budget deficit

Vanishing Hotel Tax Revenues Spells Major Trouble For City Budget

Data analyzed by NBC 7 Investigates shows 98% drop in hotel tax revenue compared to last year

NBCUniversal, Inc.

Hotel tax revenues have dried up in San Diego, spelling major trouble for the city budget and the city’s ability to pay for essential services. 

New data obtained by NBC 7 Investigates shows that last month, the city of San Diego collected $345,580 in revenues from hotel and short-term rental guests. The same month last year; the number was just over $21 million - a 98% year-over-year decrease. 

Proceeds from the hotel tax are a major funding source for the city of San Diego, as well as for cities throughout the county. In San Diego, the hotel tax is the third-highest revenue source, accounting for 8.8% of all city revenues. Proceeds from property taxes and sales tax are the only larger revenue sources for the city.

Last year San Diego collected $260 million from taxes paid by hotel guests. Of that, $137 million was directed to the General Fund to pay for essential city services. 

And as hotel and short-term rental owners await the state to allow them to reopen for business, city leaders anticipate a slow recovery in regards to the number of hotel stays in the coming months. 

In his proposed 2021 budget, San Diego Mayor Kevin Faulconer anticipates a 27% decrease in hotel tax revenues. 

And while the city will be forced to cut services to make up for the revenue loss, hotel workers such as Jose Ruiz who is chef and partner at the Lionfish Restaurant inside the downtown Pendry Hotel are bearing the brunt of the shutdown.

“I felt like it was really really fast,” Ruiz told NBC 7 Investigates. “I felt like we were on a roller coaster and we were just going up and we didn’t know how big the drop was, and all of a sudden, boom. Everything’s closed.”

Added Ruiz, “There’s a lot of people who work here, there’s a lot of people who have families who work here.”

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