Despite oppressive taxes and regulations leading to a decade-long mass exodus of businesses from Chicago, the tourism market provided one glimmer of hope. Hotel bookings reached an all-time record of 8.2 million room nights in 2025, and Mayor Brandon Johnson largely credited industry workers for going “above and beyond to make our visitors feel welcome.” 

This seeming gratitude for both industry employees and guests rendered last month’s decision to raise hotel taxes within the newly created Tourism Improvement District, to a nationwide high of 19%, quite puzzling. The city just risked one of its remaining healthy markets by disincentivizing visitors and proprietors.

Losing The Competitive Edge

A hotel stay anywhere in the country requires a lodging tax, but rates vary widely. Chicago’s previous 17.5% was already at the top of the range, and the new rate is in a costly league of its own. Even notoriously tax-heavy tourist destination New York City charges a more reasonable 14.75% (albeit with a possible $2.00 room fee).

Moreover, many popular vacation locales in states with low overall tax burdens also manage to maintain low hotel taxes. Tourist haven Miami Beach, for instance, charges 13%, and Florida is one of the eight states (and counting) with no income tax. 

Owners and customers have far more affordable options than the Windy City, and those options already outpaced Chicago’s tourist numbers before the latest cost increase. As wealth advisor Ted Jenkin mused, “Chicago just raised the price of admission and is hoping more people show up … It will only make the city less competitive.”

Prioritizing Image Over Safety

As other cities typically do with lodging taxes, Chicago earmarked funding for marketing. Unfortunately, even if the city manages a cost-effective tax-funded campaign, the aim of this one has already missed the mark.

As admitted by Choose Chicago, the city’s tourism agency, high crime rates deter travelers from visiting the area. Despite following the welcome lower-crime trend also seen across the nation, Chicago’s rates remained high by comparison to other tourist destinations. The 2023 homicide rate per capita of Cook County, where the city is located, ranked 17th out of the 63 large metro areas examined by USA Facts. 

Choose Chicago’s CEO Kristen Reynolds explained, “Our competitors benefit from the negative narratives surrounding our city that we can’t afford to counteract …” and Mayor Johnson likewise emphasized the need to contradict “negative narratives.”

This focus on rehabilitating the image, rather than the place itself, was a troublesome takeaway from official statements. Instead of acknowledging the concerning crime statistics and clearly slating these rather discretionary funds to combat danger, leaders repeatedly cited the need to appropriate spending to combat bad impressions. 

The stated goal to “amplify marketing efforts, attract more events, and [benefit] Chicago’s economy,” however appropriate, left out the glaring need for guests’ security.

Ignoring History

Logic leads to the conclusion that raising prices, especially without improving quality, is an unwise business move. Lest any question remain, history leads to the same conclusion.

Numerous existing studies analyze the consequences of hotel tax hikes on a given market. Many methodologies indicate a strong inverse correlation between tax rates and revenue, and studies showing less correlation come with caveats applying to Chicago’s current situation: 

Higher prices affect wealthy travelers less, and the region is not a prime luxury destination. In addition, the rate of return on tourism advertising decreases with higher spending. 

According to history, this tax increase was a counterproductive decision for the time, place, and current tax status of Chicago.

Conclusion

Perhaps The Economist said it best: “[T]he policy rests on a major assumption — that demand for visiting Chicago does not respond much to price. Without that assumption, the policy works against itself.”

The Windy City has much to offer, and it will attract travelers … but only at the right price. A 19% hotel tax will not render the destination more appealing.