Discussion on the possible expansion of the Austin Convention Center has drawn Austin City Council members, staff and stakeholders to examine how the city's hotel occupancy tax is being used. A group of council-appointed, tourism-related stakeholders is expected to present its recommendations this summer on how to use the city- and state-mandated taxes to fund facilities and events that fit into the tourism industry category. Meanwhile, Austin Convention Center staff and members of Austin City Council are seeking community input this Saturday at a town hall that seeks to answer what a convention center district would look like. Ahead of Saturday's town hall, Community Impact Newspaper has everything you need to know about hotel occupancy taxes.

Who pays hotel occupancy taxes? 

Anyone who owns, operates, manages or controls any hotel, or anyone who collects payment for occupancy. Yes, that means properties that use home-sharing services like Airbnb and HomeAway.

What is defined as a "hotel"?

Any building in which the public can get sleeping accommodations for more than $2 a day for 30 days or less. That means hostels, motels, tourist homes, vacation rentals and bed-and-breakfasts as well as hotels.  

What do the city's hotel occupancy taxes fund?

• 4.5 percent of the taxes gathered each year fund the Austin Convention Center to help pay off any debt service and operating expenses
• 2 percent goes to pay off the bond that paid for the convention center's first expansion in 2002, as well as a small portion of the Waller Creek Tunnel Project
• 1.45 percent goes to pay contracts for the Austin Convention & Visitor's Bureau, the city's marketing entity, to promote convention and tourism for the city
• 1.05 percent goes to the cultural arts fund, which funds contracts to artists and cultural agencies to support and encourage arts in the city

 

When are hotel occupancy taxes collected?

Each quarter, on April 30, July 31, Oct. 31 and Jan. 31.

What is the city of Austin's hotel occupancy tax rate? 

9 percent.

Is there a state hotel occupancy tax? 

Yes. The state of Texas imposes a 6 percent hotel occupancy tax rate on hotel owners, operators or managers who charge $15 or more a day for a room. The tax must be paid separately from the city's tax. These are also collected quarterly.

Is there a chance the city's hotel occupancy tax rate could be raised? 

Yes. A proposal to raise the hotel occupancy tax by as much as 2 percent has been presented to Austin City Council to help pay for another possible expansion of the convention center. The increase would bring an estimated $609 million, which could be used not only to fund the expansion, but also to fund other tourism-related uses, such as enhancements to Waller Creek and Brush Square, improvements to the Red River District or historic preservation of certain buildings like Palm School.

How else could the possible expansion be funded? 

City Council could choose to allow Austin voters to redesignate the current hotel occupancy tax funds that are being used to pay off the previous convention center expansion debt. This would result in an estimated $397 million. None of that money could legally be used to fund other tourism-related uses.

What happens once the debt from the first convention center expansion bond is paid off?

Once the bond from the convention center's first expansion is paid off—convention center staff estimate this will happen in 2029 if nothing changes—the city of Austin could ask voters to approve paying for a new venue through the same method. A "venue" has many definitions, including:

• An arena, coliseum or stadium that charges an admission fee and is used for sports events, community events or other sports events including rodeos or livestock shows
• A convention center, convention center facility or other related improvement like a civic center hotel, theater, opera house, music hall, rehearsal hall, park, museum, aquarium or plaza located within the vicinity of a convention center or facility owned by the city or Travis County
• A municipal parks and recreation system, or improvements/additions to a parks and recreation system
• A watershed protection and preservation project, a recharge area, a conservation easement or an open-space preservation program intended to protect water

But per local government code, certain projects can only be funded through certain taxes. For example, hotel occupancy taxes cannot fund park improvements, but they can fund a convention center.

Could the hotel occupancy taxes be used for something else? 

Yes. in August, Austin City Council created the Visitor Impact Task Force—made up of 13 people who work in the tourism industry—to recommend how else the money from the hotel occupancy tax could be used in accordance with state law. The law says the revenue may be spent on "day-to-day operations, supplies, salaries, office rental, travel expenses and other administrative costs" that are incurred by activities that promote tourism and the convention and hotel industry within the authorized uses set out in the state code. Theoretically, this could include facilities and events that are currently funded by the city, including Zilker Botanical Gardens, the Dougherty Arts Center, the Carver Museum, the O. Henry Museum and Barton Springs.  

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Still have questions about hotel occupancy taxes? Email us at [email protected].