Visitors at certain Lexington hotels could pay more for a room in 2027. On Tuesday, the Lexington-Fayette Urban County Council voted unanimously to advance a tourism improvement district that would add a 2% fee on top of Fayette County's hotel taxes.
The vote did not create the district, and it did not start a collection. It moved a projected $2.1 million-a-year marketing fund, a minimum seven-year term and a new public-private board onto a short calendar. The Lexington Herald-Leader reported the Nov. 10 action, including an earliest collection date of April 1, 2027, and only if the council later approves the district.
A Fee for Convention Business
County hotel taxes already total 16%. The proposal would collect 2% on top of that and is projected to generate $2.1 million a year. With the assessment included, downtown lodging charges would total about 18%.
A new public-private partnership would manage the money and market Lexington for conventions, meetings and other large-group business. District revenue would help attract groups to Central Bank Center and other convention spaces. Downtown visitors are expected to bring tax revenue back through restaurant and store spending.
A Tighter Net Than Louisville
The fee would not follow every guest who sleeps in Fayette County. It would apply to hotels within five miles of the city center that have two or more meeting rooms, at least 2,000 square feet of meeting space and a full-service restaurant, the Herald-Leader reported. A hotel outside that ring, or one downtown without the meeting space and a full restaurant, would not be assessed. If approved, the district would operate for at least seven years.
Louisville created a similar district in 2022 and drew a wider circle. That earlier account said Louisville charged 1.5% on properties with more than 51 rooms and made $7.8 million in 2024. The current reporting says the district has generated an additional $8 million a year. Lexington is proposing a higher percentage on a tighter definition of hotel, with a projected yield of $2.1 million, roughly a quarter of what Louisville's district has been reported to raise.
Operators on Both Sides of the Fee
Ameet Patel, representing Thoroughbred Hospitality Group, told the council that all the hotels in the proposed area have agreed to join. Thoroughbred owns 21c Museum Hotel and other hotels across Kentucky. Staff from participating hotels would sit on the board that oversees the district's management.
Patel also told the council, "This program costs Lexington residents nothing." The fee is proposed as an add-on to a hotel stay, not a charge on Lexington households. Qualifying downtown guests could still pay more in 2027. The operators who have agreed to join would have staff on the board spending the money, and the council would still get a chance to approve the district budget. Approval has to come before the district or the fee takes effect.
Federal Relief Runs Out Dec. 31
VisitLex, the county tourism agency, received federal COVID relief funds over several years. Patel said that money will be exhausted Dec. 31, after the scheduled hearing and months before any April collection.
CivicLex put VisitLex's current budget at about $10.5 million, next to a Louisville destination-marketing budget of $11.1 million. The agency budgets are close. Louisville's district revenue is the sharper number: an additional $8 million a year approaches the size of VisitLex's entire budget.
The arrangement is common enough to have a count. CivicLex reported more than 200 tourism improvement districts nationally. A hotel general manager told the Herald-Leader that more than 200 cities have a similar setup and that more are discussing one.
Above Chattanooga, Below Cincinnati
Civitas, which has helped establish tourism management districts across the country, provided the hotel-tax comparisons. Tiffany Gallagher, the firm's vice president and deputy executive officer, said the fee could be collected as early as April 1, 2027.
On those figures, a downtown Lexington total of about 18% would sit above room taxes of around 17% in Indianapolis and Chattanooga, and below hotel taxes in Savannah, Kansas City and Cincinnati. The proposal would not put Lexington at the top of that set. It would move the city from 16% to about 18%, just past two regional rates and still under three others.
First Reading, Then a Hearing
The council is set to give the district ordinance a first reading at its Nov. 19 meeting. A public hearing is scheduled for Dec. 2. Both are still ahead, and neither date imposes the fee.
If the district is approved, Gallagher's earliest collection date is April 1, 2027. The charge would then run at least seven years, on hotels within five miles of the center that meet the meeting-space and restaurant tests. Until that approval, the extra 2% is a unanimous vote to advance a proposal, not a line on a hotel bill.
