Cities, towns and counties may now approve tourism improvement areas, requested by lodging business owners, in which participating hotels and other lodging businesses pay an assessment of up to $5 per room night or 5% of room receipts to fund tourism marketing.
Official title: tourism improvement areas; municipalities; counties
- September 12, 2026
- Assessment begins on the first day of the first month 90 days after the governing body approves the petition: Start of the lodging business assessment in a newly approved area
What changes
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NowOn a petition signed by the owners of 2 or more lodging businesses, a city, town or county governing body may approve a tourism improvement area and its assessment rate. A plan with a map, planned activities, cost estimates, assessment formula and term must be prepared before a public hearing.
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NowLodging businesses that take part pay an assessment based on either a fixed rate of up to $5 per room rental per night or up to 5% of room rental receipts. Rates may vary by type or class of lodging business, such as size or number of rooms. The money may be used only for advertising, promotion or business recruitment tied to lodging, not for building or maintaining infrastructure.
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NowOwners who sign the petition are part of the area. Owners who did not sign are not participants but may join within 60 days after it is formed. Any owner may join or withdraw during a yearly 60-day window. If owners representing 50% or more of the rooms subject to the assessment file written objections before the hearing ends, the hearing must end and no further steps on that area may be taken for 1 year.
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NowThe Arizona Department of Revenue collects the assessment. The State Treasurer and then the local treasurer pass the money monthly to the local destination marketing organization, which the governing body must contract with to run the area's activities. An owners' board made up mostly of assessed lodging owners governs the area, and the organization must file a yearly report on activities and spending.
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NowTerms are limited to 10 years, and each renewal is limited to 10 years. Owners representing 50% or more of assessed rooms may petition to dissolve the area during a yearly 60-day window, which requires a hearing. Leftover money after debts are paid must be spent under the plan or refunded to the lodging owners. Lawsuits challenging an assessment must be filed within 30 days after it is adopted.
Who it affects
- Owners of hotels and other lodging businesses that provide short-term lodging
- City, town and county governing bodies
- Destination marketing organizations
- Arizona Department of Revenue
- State Treasurer and local treasurers
What you need to do
Nothing, unless you own a lodging business. Owners may choose to sign a petition, join, withdraw, object in writing before a hearing ends, or petition to dissolve an area within the time limits the law sets.
What the law doesn't answer
- Whether lodging businesses may pass the assessment on to guests as a separate charge
- How short-term rentals of homes are treated, beyond the reference to businesses providing transient lodging
- How much the Department of Revenue will keep for administration costs
- What penalties apply if a participating business does not pay the assessment
- Which specific cities or counties plan to form tourism improvement areas
This summary describes the law as enacted. Later laws, court rulings or referendum petitions can change the picture. Check the official text for the current wording.