Economic Impact of Tourism

The City of Napa's tourism industry is a crucial source of economic growth that benefits every resident. Two key mechanisms, the Transient Occupancy Tax (TOT) and the Tourism Improvement District (TID) play a pivotal role in utilizing tourist spending into essential City services and community enhancements.

The Transient Occupancy Tax is a 12% tax paid by visitors staying in Napa's hotels and short-term rentals. In 2023, TOT revenue reached $69 million across Napa Valley, with $30 million directed towards the City of Napa's General Fund. This revenue stream accounts for approximately 23% of the City's General Fund, which supports a wide array of City services. When visitors pay to stay in Napa, they are contributing to important community needs like street maintenance and improvements, public safety services, parks and recreation facilities and other essential services that benefit everyone.

While TOT focuses on and funds City services, the TID is all about enhancing Napa's brand and marketing efforts. The TID generates about $1.2 million annually, dedicated to beautifying Napa as a destination and investing in events that benefit both visitors and locals alike. This goal aligns with the Economic Development team's pillar of Placemaking and Beautification, which emphasizes enhancing public spaces to support economic growth. A prime example of TID funds at work is the Napa Lighted Art Festival, a beloved event that receives about half of its operating budget from TID each year. While the Lighted Art Festival is primarily a local event, it also attracts visitors and plays a crucial role in creating a sustainable revenue stream that enhances Napa's community.

The economic impact of tourism extends far beyond these specific funding sources - visitors contribute significantly to our local economy through various channels. Tourists shopping in Napa local stores, dining in restaurants and purchasing Napa's world-famous wines contribute to approximately 35% of Napa's sales tax revenue, which will contribute $23.2 million to the City's General Fund in the FY 2024-2025. The tourism industry also supports about 16,000 jobs across Napa Valley, in sectors such hospitality, culinary arts and retail.

As the City continues to expand its event offerings, invest in tourism driven businesses and attract a more diverse crowd, mechanisms like sales taxes, the TOT and TID will serve as key drivers of economic development. Tourism in Napa is a vital source of local jobs and funding that supports community services.