Chicago Increases Hotel Tax to Win More Conventions

The Chicago City Council has approved a Tourism Improvement District (TID) that will push hotel taxes to 19%, the highest among major U.S. convention cities. The new 1.5% surcharge on hotels with 100 rooms or more, in specified downtown areas including the Central Business District and McCormick Place, is expected to generate nearly $40 million annually, which will be used for Choose Chicago’s marketing campaigns, bid fees, and cash incentives to attract large-scale meetings.

The move fulfills a top priority for Choose Chicago CEO Kristen Reynolds, who has pushed for the district since taking the role less than a year ago.

“This is a transformative moment for Chicago’s tourism industry,” said Reynolds. “This investment will allow us to amplify our marketing efforts, attract more conventions and events, and ultimately deliver significant benefits to Chicago’s economy and communities.”

Chicago’s push for a TID reflects a funding gap that limits its ability to compete for meetings  business. The city’s $34 million marketing budget trails other meeting cities. For instance, the Las Vegas Convention and Visitors Authority operates on $460 million annually — including $346 million in room tax and gaming fees. While Visit Orlando’s latest budget is $105 million — with $97-5 million coming from tourism development tax.

Five-Year Deal

The TID will last five years, and at that time, it will have to be renewed by an oversight board of hotel operators and the city council. 

The fund will also be used to cover bid fees and cash incentives — tools competing cities use to win large-scale events.

“For several years, we have heard from meeting planners who were offered cash incentives to bring citywides to certain destinations. We didn’t have a budget for this,” said Michael Jacobson, president of the Illinois Hotel & Lodging Association.  

As high as Chicago’s hotel tax may be, Jacobson said the key was to stay below 20%. “We can’t hit that number, as that is the danger zone,” said Jacobson.

The move reflects a broader shift across the meetings industry, where destinations are spending more aggressively to secure business, even as rising costs raise concerns among planners.