A sailboat cruises past the San Diego skyline in San Diego Harbor on Jul. 28. 2015.
San Diego, California – Starting May 1, visitors booking a hotel room or short-term stay in San Diego will face higher bills, as a long-contested tax hike finally goes into effect. The increase, part of the city’s Transient Occupancy Tax (TOT), was approved by voters in 2020 as Measure C and applies to all stays of less than 30 days — including hotels, motels, RV parks, bed and breakfasts, and short-term rentals.
Previously set at 10.5%, the TOT will now vary based on a property’s distance from the San Diego Convention Center. Properties closest to the center will be taxed at the highest rate of 13.75%, while those slightly farther will see 12.75% and 11.75%. The changes are part of a tiered system designed to generate more revenue from tourism, especially in high-traffic areas.
The increase comes as San Diego grapples with a $258 million budget shortfall for the upcoming fiscal year. City officials estimate the new tax rates will generate $82 million in fiscal year 2026 and over $1 billion in additional revenue in the first decade.
Although Measure C was passed by 65.24% of voters in 2020, legal uncertainty delayed its implementation. Critics argued it failed to meet the two-thirds supermajority requirement for tax increases. However, a 2021 City Council vote reclassified Measure C as a citizen-led initiative, subject only to a simple majority under the California Constitution. That move was upheld by a San Diego Superior Court judge in 2023, clearing the way for enforcement.
Mayor Todd Gloria, a strong advocate of the measure, welcomed the court ruling and the tax hike’s rollout.
“Today’s affirmative vote by the City Council to validate Measure C is a necessary step to finally put to bed the long-awaited and much-discussed expansion of our Convention Center in addition to addressing two of our city’s most significant challenges: combating homelessness and getting San Diegans back to work,” Gloria said at the time.
In the first five years, 59% of the TOT revenue will be directed toward the Convention Center’s expansion and operations, with the remaining 41% allocated to homelessness services. Starting in year six, the share for homelessness services will drop to 31%, while 10% will go toward road repairs and infrastructure improvements.
The city’s Office of the Treasurer has notified hotel operators, property managers, and hosting platforms like Airbnb and Vrbo about the changes.
Despite the revenue boost, some city leaders expressed concerns about how the measure was passed. Former Councilwoman Monica Montgomery Steppe called the decision to bypass the original ballot language “disheartening” and warned it could further erode public trust in local government.
