Short-term rentals now bring Austin $23.7 million in hotel taxes. What that could mean for arts grants

Hotel taxes from short-term rentals in Austin have more than tripled in two years, to $23.7 million, KUT reported on Oct. 29. Rentals booked through sites like Airbnb and Vrbo now produce nearly 14% of the city's hotel tax collections, up from about 4%.

That matters beyond tourism. Part of Austin's hotel tax pays for arts and music grants and historic preservation. With the Convention Center closed for rebuilding until 2029, the short-term rental money has offset a drop from hotels. KUT reported that without it, total hotel tax collections would have fallen.

What KUT reported

• Guests pay a 17% hotel tax, and 11 points of that go to the city.
• Collections from short-term rentals are up $16.8 million since the new collection rule took effect.
• The Cultural Arts Fund has about $16 million this year for its Thrive, Elevate and Nexus programs. In the last cycle, applicants asked for more than $67 million, and about $24 million was awarded.
• The Live Music Fund, a separate process, gave about $7.1 million to 399 grantees in 2026.
• Two East Austin arts nonprofits told KUT their Thrive grants were cut between cycles. One said its grant fell from $150,000 to $85,000.

Arts Commission Chair Gina Houston told KUT the strength of hotel tax revenue has been a pleasant surprise during the Convention Center closure. She said it could open discussions about larger grants, more recipients or longer-term funding, but the commission has not formally begun that discussion. Only a portion of the tax goes to arts and music grants, so a $16.8 million increase will not mean $16.8 million more for grants. The city generally sets grant budgets based on the previous year's collections, KUT reported.

What our records add

The rule that brought in the money. On Feb. 27, 2025, the council voted 11-0 for an ordinance requiring short-term rental platforms to collect and remit hotel occupancy taxes and to share certain information with the city. It passed with two companion measures: one that made short-term rentals an accessory use in the zoning code, and one adding new rules for owners, operators and platforms. All three were approved as amended, 11-0. KUT reported that platforms have collected the tax directly since April 2025.

Later changes. On Sept. 11, 2025, the council repealed and replaced the city's short-term rental chapter, 10-0, with Council Member Marc Duchen abstaining. On Nov. 20, 2025, it approved two contracts with Deckard Technologies, up to $1,715,000 for enforcement and up to $745,000 for licensing, both 11-0.

Other claims on the same tax. Hotel tax money funds more than arts grants. This year the council has voted on several uses:

• July 23: $13,215,260 in city hotel tax to Rally Austin for a Historic Preservation Acquisition Fund, 10-0, with Council Member Vanessa Fuentes absent.
• Aug. 27: a new contract with Visit Austin for tourism promotion, with a city share of up to $19,993,429 for this fiscal year. It passed 10-1, with Duchen voting no.

What the arts director has said. At a July 28 budget work session, Angela Means, director of Arts, Culture, Music and Entertainment, said most of her department's funding comes from hotel taxes, with the rest from the general fund. She said the department wants to find sources beyond those two over the next year as part of its "creative reset."

What's next

KUT reported that the city's Tourism Commission has asked the Arts Commission for data comparing the tourism that arts events bring in with convention travel. Houston told KUT the city has no way to collect that data now, and she does not want to add reporting burdens on artists. Whether 2027 grants grow depends on how short-term rental collections hold up while the Convention Center is closed. Bigger awards are not guaranteed, KUT reported.