Chicago is moving forward with a proposal to create a new tourism improvement district in Downtown, which would add a fee to hotel stays aimed at promoting the city and attracting more visitors. The ordinance advanced out of the City Council’s Finance Committee on Friday and is supported by local hotel groups.
If approved, the plan would establish a five-year district where hotels with 100 or more rooms would pay up to 1.5 percent of their revenue from short-term room rentals—defined as stays of 30 days or less. This fee could be passed along to guests, potentially increasing the overall tax on Downtown hotel stays from the current 17.5 percent to as much as 19 percent.
The expected $40 million annual revenue generated by this fee is intended to increase funding for Choose Chicago, the city’s nonprofit marketing organization. Currently, Choose Chicago operates with a $33 million annual budget, which falls behind those of other major cities like Las Vegas and Orlando.
Hospitality organizations such as the Illinois Hotel and Lodging Association and the Chicago Federation of Labor have voiced strong support for the measure, along with representatives from Downtown hotels and small businesses.
“This will provide the resources needed to sell Chicago more effectively so that we can pursue more meetings and conventions … [and] drive overnight stays,” said Nabil Moubayed, general manager of InterContinental hotel on Michigan Avenue during public comments at Friday’s hearing.
“More room nights become more shifts for our employees, more business for our nearby restaurants and shops, and definitely more economic activity throughout every neighborhood in the city,” Moubayed added.
The proposed boundaries for the district would cover at least part of 14 wards—including areas beyond Downtown such as West Loop, Bronzeville, and Bridgeport.
Most alderpeople expressed support for what they described as an easy decision. Alderman Brian Hopkins (2nd) noted it was unusual for any sector to volunteer for additional taxation: “It’s rare and uncommon for any sector of Chicago’s economy to raise their hand and say please tax me.”
An analysis shared by Choose Chicago during Friday’s committee meeting estimated that over its lifespan, the district could produce $2.9 billion in economic impact, $269 million in new tax revenues, and generate 25,000 new local jobs—figures provided by Oxford Economics. Kristen Reynolds, CEO of Choose Chicago commented: “And that’s a conservative model.”
Alderman David Moore (17th) was alone in opposing creation of the district; he argued there should be an exemption for city residents from paying this additional charge.
Should it pass before City Council, management of collected funds would fall under an 11-member board comprised primarily of hotel operators alongside representatives from both Choose Chicago and city government. The board would authorize spending decisions subject to mandatory annual audits.
Despite negative national portrayals about safety in Chicago—particularly remarks made by former President Donald Trump—the city reported growth in tourism metrics last year compared with 2024. According to data presented at Choose Chicago’s recent annual meeting: “Choose Chicago cited 11.9 million hotel bookings in 2025, up from 11.6 million in 2024.” Additionally: “Choose Chicago also secured 65 citywide conventions, up from 49 last year, and $2.9 billion in hotel revenue compared to $2.8 billion in 2024.” The organization anticipates surpassing last year’s record visitation figure when final numbers are released later this spring.
Major events booked include next year’s Big Ten Men’s Basketball Tournament (March), WNBA All-Star Game (July), and MLB All-Star Game (2027).
