Oregon’s hospitality industry is raising concerns following the passage of House Bill 4134, legislation that increases the state lodging tax and could have ripple effects across tourism-dependent communities such as Central Oregon.
The bill, approved by the Oregon Legislature last week, raises the statewide lodging tax and is projected to generate up to $38 million annually. Called the “1.25% for Wildlife” bill by some, the legislation would help implement the state’s Wildlife Action Plan to protect over 300 at-risk species via habitat conservation.
Industry groups argue the increase comes at a time when parts of Oregon’s hospitality sector are still recovering from pandemic-era declines, with some cities and counties more impacted than others. The legislation now heads to Governor Tina Kotek, who must decide whether to sign the measure into law or veto it, a decision expected in the coming weeks.
Hospitality advocates say the change could affect an industry that already supports more than 200,000 jobs statewide and contributes roughly $14 billion annually to Oregon’s economy.
Jason Brandt, president and CEO of the Oregon Restaurant & Lodging Association, said the legislation could complicate efforts to rebuild Oregon’s tourism economy. “Passage of House Bill 4134 dismantles one of Oregon’s last remaining revenue streams dedicated for economic development, completely ignoring Governor Tina Kotek’s efforts to boost prosperity throughout the state,” Brandt said. “State lawmakers have threatened one of the best economic development tools the state has seen — a $40 million investment at the state level and hundreds of millions at local levels resulting in a $14 billion return and 200,000 tourism jobs. But all of that’s now at risk if House Bill 4134 is signed into law. The only way to stop this terrible legislation would be a Governor veto.”
Industry representatives say the lodging sector is still uneven in its recovery from the pandemic, particularly in urban markets. “Oregon’s hospitality industry is still in recovery mode and this is simply the wrong time to increase lodging taxes. Hotels, restaurants, and tourism businesses across the state are operating in an environment of high labor costs, inflationary pressures, and uneven demand,” said George Schweitzer, vice president, Development for West Coast Hospitality LLC.
In Portland, for example, hotel occupancy has remained below pre-2020 levels. While average occupancy exceeded 70% before the pandemic, recent data indicates 2025 averages have not surpassed 62%, placing Portland among the slowest-recovering hotel markets in the United States. “[This bill] ultimately makes Oregon and Portland less competitive as a destination,” Schweitzer observed. “When room prices rise due to taxes, travelers have choices and increasingly they choose destinations where their travel dollar goes further. That directly impacts occupancy, hours for employees, and ultimately jobs.”
Brandt said the state’s broader hospitality workforce trends also illustrate ongoing challenges. “According to the American Hotel and Lodging Association’s latest report, U.S. hotel employment increased nationally by roughly 10,000 employees in 2025, yet Oregon was one of the states that experienced a decline of 64 hotel jobs. If signed into law, this bill, with the new tax rate taking effect in January 2027, will only exacerbate the ongoing challenges our industry faces.”
While statewide trends vary, Central Oregon’s tourism economy plays an outsized role in the region’s business ecosystem. Tourism generates hundreds of millions in spending locally each year and supports thousands of jobs in lodging, restaurants, recreation and retail. “Tourism is one of Bend’s largest economic drivers, generating $386.3 million in visitor spending, $25.9 million in taxes and 3,500 direct travel-related jobs in a city of just 100,000 residents,” Brandt said.
Group travel could be particularly sensitive to higher lodging costs. Central Oregon resorts such as Sunriver, Black Butte Ranch, Eagle Crest Resort, Brasada Ranch and Tetherow frequently host conferences, weddings and corporate retreats that bring visitors into local communities.
Scott Larson, president and CEO of Visit Central Oregon, noted: “During the shoulder and winter seasons, many Central Oregon properties, particularly our resorts, rely on group business. Increasing taxes makes our destination less competitive to groups, which will likely cause a decline in business over time. This decline will occur during a time of year when local workforce and economies across Central Oregon need that support.”
Historically, a portion of Oregon’s statewide lodging tax has supported tourism promotion through Travel Oregon, which industry groups credit with helping double visitor spending and significantly expand tourism employment since the early 2000s.
Jeff Knapp, president/CEO of Visit Bend, noted that his organization has used those dollars not only for marketing efforts, but to strategically respond to issues that have impacted Bend’s visitor traffic, such as overwhelming wildfire smoke in the summer of 2024. “Tourism is an engine for our local economy, and like any engine it requires balance. If you keep taking fuel out of it by layering more and more taxes onto the visitor economy, eventually that engine can’t run the way it was designed to,” Knapp said. He noted that transient room tax collections in Bend are up approximately 7.5% year-to-date, suggesting continued demand for Central Oregon’s desirable climate and outdoor attractions.
“Higher lodging costs mean shorter stays and less money available to spend at restaurants, retail stores, activities, and attractions,” Larseo noted. “This bill will likely have a negative effect on our local economies in the long run.”
