The SDTMD was established in 2008 to fund effective and competitive destination marketing for the City of San Diego by bringing visitors into hotels and assessing the hotels a percentage of the room fee. 

Prior to 2008, a majority of the tourism marketing efforts were paid for by San Diego’s Transient Occupancy Tax (TOT) revenues. TOT was established by the San Diego City Council in 1964 “solely for the purpose of promoting the City of San Diego.” However, with costs for city services increasing, various city councils diverted most of TOT funding for other City programs. By 2007, only six percent of TOT funds were allocated for tourism promotion.

With the formation of SDTMD, lodging business owners are assessed a percentage of each room rental to be collected by the City in order to fund tourism marketing efforts. Effective September 1, 2016, the TMD assessment was officially amended to be applicable only to lodging businesses with 70 or more rooms.

SDTMD uses a majority of its funding to support the San Diego Tourism Authority (SDTA) in the objective of driving the city’s tourism promotion, which is key to SDTA’s efforts to win market share, showcase San Diego as a diverse tourism location and increase room night stays for assessed hotels.

The formation of SDTMD and its tourism promotion-only fund, frees up TOT dollars for city services without creating new taxes for city residents or extraneous government spending. The City of San Diego uses TOT revenues for a wide variety of general fund priorities such as roads, police, fire, parks, libraries, homeless outreach and other city services.

Under the leadership of SDTMD, the region has realized key economic impact achievements including consistent growth in overnight stays, visitor spending, tourism jobs and TOT.