Hotel Occupancy Tax "HOT" Funding
Definition of Hotel
Any business considered a hotel must charge state HOT. Local HOT is required within those jurisdictions that levy the tax.
This definition includes a hotel, motel, tourist home, tourist house, tourist court, lodging house, inn, rooming house, or bed and breakfast, as well as short-term room rentals such as Airbnb and HomeAway. For details, refer to Tax Code Chapter 156.
When Does Local HOT Apply?
Local HOT applies to rooms used for sleeping. It does not apply to food sales, meeting spaces or banquet rooms.
However, when the bill to the customer is a lump sum, the entire amount is subject to hotel tax. Examples of lump sum packages are honeymoon packages at a hotel, hunting packages at a lodging house, staying at a meal-inclusive bed and breakfast, etc.
When the bill separately states the room charge from the other package items, only the room charge is subject to hotel tax. (The other separately listed package items may be subject to different taxes, such as sales or mixed beverage taxes.)
How is Local HOT Revenue Used?
Local HOT revenue may only be used to promote tourism and the convention and hotel industries. The following projects may be funded with local HOT revenue:
Constructing, improving, enlarging, equipping, repairing, operating and maintaining a convention center or visitor information center;
Furnishing of facilities, personnel and materials for the registration of convention delegates or registrants;
Advertising and conducting promotional programs to attract tourists and convention delegates or registrants;
Encouragement, promotion, improvement and application of the arts;
Historical restoration and preservation projects or advertising and conducting promotional programs to encourage tourists to visit preserved historic sites or museums;
Expenses related to a sporting event in which a majority of participants are tourists;
Enhancement and upgrading of existing sports facilities or fields;
Constructing, improving, enlarging, equipping, repairing, operating and maintaining a coliseum or multiuse facility; and
Signage directing public to sights and attractions that are visited by hotel guests.
Refer to the Texas Municipal League's The Hotel Tax Two-Step (PDF) for details.
Cities and counties may also pledge local HOT revenue to pay for bonds used for eligible projects, as well as contract project management services to manage their HOT projects.
Sports and Community Venues
Local HOT may be adopted to acquire, construct, improve and equip a venue project that is a convention center facility or related infrastructure.
These include:
An arena, coliseum, stadium or other type of facility that is used for professional or amateur sports events, community events or other sports events, livestock shows, agricultural expos, promotional events and other civic or charitable events;
A convention center, convention center facility or a related improvement such as a civic center hotel, theater, opera house, music hall, rehearsal hall, park, zoo, museum, aquarium or plaza; and
A watershed protection and preservation project.
See Local Government Code Chapter 334 Secs. 334.001 and 334.251-334.258 for details.