodging Markets Year-Over-Year Growth of RevPAR
Source: STR Global
The strength of RevPAR growth varies widely across major U.S. markets. Since 2023, most markets have experienced gains, although Las Vegas and Houston saw notable declines in early 2025 compared to the same period in 2024. In contrast, San Francisco, Orlando, and Tampa recorded some of the strongest growth in early 2025, driven by warm-weather demand and a steady calendar of large-scale events. Markets such as Washington, D.C., New York, and Chicago—each supported by strong convention business and diverse visitation drivers—posted some of the most robust growth in 2024. Convention and group demand have remained resilient, with many destinations reporting solid attendance and healthy booking activity through 2025. Overall, however, year-to-date data indicate that national RevPAR growth is slowing significantly and may stagnate in 2025.
Higher operating costs and unfavorable credit market conditions continue to slow the development of new lodging supply. With lower RevPAR growth and limited new supply, lodging tax revenue growth is likely to slow in most lodging markets in 2025 and 2026.
Higher operating costs and unfavorable credit market conditions continue to slow the development of new lodging supply. With lower RevPAR growth and limited new supply, lodging tax revenue growth is likely to slow in most lodging markets in 2025 and 2026.
Economic Uncertainty
This report was prepared during a period of significant uncertainty, marked by multiple changes in U.S. policies that have impacted both the domestic. and global economies. Any subsequent change to these perspectives or information could affect the future growth of lodging tax revenues.
In March and April 2025, the U.S. markets exhibited a notable degree of volatility, primarily due to the policies of the current U.S. administration. Since May, markets have recovered and moved to new highs, primarily driven by investments in AI and related technology infrastructure. Renewed announcements surrounding tariffs and litigation over the legality of the tariffs have created widespread uncertainty surrounding how the U.S. and global economies may respond. Areas of concern include additional or new supply-chain issues, which, combined with inflation, would further increase the cost of doing business and continue to impact the pipeline for new development. The federal government shutdown (which is ongoing as of this writing), federal government layoffs, and the potential for private-sector cutbacks could also affect domestic travel, including both transient and group activity. Moreover, the implementation of the U.S. government’s immigration and visa policies may result in a shortage of hospitality workers.
Geopolitical concerns have influenced global travel to the US. Tourism Economics has forecast an 8.2% decline in international overnight arrivals to the US in 2025. Cities with heavy reliance on Canadian travel are most affected, as inbound travel from Canada has declined by 25% as of July 2025.[1]
Until more clarity emerges, the near-term outlook remains uncertain due to the factors mentioned above. The possibility of increased inflation, rising unemployment, and a recession remains a topic of concern. Slower growth and lower levels of new job creation are considered the most likely outcomes. Over the long term, the hospitality industry has proven to be extraordinarily resilient following past “shock” events and downturns such as 9/11, the Great Recession, and the COVID-19 pandemic. Despite temporary declines, the industry’s performance has consistently recovered and continued to grow. Thus, we are confident the industry will prove to be similarly resilient following the current period of uncertainty.
Until more clarity emerges, the near-term outlook remains uncertain due to the factors mentioned above. The possibility of increased inflation, rising unemployment, and a recession remains a topic of concern. Slower growth and lower levels of new job creation are considered the most likely outcomes. Over the long term, the hospitality industry has proven to be extraordinarily resilient following past “shock” events and downturns such as 9/11, the Great Recession, and the COVID-19 pandemic. Despite temporary declines, the industry’s performance has consistently recovered and continued to grow. Thus, we are confident the industry will prove to be similarly resilient following the current period of uncertainty.
Labor Force
Employment in the hospitality and leisure sector has steadily expanded in recent years, reaching stable unemployment levels by 2023 and continuing through 2025. The graph below compares the number of employees in hospitality with the unemployment rate.
Hospitality and Leisure Sector Employment (Total US)
Source: Bureau of Labor Statistics
Source: Bureau of Labor Statistics
Employment in the hospitality and leisure sector has shown steady growth in recent years, and unemployment has remained below 6% through 2025. However, the total number of employees in the sector has begun to stagnate.
Imposition of Lodging Taxes
Lodging taxes are typically ad valorem taxes (levied as a percentage of value) on short-term[2] overnight stays at hotels, motels, bed-and-breakfasts, and other lodging accommodations. Lodging taxes levied by state and local governments share common characteristics but are known by various names, including hotel occupancy tax, hotel-motel tax, room tax, bed tax, transient occupancy tax, tourism improvement tax, and others. States authorize the imposition of lodging taxes, except in home rule cities.[3] States may tax lodging as a part of a general sales and use tax, a specific lodging tax, or both. For most lodging taxes, state legislation defines the tax base, determines who is exempt from the lodging tax, and establishes collection procedures. State, county, and local governments also impose lodging taxes, which may distribute tax revenues to their general, special revenue, or debt service funds. In many cities, state and municipal governments have formed special districts to levy additional lodging taxes on hotels within a defined geographic area. Different districts within a city may have varying rates of lodging taxes. Certain state and local governments also impose excise taxes on lodging at a fixed amount per unit of sale, such as a $1.00 per-room-night fee for furnishing a hotel room.
From a political perspective, lodging taxes may be easier to impose than other taxes because visitors who use lodging accommodations are not constituents of the local municipalities. Typically, hotel operators collect the tax from guests and receive a small administrative fee of one or two percent of collections.
While the tax's legal incidence may fall on the consumer, the economic burden of the lodging tax is shared by both lodging providers and their guests. A lodging tax raises the price of lodging accommodations. Depending on the elasticity of the supply and demand for lodging, the hotel manager may be unable to increase its room rates enough to compensate for paying the full amount of the tax. Since the elasticity of supply and demand changes depending on market conditions, the true incidence of a lodging tax varies as market conditions change. This study does not attempt to estimate the economic incidence of lodging taxes.
Hotel owners are often willing to cooperate with local governments to impose lodging taxes dedicated to tourism promotion and the construction of convention centers. For hotel owners, tourist-oriented public facilities and advertising serve as drivers of room demand. All hotels in a given market can benefit from programs that bring tourists and convention attendees to a city. Sponsoring these types of programs would be prohibitively expensive for any individual hotel. In the case of convention centers funded by a lodging tax, the hotels and individuals who benefit from the center pay for its construction and maintenance. Municipalities seek to benefit from visitor spending and the associated tax revenue generated by convention centers. By imposing lodging taxes, those who benefit pay for advertising, marketing, and sales efforts funded by lodging tax revenue.
Some states, particularly those with large tourism industries, prevent municipalities from depositing hotel tax revenue into their general funds. For example, Florida allows only a series of special-purpose taxes for tourist development. Texas requires local transient occupancy taxes to fund convention center development or tourism promotion.
Since the 1970s, lodging taxes have become commonplace across the country. Of the 150 largest U.S. cities examined in this study, more than 120 impose a dedicated tax, and all collect some form of taxation on hotel room revenue. In small suburban cities and major tourist destinations, lodging taxes have become a significant source of funding for economic development initiatives. This study aims to survey hotel tax implementation nationwide, providing information for those seeking to compare the structure and revenue capacity of lodging taxes across diverse markets.
From a political perspective, lodging taxes may be easier to impose than other taxes because visitors who use lodging accommodations are not constituents of the local municipalities. Typically, hotel operators collect the tax from guests and receive a small administrative fee of one or two percent of collections.
While the tax's legal incidence may fall on the consumer, the economic burden of the lodging tax is shared by both lodging providers and their guests. A lodging tax raises the price of lodging accommodations. Depending on the elasticity of the supply and demand for lodging, the hotel manager may be unable to increase its room rates enough to compensate for paying the full amount of the tax. Since the elasticity of supply and demand changes depending on market conditions, the true incidence of a lodging tax varies as market conditions change. This study does not attempt to estimate the economic incidence of lodging taxes.
Hotel owners are often willing to cooperate with local governments to impose lodging taxes dedicated to tourism promotion and the construction of convention centers. For hotel owners, tourist-oriented public facilities and advertising serve as drivers of room demand. All hotels in a given market can benefit from programs that bring tourists and convention attendees to a city. Sponsoring these types of programs would be prohibitively expensive for any individual hotel. In the case of convention centers funded by a lodging tax, the hotels and individuals who benefit from the center pay for its construction and maintenance. Municipalities seek to benefit from visitor spending and the associated tax revenue generated by convention centers. By imposing lodging taxes, those who benefit pay for advertising, marketing, and sales efforts funded by lodging tax revenue.
Some states, particularly those with large tourism industries, prevent municipalities from depositing hotel tax revenue into their general funds. For example, Florida allows only a series of special-purpose taxes for tourist development. Texas requires local transient occupancy taxes to fund convention center development or tourism promotion.
Since the 1970s, lodging taxes have become commonplace across the country. Of the 150 largest U.S. cities examined in this study, more than 120 impose a dedicated tax, and all collect some form of taxation on hotel room revenue. In small suburban cities and major tourist destinations, lodging taxes have become a significant source of funding for economic development initiatives. This study aims to survey hotel tax implementation nationwide, providing information for those seeking to compare the structure and revenue capacity of lodging taxes across diverse markets.
Revenues from Lodging Taxes
While a relatively small share of revenue for state and local governments, lodging tax revenues have a significant impact on the tourism economy. Lodging taxes support tourism marketing, the repayment of debt for tourism-related projects, and general fund purposes. Most destination marketing organizations rely primarily on lodging taxes to support their operations, which were decimated during the pandemic. Lodging tax revenues are pledged to support roughly $1.3 billion in outstanding municipal debt.[4]
Before the onset of the crisis, during the fiscal year 2019, the 25 major US markets generated approximately $3.6 billion in lodging tax revenue, as shown in the figure below.
Before the onset of the crisis, during the fiscal year 2019, the 25 major US markets generated approximately $3.6 billion in lodging tax revenue, as shown in the figure below.
Lodging Tax Revenues in 25 U.S. Markets
Source: Financial Statements of the Respective Governments
Source: Financial Statements of the Respective Governments
In total, these markets experienced a decline in revenue to approximately $2.5 billion in fiscal year 2020, reflecting the early impact of the pandemic. Revenue declined to approximately $1.5 billion in fiscal year 2021, reflecting a full year of the pandemic's negative impacts. In fiscal year 2022, revenue increased to $3.1 billion, reflecting a full year of pandemic recovery. Revenue increased to $4 billion in fiscal year 2023, which surpasses pre-pandemic levels. The 2023 data reflects a typical two-month delay between when the consumer pays the tax and when revenues are available to local governments. In fiscal year 2024, revenue increased only slightly to $4.1 billion, indicating that revenue growth has stabilized post-pandemic.
Changes in Lodging Tax Rates
County and local governments enacted several rate changes that took effect during or immediately following fiscal year 2024. Recent changes in lodging taxes in cities include the following:
Recent Changes in Tax Rates
Source: Respective Jurisdictions
Source: Respective Jurisdictions
In addition to the 2024 county and local rate changes, we anticipate the following changes for fiscal year 2025.
Projected Changes for Fiscal Year 2025
Source: Respective Jurisdictions
Source: Respective Jurisdictions
State Tax Rates
All but two states impose a sales tax, a lodging tax, or both on overnight transient accommodations. Municipal governments impose lodging taxes in two states (Alaska and California) that do not tax hotel lodging. Twenty-five states impose lodging taxes that are not part of a broader sales or use tax.
States with high lodging tax rates typically have more restrictions on imposing local lodging taxes. To illustrate, Connecticut has the highest statewide lodging tax rate at 15% but forbids all local authorities from imposing additional lodging taxes. On the other hand, Oregon imposes a low state lodging rate but does not restrict local taxes.
States with high lodging tax rates typically have more restrictions on imposing local lodging taxes. To illustrate, Connecticut has the highest statewide lodging tax rate at 15% but forbids all local authorities from imposing additional lodging taxes. On the other hand, Oregon imposes a low state lodging rate but does not restrict local taxes.
Source: Respective Jurisdictions
Appendix A presents a detailed description of each state’s lodging taxes and annual revenue collections.
State Lodging and Sales Taxes Imposed on Hotels
Source: HVS and Respective Jurisdictions
Source: HVS and Respective Jurisdictions
The following table lists the sales tax, lodging tax, and total tax rate levied on lodging accommodations. It ranks the 50 states by the total tax rate applied to lodging.
States Ranked by Total Ad Valorem Tax Rates on Lodging Accommodations 2024
Source: Respective Jurisdictions
Source: Respective Jurisdictions
State Lodging Tax Revenue
HVS analyzed annual state lodging tax revenues as reported in comprehensive annual financial reports, most of which use a modified accrual basis for revenue reporting. We recorded government estimates from budget reports in a few states where the final audited information was unavailable for fiscal year 2024. Government agencies sometimes provide annual lodging tax collection data instead of modified accrual data. Accrued revenues are recorded in the period in which the liability for tax payment occurs. Cash collections typically lag the period of liability by at least one month.
Depending on the size of their tax liabilities, taxpayers may remit payments on a monthly, quarterly, or annual basis.
Administrative charges, payment of back taxes, and penalties may also affect the reported revenues, but the amounts are small. Only sales tax revenues in the accommodations sector were available in some states. Whereas lodging taxes are typically applied only to hotel room charges, sector-wide taxable sales might include other sources of taxable revenue, such as food and beverage revenue. We did not attempt to estimate the percentage of taxable sales due solely to overnight stays.
Among the states that collect lodging or sales tax on hotel rooms, total revenue increased by 4% in 2024 compared to 2023. This modest growth follows a 10.4% increase in 2023 and a large 89% surge in 2022, which was largely—if not entirely—attributable to the slowdown of travel during the COVID-19 pandemic. The smaller increase in 2024 suggests that revenue growth is beginning to stabilize. Notably, not all states that reported lodging tax revenues in 2024 saw year-over-year increases, indicating that the sharp recovery gains seen in the immediate aftermath of the pandemic have started to level off.
The following table page presents a six-year history of lodging tax revenue for each of the twenty-five states that have imposed a dedicated lodging tax. Revenue reported from past years has been adjusted for inflation. Data is presented in millions of dollars, and the states are ranked by 2024 revenues.
Depending on the size of their tax liabilities, taxpayers may remit payments on a monthly, quarterly, or annual basis.
Administrative charges, payment of back taxes, and penalties may also affect the reported revenues, but the amounts are small. Only sales tax revenues in the accommodations sector were available in some states. Whereas lodging taxes are typically applied only to hotel room charges, sector-wide taxable sales might include other sources of taxable revenue, such as food and beverage revenue. We did not attempt to estimate the percentage of taxable sales due solely to overnight stays.
Among the states that collect lodging or sales tax on hotel rooms, total revenue increased by 4% in 2024 compared to 2023. This modest growth follows a 10.4% increase in 2023 and a large 89% surge in 2022, which was largely—if not entirely—attributable to the slowdown of travel during the COVID-19 pandemic. The smaller increase in 2024 suggests that revenue growth is beginning to stabilize. Notably, not all states that reported lodging tax revenues in 2024 saw year-over-year increases, indicating that the sharp recovery gains seen in the immediate aftermath of the pandemic have started to level off.
The following table page presents a six-year history of lodging tax revenue for each of the twenty-five states that have imposed a dedicated lodging tax. Revenue reported from past years has been adjusted for inflation. Data is presented in millions of dollars, and the states are ranked by 2024 revenues.
Rank of States by 2024 Lodging Tax Revenues (millions)
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Source: Respective Jurisdictions
Source: Respective Jurisdictions
Total Lodging Tax Rates
HVS researched the total tax rate applied to lodging accommodations in the 150 most populous US cities as projected from the 2010 census. The total tax rate comprises all state, county, city, and special district taxes levied on lodging facilities within the city's urban center, where the highest special district taxes may be applied. The following tables list the tax rate applied to overnight stays at lodging facilities at the state, county, city, and special district levels, as well as the total rate imposed on an overnight stay at a lodging facility in the urban center of each of the 150 largest cities in the United States.
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Source: Respective Jurisdictions
To calculate the special district rate, HVS calculated the tax rate an overnight visitor would pay to stay at the hotel with the highest tax rate within a special taxing district. Due to special taxing districts, the tax rate at a particular hotel can be influenced by its location, size, or other factors that determine tax rates. The figure below shows a distribution of combined lodging tax rates in the 150 largest U.S. cities.
Frequency of Total Lodging Tax Rates
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Source: HVS and Respective Jurisdictions
The following table ranks 150 cities by total lodging tax rate. If state or local general sales taxes apply to lodging sales, this rate includes the total tax rate. This analysis enables a comparison of cities’ total tax rate. The figure below provides a breakdown of tax rates by government unit.
Top 150 Urban Centers Total Lodging Tax Rate Ranking 2024*
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Source: Respective Jurisdictions
Tax Rates in Top 150 Urban Centers 2024
Source: Respective Jurisdictions
Tax Rates in Top 150 Urban Centers 2024 - Continued
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Source: Respective Jurisdictions
Tax Rates in Top 150 Urban Centers 2024 - Continued
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Source: Respective Jurisdictions
Source: Respective Jurisdictions
Tax Rates in Top 150 Urban Centers 2024 - Continued
Source: Respective Jurisdictions
Tax Rates in Top 150 Urban Centers 2024 - Continued
Source: Respective Jurisdictions
City Lodging Tax Revenue
The following tables describe the lodging tax revenue that the 150 most populous cities collected from lodging taxes. Unless otherwise noted, the tax rate and revenue listed only pertain to the citywide lodging tax and exclude special district or city sales taxes. Unlike most lodging tax revenues, sales tax revenues typically flow to general government funds and are not separately reported for the lodging sector.Consequently, the revenue figures presented for comparable cities can diverge greatly. For example, a city in California with an average lodging tax rate will show greater revenue year over year than a similar city in Nevada, where taxes are levied primarily at the state and special district level. For individual cities, revenues are reported from consistent sources each year.
In some states and cities, lodging taxes are imposed by the county rather than the city level. For example, cities in Florida, Indiana, and parts of New York do not levy municipal lodging taxes. In such cases, we list county lodging tax revenues. Year-over-year revenue changes may reflect tax rate changes and underlying changes in taxable receipts for lodging.
Reported Lodging Tax Revenues in Top 150 Urban Centers ($ Millions)
Source: Respective Jurisdictions
Reported Lodging Tax Revenues in Top 150 Urban Centers ($ Millions) - Continued
Source: Respective Jurisdictions
Reported Lodging Tax Revenues in Top 150 Urban Centers ($ Millions) - Continued
Source: Respective Jurisdictions
Source: Respective Jurisdictions
Reported Lodging Tax Revenues in Top 150 Urban Centers ($ Millions) - Continued
Source: Respective Jurisdictions
Reported Lodging Tax Revenues in Top 150 Urban Centers ($ Millions) - Continued
Source: Respective Jurisdictions
Excise Taxes
In addition to percentage taxes on gross room revenues, some hotels are subject to excise taxes on lodging transactions and may be charged a flat fee per room night. Excise taxes tend to be less volatile because they only depend on occupancy and are not subject to room price variations. However, excise taxes do not grow with inflation or room rate increases.Hotels in 22 cities are subject to a state, city-wide, or special district excise tax. Excise taxes range from $0.75 to $5.00 per room night, with an average of $2.74. HVS calculated each city’s excise tax as a percentage of its per diem rate (in fiscal year 2024 dollars) to estimate effective tax rates. A city’s effective rate indicates the average rate a person pays if the excise tax were included as a percentage of the total sale price. For this example, HVS used the per diem rates set by the General Services Administration (GSA). The per diem rates set by the GSA are usually lower than the average daily rates at hotels in the specified areas. The chart below is for illustrative purposes only.
On average, every dollar charged in excise tax is roughly equivalent to an ad valorem tax increase of 2.04% for 2024.
Selected Effective Rates of Excise Taxes
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Source: HVS, GSA, and Respective Jurisdictions
Source: HVS, GSA, and Respective Jurisdictions
Airbnb Lodging Tax Collections
Short-term home rental services such as Airbnb and VRBO have grown even more popular among travelers, with Airbnb being the dominant player in the market. 2024 marked a record year for Airbnb in terms of revenue, with a total of $11.1 billion, representing a 12% increase from 2023, which had previously set a record. This increase was primarily driven by a 10% increase in the number of bookings. Listings in North America accounted for 45% of 2024’s revenue. Often referred to as part of the sharing economy, these peer-to-peer platforms enable homeowners or hosts to rent out a spare room, an entire house, or an apartment to travelers seeking unique travel experiences and accommodations. Airbnb has experienced exponential growth since its founding. In 2024, Airbnb’s adjusted EBITDA rose 11% to $4.0 billion, reflecting continued strong business performance.In response to Airbnb’s growth, cities have been compelled to address challenges stemming from the impact of short-term rentals. Residents have raised concerns over the neighborhood impacts of transient visitation. In response, many cities and states have imposed new taxes and regulations on short-term rentals.
To gain legitimacy and permanence within the United States, Airbnb has urged local governments to permit it to collect and remit lodging taxes on behalf of its hosts. In the past two years, states and cities have made considerable efforts to collect taxes from Airbnb. Most recently, starting January 1, 2025, a 4.5% short-term rental lodging tax will be imposed in Delaware on all short-term rentals, including those listed on platforms such as Airbnb. Hawaii remains the only U.S. state in which Airbnb does not collect and remit taxes on behalf of the state.
Disclaimer
HVS’s lodging tax study recognizes that lodging tax rates, collections, and distributions are in constant flux. The data presented herein are HVS’s best attempt to gather the most recently available information. HVS used sources deemed to be reliable and assumes that this information is accurate. All questions, comments, or concerns are welcome in the continuing process to accurately present the current and historical trends of lodging taxes in the United States.
[1]Tourism Economics, "US Inbound Travel's Continued Decline Amid Sentiment Challenges", Retrieved October 27, 2025.
[2]Typically defined in ordinances as being fewer than thirty days.
[3]Home rule cities are cities that have their own taxing authority, have adopted home rule charter for their self-governance, and are not limited to exercising only those powers that the state expressly grants to them.
[4]Municipal Finance Journal, "Local Lodging Taxes During and After the Pandemic", Retrieved October 27, 2025.
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