Minnesota has joined the ranks of major U.S. destinations like Hawaii, Florida, California, Texas, and New York by introducing a bold new 2% tourist tax aimed at boosting hotel revenue and revitalizing its tourism sector. The proposed fee, part of a newly planned Tourism Improvement District, will fund marketing, workforce training, and neighborhood enhancements, with a strong focus on equitable investment across the city—including areas outside downtown. With hotel occupancy rates reaching post-pandemic highs and over 680,000 rooms sold in summer 2024, the city aims to capitalize on its tourism rebound by adopting a revenue model already thriving in other states.

The proposed fee would apply to hotels, motels, bed and breakfasts, boarding houses, and other buildings offering 50 or more rooms for rent. If approved, the new charge will take effect in September 2025 and is expected to generate approximately $6 million annually. This initiative forms part of Meet Minneapolis’ “destination master plan,” which seeks to optimize the city’s visitor economy and ensure year-round vibrancy, particularly downtown and in surrounding cultural hubs.

Unlike general city taxes, this 2% levy will be part of a Tourism Improvement District (TID) — a structure that allows hoteliers themselves to oversee how funds are allocated. This model is already in use in various U.S. states and cities to bolster tourism through coordinated planning and localized control. The Greater Minneapolis Convention and Visitors Association would manage the district, with oversight from a committee of hoteliers empowered to decide spending priorities.

Equity-Focused Tourism Development

Council Member Robin Wonsley, who represents Ward 2 encompassing the University of Minnesota area, emphasized that the proposal was designed with geographic equity in mind. Wonsley noted that the university district hosts the largest concentration of hospitality venues outside downtown, and hospitality leaders in that area have asked her to ensure that the new district benefits neighborhoods beyond the downtown core.

As a result, the ordinance includes language specifying that activities and improvements must be “implemented equitably” across the city, including university-area attractions and hotels. This emphasis aligns with Minneapolis’ broader push to decentralize development and channel economic gains into historically underfunded areas.

Wonsley also highlighted the role of Unite Here Local 17, the state’s hospitality union, which supports the plan on the condition that it strengthens workforce development. As part of the ordinance, a portion of the revenue is earmarked for job training and support programs designed to uplift hospitality workers—many of whom were disproportionately impacted by the COVID-19 downturn.

Legislative Backing and Public Input

The initiative draws legitimacy from a 2023 Minnesota law that authorizes cities to form tourism improvement districts if more than half of the lodging businesses within a proposed zone approve the measure, in addition to City Council support. Minneapolis will follow this model, and if passed, the district would operate on an initial five-year term.

The ordinance has been formally sponsored by Council Members Robin Wonsley, Katie Cashman, and Michael Rainville. It is currently set for public hearing in the Business, Housing, and Zoning Committee at 1:30 p.m. on May 20. If approved, it would mark the city’s most significant move yet toward building a self-sustaining, hotel-driven tourism ecosystem.

Minneapolis Riding Tourism Recovery Wave

The initiative comes on the heels of a tourism resurgence in the city. According to Meet Minneapolis, the city recorded a post-pandemic high of 680,000 hotel rooms sold during summer 2024, with occupancy rates soaring past 70% in August—the strongest performance since October 2019. Room demand, revenue, and overnight stays have all rebounded, providing a stable foundation for reinvestment in the hospitality sector.

With rising visitor traffic, hotel operators and city planners see the new tax as a means to sustain momentum, capitalize on growth, and position Minneapolis as a year-round destination. The extra funds will empower local tourism promoters to expand event programming, improve facilities, and deliver tailored marketing campaigns.

Following a National Trend of Tourist Tax Expansion

Minneapolis is not alone in this approach. Across the U.S., tourist-focused taxes—often levied as transient occupancy taxes, lodging fees, or tourism development surcharges—are becoming a cornerstone of local revenue generation:

• Hawaii collects a state-level Transient Accommodations Tax (TAT) of 10.25%, with counties allowed to add up to 3%. In 2026, a 0.75% Climate Tax will be added to address wildfire recovery and sustainability.
• Florida imposes a state sales tax of 6%, alongside local tourist development taxes of 3–6%, and up to 4% in tourism-heavy areas like Miami Beach.
• California allows cities like Los Angeles to set Transient Occupancy Taxes (TOT) at rates up to 14%, with revenues directed toward public services and tourism infrastructure.
• Texas has a state hotel occupancy tax of 6%, supplemented by local rates imposed by counties and municipalities for local tourism promotion.
• New York City applies a combined lodging tax of up to 14.75% through state and local charges.

Other states like Connecticut, Massachusetts, Illinois, Georgia, and Oregon also maintain tourist-focused hotel taxes, often allocating the revenue to tourism marketing, infrastructure improvements, or workforce initiatives. These measures have proven effective in bolstering regional tourism economies and cushioning municipal budgets against economic downturns.

Minneapolis has joined major US states like Hawaii, Florida, California, Texas, and New York in implementing a bold new tourist tax to fuel hotel revenue and revitalize local tourism. The city’s 2% lodging fee will fund marketing, workforce training, and neighborhood improvements amid record-breaking hotel demand.

A Strategic Move to Sustain Growth

Minneapolis’ decision to join the ranks of cities and states with dedicated hotel taxes reflects a broader national strategy: channeling tourism activity into sustained economic gains. By empowering hoteliers to direct funds and ensuring equitable distribution beyond the city center, the ordinance aims to create a more inclusive, sustainable tourism model.

If the City Council approves the measure, Minneapolis could unlock millions annually to amplify its tourism potential—while signaling to travelers that the city is not just open for business, but actively investing in a better visitor experience. With hotel demand already surging and the public hearing set for May 20, all eyes are now on how this bold new plan will shape the future of Minneapolis tourism.

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