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Research Update: $142.5M in lodging tax revenue

Tuesday, January 28, 2025 Research

Strategic marketing drives tourism growth in 2024

According to the latest local industry reports, Puerto Rico’s lodging industry experienced another record year in 2024. Early estimates from the Puerto Rico Tourism Company account for
$142.5 million in room tax collections during the calendar year, a year-over-year increase of 5% and 87% more than the pre-pandemic era.

Hotels without casinos contributed the largest share of taxes, amounting to 42% or $59.3 million. In contrast, hotels with casinos, which are taxed at 11%, account for 27% of the total taxes collected, or $38.5 million.

Lodging platforms that house booking tools, such as Airbnb and VRBO, increased their overall room tax share from 22% to 23% of the total, reaching $33.2 Million.

Since the inception of Discover Puerto Rico, room tax collections have nearly doubled. The industry continues to thrive due to strategic marketing efforts, an expanding local rental market, a surge in post-pandemic travel, and healthy hotel rate growth heading into 2025.

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Graphics=: Lodging tax revenue

Upon review of 2024 hotel analytics by category, Puerto Rico hotels were able to increase average rates and RevPAR, while occupancy remained flat or below last year.

Overall average rates increased across all hotel lodging categories last year, with Puerto Rico average rates growing by 4.7% compared to 0.9% from STR Caribbean competitors.

Puerto Rico's Regional luxury and upper-upscale properties, mostly resorts outside the metro area, had the best overall performance among the hotel categories, with 8.8% average rate growth and a RevPAR growth of 4%.

San Juan area luxury and upper upscale hotel properties increased average rates by 4% while RevPAR showed mild growth of 0.8%. City properties in lower hotel categories, upscale, and mid categories had a slight rate increase of 1.5% while RevPAR decreased by 4%, part as more competition was added to the market.

Hotels Metrics

According to the January edition of the “State of the American Traveler” by Future Partners, the start of the year finds travelers overall optimistic about 2025. 36.9% of American travelers now say the present is a good or very good time to spend on travel—the highest this metric has been since February 2022 (37.8%)-and 58.2% say that travel will be a high budget priority for them in the next three months.

70% of travelers expect inflation to drive travel costs up this year. This, in turn, will drive interest in more budget-friendly destinations and/or more off-the-beaten-path destinations that might be less expensive and likely less crowded.

72% of travelers will use apps as translator tools while traveling abroad, and AI continues to broaden its appeal as an itinerary planning source.

One in five travelers currently use “Buy Now, Pay Later” payment plans, which allow them to book and pay for their trips over time instead of paying the full cost upfront. Interestingly, nearly half (45%) of Gen Z travelers opt to pay for trips with these plans.

Likely predictions for american travelers 2025

Current travel sentiment improved slightly this month, with optimism remaining solid. Nearly four in ten (37%) of American travelers feel that now is a good time to spend on travel, compared to 32% a year ago.

Travel budgets are also strong. The average expenditure on leisure travel, including airfare and accommodation, is $5,898, a record high.

Excitement for travel is near record levels with most travelers (90%) registering high levels.

The expected number of future trips is growing. Americans plan to take an average of 3.9 leisure trips of 50 miles or more from home next year.

Travel booking activity remains high. Almost 40% of people researched travel in December 2024 and 18% have already made reservations for 2025.

Travelers research and reservations