Chicago is introducing a fresh tax initiative targeting certain hotel stays across the city.

The City Council gave the green light to the Tourism Improvement District earlier this year, affecting larger hotels in specific neighborhoods.

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The overall tax levied on a hotel stay in Chicago has now reached 19 percent.

Mayor Brandon Johnson and city officials are hailing this as a pivotal moment for Chicago’s tourism sector. They believe this new funding will boost marketing, draw more events, and enhance the local economy.

“The year 2025 was remarkable for tourism,” stated Mayor Johnson. “We achieved a record number of passengers passing through O’Hare Airport and welcomed more leisure visitors to our hotels than ever before.”

The mayor is eager to maintain this momentum. He proposed the “Tourism Improvement District,” which the Chicago City Council approved last month, to secure funding for Choose Chicago, the agency tasked with attracting tourists to the Windy City.

It’s a program that tourism leaders say Chicago’s been lacking for decades.

“Already, we have these tourism improvement districts in over 200 other cities across the country. And most importantly, it would allow the city to generate more revenue and economic opportunity without placing burdens on residents,” Michael Jacobson, president and CEO of the Illinois Hotel & Lodging Association, said.

Starting May 1, visitors staying at a hotel with 100 or more rooms will see a 1.5% assessment on their bill within designated zip codes.

These funds are projected to raise nearly $40 million annually to enhance Chicago’s presence in global markets, attract more travelers, and drive economic growth for the city and the state.

“We compete as the largest convention center in North America with Orlando and Vegas primarily,” Kristen Reynolds, president and CEO of Choose Chicago, said. “Our budget is about 34 million. Orlando is 120, Vegas is over 200 million. So we’ve been really operating in a deficit for many, many years and this makes our competitors nervous.”

City leaders said the benefits from this program will go beyond the tourism industry, bringing more money to the city without affecting people who live in Chicago.