Why do I have to Pay a Hotel Occupancy Tax to Rent a Beach Home in Galveston?

Have you ever wondered why there is a 15% tax on your bill when you rent a beach house in Galveston?

Hotel or beach home? Well, by law, hotel and short-term vacation rental renters are required to pay a hotel occupancy tax, also commonly known as HOT.  In Galveston, this rate is 15% which includes the 6% hotel occupancy tax that is paid to the State of Texas and a 9% hotel occupancy tax that is paid to the City of Galveston.

The state’s hotel occupancy tax has been around since 1959 when the first hotel occupancy tax legislation was passed at 3%.  The last rate increase in the 80s brought it to the current rate of 6%.  The state’s portion of hotel occupancy tax goes to the General Revenue Fund and to the Economic Development Account which supports tourism in Texas.

The local hotel occupancy tax was authorized by the state of Texas in the 1970s and capped this rate at 9%.  The local hotel occupancy tax can only be used to promote tourism and the convention/hotel industry and proceeds can be spent on projects/events that would result in generating more hotel occupancy taxs.  Examples of projects/events include:

  • Convention Center construction, operation, and maintenance
  • Transportation systems that serve tourists
  • Tourism advertisements
  • Maintenance/cleanup of public beaches, piers, etc.

The taxes must be paid to the state on quarterly basis and to the City of Galveston on a monthly basis.  As a vacation rental owner, it is critical to register your property and get these hotel occupancy tax taxes paid in a timely manner to avoid late penalties, fines, interest, and especially a Class C Misdemeanor!

The Galveston hotel occupancy taxes go to the Galveston Park Board of Trustees (a non-profit government entity created by the Texas Legislature in 1962 to manage Galveston’s tourism effort) and the three departments within the group include Beach Patrol (which includes lifeguards and peace officers), Tourism (which works to generate increased tourism to the area), and the Coastal Zone (which includes litter control, seaweed and debris removal, and operation of the public beach parks).

Rest assured, the taxes you pay when renting our beach house do go to the proper authorities for the purposes mentioned above.  I hope I have done a good job of explaining where your hotel occupancy tax dollars end up and what they are used for.

But if you want to save money by not paying for the booking fees when renting a beach home, check out this article on booking direct.  #BOOKDIRECT!