In March, the Chicago City Council approved a resolution to establish a Tourism Improvement District, which will generate more funding to market the destination by way of additional tax revenue. The move, according to Choose Chicago, the city's destination marketing organization, allows the city to more effectively compete with peer cities that typically have had larger and more consistent budgets. More than 200 other destinations already have TIDs in place.
Assessment on local stays
Beginning May 1, the TID will generate funds by way of a 1.5 percent assessment on stays at hotels in defined zip codes with 100 rooms or more. The TID encompasses the Central Business District, the Illinois Medical District and McCormick Place, and extends south to Hyde Park.
"This is a transformative moment for Chicago's tourism industry," noted Choose Chicago president and CEO Kristen Reynolds when the TID was established. "With the TID in place, we now have the enhanced resources to match the ambition and vibrancy of our city. 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."
The organization projects the TID assessment to raise nearly $40 million annually. According to Choose Chicago, over the next five years that could result in the creation of 25,000 jobs, $2.9 billion in visitor spending, $63.5 million total hotels taxes generated and $268.3 billion in total economic impact.
Support from local stakeholders
The TID was developed in collaboration with a range of local stakeholders, including the hotel community, local business owners, the Chicago Federation of Labor and the Chicagoland Chamber of Commerce.
"This was initiated by the hotel community itself," explained a Choose Chicago spokesperson, "recognizing the competitive disadvantage created by years of underinvestment in destination marketing and sales. For too long, Chicago has been significantly outpaced by competitor cities, and this initiative allows us to begin leveling the playing field."
Overall effect on Chicago lodging tax
Planners will note that the total combined taxes and assessments for hotels in the district will be 18.89 percent, a lodging tax among the highest in the nation — within a comparable range, added the spokesperson, to major convention destinations such as Seattle (17.8 percent, according to a 2025 HVS report), Baltimore (17.5 percent) and San Antonio (17.5 percent). According to the same HVS report, Cincinnati, Ohio, had a 19.3 percent total lodging tax and St. Louis has a total of 18.93 percent.
Chicago's new TID is particularly meaningful, explained the spokesperson, because the increase is fully reinvested back into the tourism and hospitality industry. "It directly benefits hotels, our partners and our customers," said the spokesperson. "Other potential increases under consideration would have raised hotel taxes without a direct return to the industry."
The TID will be governed by a committee, yet to be appointed, that represents a cross-section of hotel stakeholders whose properties fall within the district boundaries. The committee will oversee the allocation of funds and ensure that all interests are represented.