Editor’s Note: As the city touts the success of World Cup tourism, the Daily Press is taking a look at the city’s overall tourism industry. Yesterday we covered the city’s ongoing failure to rebound from a Covid-induced decline in tourism and the reasons why officials say Santa Monica remains at 50% of historic highs. Today we cover the economic value of tourism.
Fewer visitors means lower hotel tax revenues
Santa Monica's recovery strategy rests heavily on Transient Occupancy Tax revenue, the 15% levy on overnight hotel stays that flows directly into the city's General Fund and represents one of its single largest revenue sources. In 2025, the City of Santa Monica generated $54.4 million in Transient Occupancy Tax, a 13.2% decrease from the $62.7 million generated in 2024.
The decline in revenue comes as there are actually more hotel rooms available. All hotels and rooms that had been under renovation over the previous three years fully reopened by 2025, bringing the city's annual room supply up 4% compared to 2024.
Santa Monica now has 4,189 total rooms and units available daily, including 3,936 hotel and motel rooms across 36 properties and 253 beds at the International Hostel. Over the course of the year, that translates to a total annual supply of 1,608,329 available rooms.
Despite the increased supply, the citywide occupancy rate dipped to 72.3% in 2025, down from 75% in 2024, leaving a vacancy rate of 27.7%.
International Visitors Carry the Load
The principal driver of 2025's spending gains was the continued growth of international visitation. International travelers now account for 50% of all Santa Monica visitors, up from 44% in 2024 and just 24% in 2023 — a dramatic compositional shift in who is actually coming to the city.
Those visitors are also significantly more lucrative. International visitors spent an average of $212 per person per day in 2025, compared to $158 for domestic U.S. visitors. Their combined total spending reached $601.9 million — 60% of all visitor spending — up 28% from $470.9 million in 2024.
The flip side of that equation played out in the domestic numbers. U.S. visitor volume fell 17% from 2024, to 1.95 million from 2.36 million, and their total spending dropped 11% to $394.8 million despite a modest per-capita increase. The study attributed the domestic decline partly to high U.S. travel costs motivating American travelers to go abroad rather than stay home.
The Day-Tripper Dilemma
One of the more persistent structural features of Santa Monica's tourism economy is its overwhelming preponderance of day visitors — people who arrive, spend part of the day, and leave without staying overnight. In 2025, 88% of all visitors were day visitors, up from 84% in 2024 and 77% in 2023. The trend line is moving in a direction that creates challenges for the city's hotel-heavy tax base.
The contrast in economic contribution between the two groups is stark. Day visitors accounted for 88% of total visitor volume but generated only 27% of total visitor spending. Hotel guests, averaging $445 per person per day compared to $78 for day visitors, are far and away more economically valuable per person to the city.
Hotel guest numbers fell sharply, dropping 21% to 422,800 from 534,800 in 2024. The decline had a pronounced effect on tax revenue to the city. Visitor-generated lodging and retail sales taxes fell 10% to $60.2 million, with transient occupancy tax — the city's primary tourism-related revenue stream — declining 13% to $54.4 million. The tax equivalent contributed by visitors amounted to $1,267 per Santa Monica household, down from $1,441 in 2024.
Inflation drives spending
Against that backdrop of stubborn volume decline, the spending picture offers mixed results. Total direct visitor spending reached $996.6 million in 2025, a 9% increase over the $916.6 million recorded in 2024, driven by a 19% spike in overall per-capita daily spending to $187 from $156.
However, that spending is driven largely by inflation driving increases in prices. Adjusted for inflation, real visitor spending in 2025 totaled $290.8 million — compared to a real-dollar peak of $766.6 million in 2017. In practical terms, the city is collecting more nominal dollars from far fewer visitors spending far less in inflation-adjusted terms than it once did.
When combined with indirect and induced spending, the total economic impact of Santa Monica tourism reached approximately $1.3 billion in 2025, up from $1.19 billion in 2024.
Repeat Visitation Declining
Another dimension of the industry's long-term challenges is the declining share of visitors who have been to Santa Monica before. In 2025, 70% of visitors were in the city for the first time — up from 65% in 2024 and 51% in 2023. The report tied the rise in first-timers directly to the increase in long-haul international arrivals, who are less likely to have visited previously.
Among the diminishing pool of repeat visitors, those who had been to Santa Monica before averaged 3.2 prior trips in the past three years, up from 2.6 in 2024. But the overall visitor base is becoming increasingly composed of people experiencing the destination for the first time, a mix that carries implications for spending patterns, brand loyalty, and long-term visitation stability.
The report noted that satisfaction ratings, while generally high, declined across most measured categories from 2024 to 2025, including overall destination satisfaction, value for money, and authentic shopping experiences. Among past visitors rating their impression of Santa Monica compared to prior visits, 19% said the city had gotten worse — the third consecutive year that figure has risen.
Among past visitors to Santa Monica, 19.2% said their impression of the city had worsened since their last visit. Of those, 60.8% cited an increase in homelessness, while 43.7% pointed to worsening traffic and congestion and 43.3% said the city feels less safe. Cost was a factor for 41.7%, who said Santa Monica has become too expensive, and 32% said the area was dirtier than they remembered. Smaller shares flagged parking availability (18%), a less vibrant atmosphere (17.7%), fewer new things to see and do (13.3%), an unwelcoming feel (9.6%), overcrowding (7.1%) and a lack of new restaurants (6.9%).