{"id":13277,"date":"2026-02-25T20:31:49","date_gmt":"2026-02-26T03:31:49","guid":{"rendered":"https:\/\/dh.durangoherald.com\/tj\/taxes-have-never-been-higher-for-colorado-vacationers-but-little-of-that-revenue-supports-tourism\/"},"modified":"2026-03-30T21:36:27","modified_gmt":"2026-03-31T03:36:27","slug":"taxes-have-never-been-higher-for-colorado-vacationers-but-little-of-that-revenue-supports-tourism","status":"publish","type":"post","link":"https:\/\/dh.durangoherald.com\/tj\/taxes-have-never-been-higher-for-colorado-vacationers-but-little-of-that-revenue-supports-tourism\/","title":{"rendered":"Taxes have never been higher for Colorado vacationers \u2013 but little of that revenue supports tourism"},"content":{"rendered":"\n

\"Tourists
Tourists and several locals gaze at the hot air balloons during the LIght up the Night event at Steamboat ski area, Feb. 17, 2024, in Steamboat Springs. (Hugh Carey\/Colorado Sun)<\/span><\/figcaption><\/figure>\n<\/p>

Colorado\u2019s tourism industry is in a slump. Two years of slowing traffic and flat spending have left visitor-reliant businesses limping. This winter \u2013 with a snowpack looking to make the 2025-26 ski season the second worst in 50 years<\/a> \u2013 will certainly add to the tourism industry\u2019s woes.<\/p>\n

A few years ago, the state\u2019s destination marketing pros would have been crafting persuasive campaigns to shift the tide. They would have planned flashy videos and banner ads and targeting vacationers with alluring pitches.<\/p>\n

But those campaigns are not happening. The Colorado tourism marketing machine is slowing as millions of dollars in new and diverted lodging taxes that once funded destination promotion are now going toward housing, child care, recreational projects, roads and police.<\/p>\n

Two laws passed in 2022 and 2025 \u2013 House Bill 1117 and House Bill 1247 \u2013 allow local communities to increase or divert lodging taxes from traditional tourism marketing.<\/p>\n

A recent tally of 39 towns, counties and marketing districts shows more than $256.6 million in lodging taxes have been raised for purposes other than tourism promotion since the first communities increased taxes in 2022. New and redirected lodging and short-term rental taxes collected by the 39 local governments in 2026 are expected to reach $76.9 million, with all of that supporting housing, child care, roads and public safety.<\/p>\n

\u201cThis means visitors are paying a lot more in taxes for lodging and we are not getting more money to work with to market our destinations,\u201d said Dave Santucci, whose Mission 2 Market<\/a> consulting firm helps communities grow tourism economies.<\/p>\n

Santucci has tracked the lodging tax funding allocations since 2022. He points to a majority of states increasing tourism marketing budgets<\/a> while the roughly $20 million annual budget for the Colorado Tourism Office has largely remained flat since 2016. And advertising costs have climbed as much as 40% in the last five years.<\/p>\n

\u201cThe point of destination marketing organizations is to spread out traffic and create resiliency. The funding that goes into DMOs comes back in multiples of return on investment,\u201d Santucci said. \u201cThat marketing is tied to economic development and a community\u2019s ability to attract and retain residents. We are setting ourselves up for trouble ahead by raising our prices and cutting our marketing.\u201d<\/p>\n

Declining visitation in this snow-starved winter<\/div>\n

Colorado seems to be leading the nation in declining skier traffic in this snow-deprived season. Hotel occupancy tracked by DestiMetrics \u2013 which follows lodging bookings in 17 Western mountain communities in seven states \u2013 shows Colorado and Utah enduring the brunt of the declining traffic. The latest DestiMetrics report pins winter occupancy in Colorado and Utah down 6.7% compared with this time last year, with the other five states seeing an occupancy decline of 0.5% so far this season.<\/p>\n

\"Plastic
Plastic viking hats are traditional attire at the annual Ullr Fest in Breckenridge in 2024. (Courtesy of Breckenridge Tourism Office)<\/span><\/figcaption><\/figure>\n<\/p>

Short-term rentals in Colorado mountain towns are leading a national decline in ski vacation bookings, according to a January report from AirDNA<\/a>, a Denver-based firm that tracks trends in short-term rental data. While STR bookings at all ski destinations are down about 5%, Colorado resort markets are down anywhere from5% in Vail to 35% in Telluride.<\/p>\n

\u201cAs the remainder of the season unfolds and destinations wrestle with the impacts of changing climate and weather patterns, I suspect that new playbooks are being written on how these destinations can adapt and flourish if this season\u2019s scenario returns,\u201d Tom Foley, the data-crunching tourism economist with DestiMetrics owner Inntopia, said in a statement outlining the season\u2019s booking trends. \u201cAlong with the seemingly interminable economic uncertainty, we are also reminded that snow, our ace in the hole, can be frustratingly fickle and unreliable.\u201d<\/p>\n

Of course, funding for housing, public safety, infrastructure and child care is critical as municipalities and counties face deficits with uncertain federal funding. The state is asking more of counties, too, with new laws around jails, human services, Medicaid and other local services that do not include increased support from the state.<\/p>\n

That is forcing many local governments to squeeze tourists for more revenue. Most of the time, those local governments easily sway voters to increase taxes<\/a> on visitors. But not always. Last year voters in Ca\u00f1on City, Chaffee County, Manitou Springs, Vail and Telluride rejected tax increases on lodging and activities to help cover budget declines<\/a>.<\/p>\n

\u201cThe state will not allow counties to go out and raise funds in any way other than property taxes,\u201d Chaffee County Commissioner P.T. Wood said at the beginning of a commissioners\u2019 meeting Feb. 17<\/a> as the three elected leaders joined several other counties<\/a> in sending a letter to the state urging more support for implementing new laws. \u201cWe are really handcuffed and our populations continue to grow and our demands for services continue to grow and the state continues to restrict our abilities to increase revenues while they demand more from us.\u201d<\/p>\n

Local governments scrambling to grow revenues<\/div>\n

Wood was one of several county commissioners earlier this month urging lawmakers to pass legislation<\/a> that would have allowed local communities to create a new tax on homes that are left vacant for portions of the year.<\/p>\n

The lawmakers killed that legislation after vehement opposition from tourism businesses, homebuilders, county treasurers and investment groups.<\/p>\n

The idea behind the vacancy tax was to give local governments a new tool to fund affordable housing. Five years ago, that the measure likely would have sped through the committee bound for the entire chamber.<\/p>\n

But the lodging industry has unified in the past five years as local governments crack down on short-term rentals and impose new restrictions and taxes on homes rented to visitors. That unity means proposals for new taxes are facing the stiffest opposition ever.<\/p>\n

In about four hours of testimony before the House Finance Committee on Monday, a parade of real estate brokers, county treasurers, homebuilders and business leaders argued against a vacancy tax. The hearing mirrored several other committee hearings in recent years where lawmakers considered legislation to increase regulations and taxes on vacation homes.<\/p>\n

\u201cThis is sort of a result of the tentacles spreading out across the state, with property owners and advocates talking with county commissioners, business owners and people in the community, just spreading awareness about the role the lodging industry plays in this economy and how vital that it is,\u201d said Julia Koster, the head of the nascent but surging Colorado Short Term Rental Association<\/a>, or COSTRA, which counts thousands of members and helped organize the formidable opposition to the vacancy tax.<\/p>\n

Koster sees a more than five-year effort to galvanize lodging businesses and property owners finally finding its footing. She points to a shifting tide in the defeat of legislation in 2024 that would have quadrupled property taxes on short-term rentals<\/a> and then last fall, voters rejecting increased lodging taxes<\/a> in Chaffee County and Vail.<\/p>\n

\u201cPeople are listening and they are recognizing the data and hearing the voices of the business community outside the STR industry,\u201d Koster said. \u201cPeople are seeing that if you target the lodging and tourism industries, there will be downstream impacts on all sorts of other industries.\u201d<\/p>\n

\"People
People roam Harrison Avenue during Leadville Boom Days, Aug. 7, 2022, in Leadville. The town had a population of approximately 2,700 residents in 2020. (Hugh Carey\/Colorado Sun)<\/span><\/figcaption><\/figure>\n<\/p>

And those impacts are becoming evident as visitation wanes without attempts to reengage with vacationers.<\/p>\n

\u201cEveryone I\u2019ve talked to in tourism, their budgets are cut and way down. You have to spend money to bring visitors here, and if the DMOs can\u2019t do it, the lodging industry and tourism businesses are going to have to step up,\u201d Koster said. \u201cBut we are shooting ourselves in the foot by raising our rates and turning more people away. If we keep raising the cost of a Colorado vacation, we will keep losing visitors.\u201d<\/p>\n

Too close to a tipping point?<\/div>\n

Travel spending in Colorado is flat and not keeping pace with inflation, increasing only 0.5% in 2024 to $28.4 billion. Wages earned from travel spending increased 7.1%, indicating tourist-reliant businesses are spending more on workers while collecting less.<\/p>\n

The state\u2019s annual tourism studies from 2024<\/a> show local communities and the state collecting about $1.9 billion in taxes paid by tourists, a 1.3% increase from 2023. About 40.5% of that revenue comes from sales taxes paid by visitors and more than 15% \u2013 close to $290 million \u2013 comes from lodging taxes.<\/p>\n

No one in the tourism industry is blasting lodging taxes. Those tourism trumpeters work closely with their communities and they know residents can grow weary of too many visitors. They also know vast swaths of local economies rely on those visitors.<\/p>\n

It\u2019s a delicate dynamic, said Cynthia Eichler, president of the Colorado Association of Destination Marketing Organizations, which represents more than 25 towns and regions around the state.<\/p>\n

\u201cWhen the tourism bucket is filling, a lot of other buckets are filling too,\u201d Eichler said.<\/p>\n

There is a growing concern that increased lodging taxes \u2013 some communities levy a lodging tax higher than 20% of the cost of the rental \u2013 as well as hotel owners increasing rates to compensate for waning traffic could be pricing Colorado out of the vacation market.<\/p>\n

\u201cWe need to be mindful and think about that. We do not want to be a luxury vacation state filled with communities purely reliant on wealthy visitors,\u201d Eichler said.<\/p>\n

\u201cWe need a more holistic approach to bringing people to our state and to our individual communities,\u201d she said. \u201cWe live in these amazing communities and we have wonderful lifestyles that we enjoy so much. We want to be mindful about how we approach our visitors. We do not want to get too close to the tipping point where we lose our appeal.\u201d<\/p>\n

The Colorado Sun is a reader-supported, nonpartisan news organization dedicated to covering Colorado issues. To learn more, go to coloradosun.com<\/em><\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

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