Reinvesting Tourism Taxes

Imagine if a portion of the funds generated by tourism consistently flowed back into the communities that make travel possible. In the U.S., the travel industry contributes $2.9 trillion in economic output each year1. According to the World Travel & Tourism Council, in 2024, travel and tourism represented 10% of the global economy2. Yet despite the scale of this impact, the taxes generated by tourism often flow into general government funds, with unclear or indirect reinvestment into the destinations that produce them. Many in the industry recognize that more intentional reinvestment could make destinations better for both visitors and residents.

WHY REINVEST TOURISM TAXES

In most places, tourism taxes such as hotel occupancy taxes, short-term rental fees, or resort levies flow into a city or state’s general fund that compete with many other priorities like education, health care, or policing. While these are essential services, the connection between the money collected from visitors and the destination they experience often becomes invisible.

That’s where reinvestment matters. Reinvesting tourism tax dollars enhances both visitor experiences and local quality of life3,4. Directing at least a portion of tourism taxes as a revenue source for a DMO, who can then use the funds to support community initiatives, creates a positive cycle where the funds directly make the destination more appealing for visitors while also enhancing daily life for residents5,6. Reinvestment also supports local businesses and cultural initiatives, helping the economy grow and demonstrating tangible benefits to those who live there7,8. When residents see tourism dollars working for them, community support for tourism grows and potential tensions diminish9,10. The intentional and clear reinvestment transforms tourism taxes from a hidden revenue stream into a visible tool for sustainable tourism development.

WHAT IT MEANS TO REINVEST TOURISM TAXES

Reinvestment means earmarking visitor-generated revenue for projects that directly strengthen the community and visitor experience. Reinvesting tourism taxes back into the tourism system is about accountability and intentionality ensuring that the money visitors bring in doesn’t just disappear into broad budgets, but is visibly returned to improve the places they came to see. Revenue collected from taxes on tourism such as hotel occupancy taxes, resort fees, or other visitor-related levies can be used to fund projects and initiatives that directly benefit the local area. This can include improving public infrastructure like roads, parks, and transportation10,11, supporting cultural or recreational programs for residents and visitors12, preserving historic sites9,13, or investing in sustainability and environmental conservation6,14,15. It ensures that the money generated by visitors is not just absorbed by administrative costs but is returned in ways that enhance both residents’ quality of life and the overall visitor experience. 

HOW TO DO IT 

Experience Kissimmee in Florida, USA is a strong example of a DMO effectively reinvesting tourism tax dollars into the community. The organization uses a portion of the revenue from the Tourism Development Tax to fund their Tourism Enhancement Grants Program which is intended to provide funding assistance to local government and nonprofit organizations conducting special events and projects in Osceola County as well as their Charitable Support Program. Kissimmee strengthens the local economy, preserves cultural and community heritage, and improves the overall visitor and resident experience.

The Brent Council in Wembley, England demonstrates how reinvesting tourism funds can support community development. Brent Council has proposed a discretionary visitor levy that supports street sweeping, parks and environmental enforcement. The levy aims to actively get ahead of problems like waste, traffic congestion and noise, and to make sure local residents have access to events. This approach ensures that tourism not only attracts visitors but also contributes to the long-term prosperity and quality of life for residents.

The Balearic Islands in Spain have introduced the Sustainable Tourism Tax , levying a per-night fee on tourists staying in various accommodations. Revenue from this tax is directed toward environmental conservation, cultural restoration, destination improvement, and more. For instance, nearly €377 million in 2024-2025 was invested to support the implementation of 79 strategic projects, such as a “programme for the promotion of employment for the long-term unemployed.” This strategy enhances the quality of life for both residents and visitors. 

DMOs mentioned

https://www.experiencekissimmee.com/
https://www.brent.gov.uk/
https://www.spain.info/en/region/balearic-islands/

Other helpful materials

Adams, C. (2025, January 15). Funding Our Future – Tourism Taxation & Sustainable Tourism. Miles Partnership. https://www.milespartnership.com/how-we-think/article/funding-our-future-tourism-taxation-sustainable-tourism

Auslander, S. (2024, January 11). Tourism Development Taxes for Sustainable Growth. Destinations International. https://destinationsinternational.org/blog/tourism-development-taxes-sustainable-growth

Hansen, P. R. (2021, January 12). Tourism taxes – what can they offer in a time of crises? – Global Destination Sustainability Movement. Global Destination Sustainability Movement. https://www.gds.earth/blog/tourism-taxes-what-can-they-offer-in-a-time-of-crises/

Moran, M. (2023, October 20). Citizens help decide how to spend county tourism tax | National Association of Counties. Www.naco.org. https://www.naco.org/news/citizens-help-decide-how-spend-county-tourism-tax

Shapiro, S. (2023, April 26). Want To Increase Cultural Investment? Use Tourism Taxes. Forbes. https://www.forbes.com/sites/shainshapiro/2023/04/26/want-to-increase-cultural-investment-use-tourism-taxes/ 

Durán Román, J. L., Cárdenas García, P. J., & Pulido Fernández, J. I. (2020). Taxation of Tourism Activities: A Review of the Top 50 Tourism Destinations. Revista de Economía Mundial, 55. https://doi.org/10.33776/rem.v0i55.3838

Miranda, E. M., Gonçalves, S., & Vareiro, L. (2023). Tourist Taxes and Sustainability: A Systematic Literature Review and Future Research. In  Taking on Climate Change Through Green Taxation (pp. 335–349). IGI Global Scientific Publishing. https://www.igi-global.com/chapter/tourist-taxes-and-sustainability/328651 

Sheng, L. (2017). Factors determining the success or failure of a tourism tax: a theoretical model. Tourism Review, 72(3), 274–287. https://doi.org/10.1108/tr-02-2017-0030

References

1. U.S. Travel Association. (2024). Economic Impact of the U.S. Travel Industry (p. 1). https://www.ustravel.org/sites/default/files/2024-03/National%20Data_0.pdf
2. World Travel & Tourism Council. (2025). Travel & Tourism Economic Impact Research (EIR). https://wttc.org/research/economic-impact
3. Mandić, A., & Rastegar, R. (n.d.). Revisiting tourism taxes: A justice-oriented approach to redistributing revenue. Current Issues in Tourism, 0(0), 1–8. https://doi.org/10.1080/13683500.2025.2542533
4. Lacy, T. D., & Whitmore, M. (2006). Tourism and Recreation. In Managing Protected Areas. Routledge.
5. Mandić, A., Mrnjavac, Ž., & Kordić, L. (2018). Tourism Infrastructure, Recreational Facilities And Tourism Development. Tourism and Hospitality Management, 24(1), 41–62. https://doi.org/10.20867/thm.24.1.12
6. Cetin, G., Alrawadieh, Z., Dincer, M. Z., Istanbullu Dincer, F., & Ioannides, D. (2017). Willingness to Pay for Tourist Tax in Destinations: Empirical Evidence from Istanbul. Economies, 5(2), 21. https://doi.org/10.3390/economies5020021
7. Alisa, F., & Ridho, Z. (2020). Sustainable Cultural Tourism Development: A Strategic For Revenue Generation in Local Communities. Journal of Economic and Tropical Life Science, 4(2). https://doi.org/10.21428/e61c265e.f512dbd8
8. Mahendra, D. (2024). The Impact of Tourism on the Preservation and Transformation of Cultural Identity in Bali, Indonesia. Studies in Social Science & Humanities, 3(6), 34–41.
9. Soares, J. R. R., Remoaldo, P., Perinotto, A. R. C., Gabriel, L. P. M. C., Lezcano-González, M. E., & Sánchez-Fernández, M.-D. (2022). Residents’ Perceptions Regarding the Implementation of a Tourist Tax at a UNESCO World Heritage Site: A Cluster Analysis of Santiago de Compostela (Spain). Land, 11(2), 189. https://doi.org/10.3390/land11020189
10. Derek, M. (2021). 15: Why Tourists Should Pay Local Taxes. https://bristoluniversitypressdigital.com/edcollchap/book/9781529217209/ch015.xml
11. Ivankova, V., Gavurova, B., Bačík, R., & Rigelský, M. (2021). Relationships between road transport infrastructure and tourism spending: A development approach in European OECD countries. Entrepreneurship and Sustainability Issues, 9(2), 535–551. https://doi.org/10.9770/jesi.2021.9.2(35)
12. Göktaş, L., & Çetin, G. (2023). Tourist tax for sustainability: Determining willingness to pay. European Journal of Tourism Research, 35, 3503–3503. https://doi.org/10.54055/ejtr.v35i.2813
13. Tosi, L., & Bagarotto, E.-M. (2021). Access Fees to Cultural Heritage Cities: A Way to Promote Sustainable Tourism? World Tax Journal, 2021, 283.
14. Cárdenas-García, P. J., Pulido-Fernández, J. I., Durán-Román, J. L., & Carrillo-Hidalgo, I. (2022). Tourist taxation as a sustainability financing mechanism for mass tourism destinations. International Journal of Tourism Research, 24(4), 577–592. https://doi.org/10.1002/jtr.2523
15. Miranda, E. M., Gonçalves, S., & Vareiro, L. (2023). Tourist Taxes and Sustainability: A Systematic Literature Review and Future Research. In Taking on Climate Change Through Green Taxation (pp. 335–349). IGI Global Scientific Publishing. https://doi.org/10.4018/978-1-6684-8592-7.ch015