The city of Chesterfield is exploring the possibility of implementing a transient guest tax on hotel and motel accommodations.
Currently, hotels in the city collect a 7.25% tax, with proceeds divided between St. Louis County as a 3.75% Convention and Tourism Tax and a 3.5% Convention and Sports Tax.
According to Assistant City Administrator Elliot Brown, Chesterfield presently does not receive any direct financial benefit from hotel taxes.
Although Chesterfield does not qualify under existing statutory provisions for a municipal hotel tax, Missouri law permits cities to implement local hotel taxes if approved by voters.
The amount of hotel tax revenue is determined largely by three factors: the quantity of hotel rooms available, the percentage of rooms occupied, and the average nightly room rate.
Brown noted that Chesterfield has 16 active hotels providing approximately 2,053 rooms. Based on a 65% occupancy rate and an average nightly rate of $140, the city’s annual hotel room revenue is estimated between $67-68 million.
An alternative approach that would bypass the need for voter approval exists if the city reaches 2,500 hotel rooms, though this option would cap the tax rate at 0.5% per occupied room each night.
Planned developments including Gateway Studios (around 100 rooms) and Downtown Chesterfield (featuring one or more hotels) may expand the city’s hotel supply in coming years.
“Should these projects move forward, Chesterfield’s hotel room count could grow substantially and possibly reach Missouri law’s 2,500-room statutory threshold,” Brown stated.
The timing for Chesterfield to achieve the 2,500-room threshold remains unclear and will depend on the pace of private development projects.
“Even upon reaching that threshold, the maximum permitted tax of 0.5% would yield relatively limited revenue, with potential gains diminished by the costs of administration and personnel needed to properly manage and distribute those funds,” he explained.
Brown indicated that the City Council has two potential paths forward: pursuing special legislation to authorize a hotel tax ballot measure for voters, or waiting to assess hotel development progress and enacting a tax once the city qualifies under current state law thresholds.
Depending on the tax rate permitted by state law, a city-level hotel tax could yield between $300,000 and $3.3 million yearly, he noted.
Hotel tax proceeds are generally allocated to tourism marketing, promotion activities, or tourism infrastructure projects. To oversee these funds, a dedicated commission would be required to counsel the council on spending decisions.
City staff advised pursuing special legislative authorization to place a hotel tax question before voters at a rate aligned with other cities (typically ranging from 2-5%). The Finance and Administration Committee endorsed a 5% rate.
“This strategy sidesteps dependence on speculative development timelines, delivers a more substantial and fiscally sound revenue option, and helps ensure that any eventual voter measure will produce the maximum benefit for Chesterfield residents,” Brown remarked.
During the June 1 meeting, council members voted to support the recommendation to evaluate and examine the special legislation option further.
