As more destinations wrestle with the pressures of growth, a simple idea is gaining traction: Show people where their money goes. From sustainability funds in Oregon, USA, to tourism taxes in Spain’s Balearic Islands, transparency around this income is helping destinations build trust, manage demand, and ensure that tourism dollars truly work for local communities. This transparency isn’t just good governance or good storytelling; it’s a cornerstone of destination stewardship. Ailin Fei, Hospitality and Tourism Management PhD Candidate at Purdue University and Research Manager at Visit Austin, explains.
Does the Tourism Tax Actually Care for the Place Tourists Come to Enjoy? Maybe.
Every year, travelers spend billions of dollars in destinations around the world. They stay
in accommodations, enjoy meals, buy tickets to attractions, and pay for the taxes tucked quietly
into the fine print. But how much of that money actually makes its way back into the
communities hosting them? And how many visitors, or even residents, know about those funds?
As more destinations wrestle with the pressures of tourism growth, a simple idea is
gaining traction: Show people where their money goes. From sustainability funds in Oregon,
USA, to tourism taxes in the Balearic Islands, transparency around tourism taxes is helping
destinations build trust, manage demand, and ensure that tourism dollars truly work for local
communities.
Tourism That Directly Gives Back
In Bend, Oregon, USA, the local destination organization, Visit Bend, puts its money
where its mouth is. Through the Bend Sustainability Fund, a portion of the city’s lodging tax
supports community-led projects such as trail restoration, river cleanups, and waste reduction
programs. Locals can apply for funding, and visitors can see how their stay helps protect the
places they came to enjoy.
Across the country in Kissimmee, Florida, Experience Kissimmee takes a similar
approach. It invests part of its tourism revenue into the Tourism Enhancement Grants Program, which provides funding assistance to local government and nonprofit organizations conducting special events and projects in Osceola County. These community events celebrate local culture and create shared moments between residents and visitors. It’s tourism as partnership, not transaction, and the benefits are visible.
The Rise of Tourism Improvement Districts
In the U.S., a growing number of cities are turning to Tourism Improvement Districts
(TIDs) to keep tourism money close to home. California has been leading the way for years, but places like Richmond, Virginia, and Austin, Texas, have recently joined in.
Here’s how it works: Local hotels and tourism businesses agree to collect a small
assessment, which is not a tax imposed by the state, but a local tool for local benefit. The funds
go directly into enhancing the visitor experience, marketing the destination, or supporting
community projects. In Austin’s case, in addition to the new Public Improvement District, tourism taxes also help fund the city’s Live Music Fund. Of the hotel occupancy tax revenue, 15% goes directly to a historic preservation fund and 15% or more go to the cultural arts fund, with any remaining dollars going to enhance Austin’s “cultural tourism” industry. The result? A tourism
economy that is creative, local, and community driven.
Global Lessons in Reinvestment
Elsewhere, some destinations are getting even smarter about how they collect and use tourism taxes. In Croatia (Sojourn tax) and the Balearic Islands (Sustainable Tourism Tax), for
example, tax rates fluctuate by season or region. Travelers pay a little more during peak periods,
and a little less in the shoulder season. It not only makes sense, but it’s a built-in way to manage
demand and reduce strain on local communities and ecosystems.
The payoff can be impressive. Since 2016, the Balearic Islands’ sustainable tourism tax
has funded more than 200 projects worth over €470 million, from water conservation and
heritage farming to off-season employment programs.
The idea of using visitor levies to fund sustainability isn’t new, but it’s gaining momentum fast. In New Zealand, the International Visitor Conservation and Tourism Levy was nearly tripled in 2024 to $100 NZD. Half of that goes to improving visitor infrastructure, and the other half goes to conservation projects. The goal is simple: If tourism benefits from the land, it should also help protect it. Meanwhile in Cologne, Germany, an occupancy tax directly supports the city’s arts and culture scene.
These examples show that many destinations are getting the funding formula right. One
big piece, however, is still missing—public-facing transparency. Try to find out exactly where those millions have gone, and the trail often runs cold. Reports may exist somewhere in government archives, but they’re not always easy for residents or travelers to access, let alone understand.
That said, a few destinations are setting a new standard. In places like Bend, Oregon, and the Balearic Islands, governments with their Destination Marketing Organizations (DMOs) have
created clear, user-friendly websites that show exactly how tourism tax revenues are allocated. Projects are listed, funding amounts are stated, and the outcomes are recorded in plain language. Simple, visual, effective. When people can see what their extra tax supports, they’re far more willing to pay it.
Why Transparency Matters
All these examples point to a common truth: Tourism funding only builds trust when
people can see what it’s doing. For residents, transparency helps shift the narrative from “tourism
costs us,” to “tourism supports us.” For visitors, it turns an abstract tax line on their hotel bill into a
tangible contribution. They could be supporting a new trailhead, a restored festival, and a
thriving local culture. When people know their dollars make a difference, they become more
invested, literally and emotionally, in the destination’s future.
What DMOs Can Do
Destination Marketing Organizations have a key role to play in this shift. They can make
the financial impact of tourism visible and meaningful through a few simple steps:
● Show and Promote the Impact – Publish annual reports or digital dashboards highlighting
how tourism taxes and fees are reinvested locally.
● Tell the Story – Use social media, signage, and campaigns to connect visitors’ spending to
real community projects, for example, “Your stay helped restore this trail.”
● Collaborate Locally – Involve residents, nonprofits, and local governments in deciding
how funds are allocated.
● Be Clear and Honest – Communicate not just the successes, but the trade-offs as well. Transparency builds trust.
● Tie It to Stewardship – Frame every reinvestment as part of a bigger story: tourism taxes that
sustain the place, not just sell it.
Tourism doesn’t have to be a one-way street. When destinations close the loop by showing
where the money goes, how it’s spent, and who benefits, they turn tourism into a shared
investment in place. Transparency isn’t just good governance or good storytelling; it’s a cornerstone of destination stewardship. By clearly demonstrating how tourism dollars support communities, protect the environment, and preserve local culture, destinations can build trust,
foster resident pride, and ensure that tourism growth truly benefits everyone.