Hotel rates may go up in a matter of weeks in the city of San Diego, as a new transient occupancy tax — also known as the TOT or the “hotel room tax” — is set to increase on May 1.
The transient occupancy tax, which was approved by voters as Measure C in 2020, is expected to bring in about $82 million in 2025 and approximately $1.04 billion over the next decade.
Despite the vote, implementation of the TOT increase was delayed for several years due to legal challenges.
“The city has prevailed in trial court and is moving forward with increasing the TOT, currently at 10.5%, to be paid by hotel guests, and visitors staying in RV parks and short-term rental properties,” city officials said in a statement Thursday.
The measure established three tax zones with corresponding rates — 11.75%, 12.75%, and 13.75 — each of which are dependent on the facility’s proximity to the Convention Center, with the closest properties to the Convention Center receiving the highest tax rates.
Those funds will go toward street repair, shelter for unhoused people, and San Diego Convention Center improvements.
For the first five years, city officials said that the additional revenue will be allocated in the following ways:
- 59% to finance Convention Center improvements and otherwise support the Convention Center operations;
- 41% to City efforts to address homelessness, including shelter and support programs, permanent supportive housing, and associated costs.
For years 6 through 10, the additional revenue will be allocated as follows:
- 59% to finance Convention Center improvements and otherwise support Convention Center operations;
- 31% to City efforts to address homelessness, including shelter and support programs, permanent supportive housing and associated costs;
- 10% to support street repairs included an array of street-related infrastructure improvements.
Zone locations and tax rates can be looked up on the interactive tax zone map, which can be found here.
