Summer slowdown strikes Palm Springs: Tourism takes a hit as transient occupancy tax drops

As summer fades in the Coachella Valley, Palm Springs is reporting a steeper decline in tourism this year compared to the previous summer. The city's transient occupancy tax (TOT), often referred to as a room tax, which is primarily paid by visitors, has seen a significant drop of 16% from July 2022 to July 2023.

"We're definitely seeing a significant slowdown with our summer travel business," said Kelly McLean, CEO of vacation rental property management company Poppy. She said this year's summer tourism levels resemble those of 2019, pre-pandemic, after experiencing a boom in travel during and after the pandemic.

McLean highlighted the surge in business during 2020 and 2021 but noted a decline in 2023. Vacation rentals were hit especially hard, with TOT revenue dropping by more than $226,000 compared to last July.

In response to the downturn, McLean is rolling out marketing initiatives and price adjustments for her roughly 100 Palm Springs short-term rentals. She advised property owners to be open to lowering nightly rates, saying, "People are making buying decisions, and they're choosing whether or not to come stay at your property versus another home that might be comparable and at a slightly better price point."

Although the year-over-year July TOT revenue drop in Palm Springs amounted to approximately $476,000, this represents less than 1% of the city's annual tourism tax revenue, which stands at nearly $53 million.