Three Minneapolis City Council members have proposed a new 2% fee on hotel rooms that would be used to promote tourism.

A tourism improvement district would be created and the roughly $6 million in revenue would pay for marketing, special projects and workforce development and training.

It would be similar to Minneapolis' downtown improvement district, except the revenue would be managed by a committee of hoteliers who would decide how to use the money. The district would be managed by the Greater Minneapolis Convention and Visitors Association.

Council Members Robin Wonsley, Katie Cashman and Michael Rainville are sponsoring the ordinance, which would allow a 2% "service charge" on the sale of rooms at hotels, motels, boarding houses, bed and breakfasts, and other buildings with 50 or more rooms for rent.

This ordinance was proposed by Meet Minneapolis, the city's convention and visitors bureau. It's part of Meet Minneapolis' destination master plan, which aims "to optimize Minneapolis' visitor economy to ensure year-round vibrancy, a thriving downtown and radiant cultural hubs."

In an email to constituents, Wonsley said university-area hospitality leaders encouraged her to invest the proceeds beyond downtown. Wonsley represents Ward 2, which includes the University of Minnesota. She said the ward is home to the "largest concentration of hospitality outside of downtown," so extending the tourism district into the university area is important to the city's growth. Meet Minneapolis and her co-authors agreed to write the ordinance to say activities and improvements will be "implemented equitably" with regard to geography, including areas outside of downtown.

Wonsley said Unite Here Local 17, the state's hospitality union, also wants to ensure the ordinance increases investment in the hospitality workforce, so the tax revenue can be spent on workforce development and training.

Legislation passed in 2023 allowing cities to create tourism improvement districts, if over half of lodging businesses in the district support it, along with the City Council.

The City Council would vote on whether to approve the tourism improvement district for five years. If passed, the new fee would begin in September. The business housing and zoning committee will hold a public hearing on the proposal at 1:30 p.m. on May 20.

Minneapolis sold a record 680,000 hotel rooms during summer 2024, according to Meet Minneapolis, setting post-pandemic highs for summer occupancy, room demand and room revenue. The occupancy rate last August was over 70% — the highest since October 2019.