Tipping point
Taxes have never been higher for Colorado tourists; are we killing the golden goose?

Colorado’s tourism industry is in a slump. Two years of slowing traffic and flat spending have left visitor-reliant businesses limping. This winter – with a snowpack looking to make the 2025-26 season the second worst in 50 years – will certainly add to the industry’s woes.

A few years ago, the state’s destination marketing pros would have been crafting persuasive campaigns to shift the tide. They would have planned flashy videos and banner ads and targeting vacationers. But those campaigns are not happening. The Colorado tourism marketing machine is slowing as millions of dollars in new and diverted lodging taxes that once funded destination promotion are now going toward housing, child care, recreational, roads and police. 

Two laws passed in 2022 and 2025 allow communities to increase or divert lodging taxes from tourism marketing. A recent tally of 39 towns, counties and marketing districts shows more than $256.6 million in lodging taxes were raised for purposes other than tourism promotion since 2022. New and redirected lodging and short-term rental taxes collected in 2026 are expected to reach $76.9 million, with all of that supporting housing, child care, roads and public safety. 

“This means visitors are paying a lot more for lodging, and we are not getting more money to work with to market our destinations,” Dave Santucci, of Denver marketing firm Mission 2 Market, said.

Santucci has tracked lodging tax allocations since 2022. He points to a majority of states increasing tourism marketing budgets while the roughly $20 million annual budget for the Colorado Tourism Office has largely remained flat since 2016. And advertising costs have climbed as much as 40% in the last five years. 

“The point of destination marketing organizations is to spread out traffic and create resiliency. The funding that goes into DMOs comes back in multiples of return on investment,” Santucci said. “That marketing is tied to economic development and a community’s ability to attract and retain residents. We are setting ourselves up for trouble by raising our prices and cutting our marketing.”

Colorado seems to be leading the nation in declining skier traffic in this snow-deprived season. Hotel occupancy tracked by DestiMetrics – which follows bookings in 17 Western mountain communities – shows Colorado and Utah bearing the brunt of the declining traffic. The latest DestiMetrics report pins winter occupancy in Colorado and Utah down 6.7% compared with this time last year, with five other Western states seeing an occupancy decline of 0.5% so far this season. 

Shor-term rentals in Colorado mountain towns are leading a national decline in ski bookings, according to a January report from AirDNA, a Denver firm that tracks short-term rental data. While STR bookings at all ski resorts are down about 5%, Colorado resorts are down anywhere from 5% in Vail to 35% in Telluride.  

“As destinations wrestle with the impacts of changing climate and weather patterns, I suspect that new playbooks are being written,” Tom Foley, tourism economist with Inntopia, which owns DestiMetrics, said. “Along with seemingly interminable economic uncertainty, we are also reminded that snow, our ace in the hole, can be frustratingly fickle.” 

Of course, funding for housing, infrastructure and child care is critical as municipalities and counties face federal funding cuts. The state is asking more of counties, too, with new laws around jails, human services, Medicaid and more. That is forcing many governments to squeeze tourists for more revenue. Most of the time, voters can be easily swayed to increase taxes on visitors. But not always. Last year, Cañon City, Chaffee County, Manitou Springs, Vail and Telluride rejected tax increases on lodging and activities.

“The state will not allow counties to raise funds in any way other than property taxes,” Chaffee County Commissioner P.T. Wood said. “We are really handcuffed, and our populations continue to grow and our demands for services continue to grow, and the state continues to restrict our abilities to increase revenues.”

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