Few residents have ever heard of the San Diego Tourism Marketing District, commonly known as SDTMD. Fewer still understand how it works. Yet every year the nonprofit oversees one of the largest tourism marketing budgets in California, directing tens of millions of dollars toward attracting overnight visitors to San Diego.
How It Works
Every time a visitor books a room at a qualifying hotel within the City of San Diego, they pay more than the advertised nightly rate. In addition to the room charge and the city's hotel tax, guests staying at lodging properties with 70 rooms or more also pay a separate 2 percent Tourism Marketing District assessment. Rather than flowing into the city's general coffers, those dollars are pooled into SDTMD and reinvested exclusively to attract more overnight visitors. It is, in effect, the tourism industry marketing itself.
The concept is straightforward. Hotels collectively contribute marketing dollars because no individual property can effectively promote San Diego as an international destination on its own. By pooling resources, they can fund large-scale advertising campaigns, major sporting events, destination branding, convention recruitment and tourism initiatives that would be impossible for a single business to undertake independently.
That influence extends well beyond hotels. When SDTMD funds a major sporting event, music festival or tourism campaign, visitors who stay overnight also dine in restaurants, visit breweries, purchase tickets to attractions, shop at local retailers, use rideshare services, visit museums, attend concerts, charter fishing boats, take harbor cruises and spend money across virtually every sector of San Diego's economy. According to the San Diego Tourism Authority, visitors spent approximately $14.4 billion throughout San Diego County during fiscal year 2025, supporting more than 200,000 jobs and making tourism the region's second-largest industry. Between 75 and 80 percent of visitor spending occurred outside of hotels.
"Everything we do starts with attracting overnight visitors to San Diego," said SDTMD Board Chair Richard Bartell. "Even as travel patterns continue to evolve, SDTMD's investments help ensure San Diego remains competitive in attracting visitors year-round. By supporting strategic destination marketing and high-performing events, we're helping sustain the visitor economy that benefits communities throughout our city."
This year's funding announcement arrives at a significant moment. San Diego is expanding its convention and sports tourism footprint, welcoming major new hospitality developments including the Gaylord Pacific Resort & Convention Center, and navigating a global tourism landscape where competing destinations are investing unprecedented sums to capture travelers who have more choices than ever before.
Where The $44.5 Million Goes
The overwhelming majority of SDTMD's funding is concentrated in a handful of organizations tasked with bringing overnight visitors to the city.
Of the $44.5 million approved for fiscal year 2027, approximately $41.66 million, nearly 94 percent of the entire budget, goes to a single organization: the San Diego Tourism Authority. Often confused with SDTMD itself, the Tourism Authority is a separate nonprofit responsible for marketing San Diego as a travel destination. It produces much of the advertising prospective visitors see promoting San Diego's beaches, restaurants, neighborhoods, hotels, attractions and conventions, and works to recruit meetings, conventions, international travelers and leisure visitors from around the world. In many respects, SDTMD functions as the funding mechanism while the Tourism Authority serves as its primary marketing arm.
The remaining funds are distributed through a competitive application process to organizations and events capable of demonstrating one thing above all else: the ability to generate overnight hotel stays within the City of San Diego. That distinction matters. Unlike traditional arts grants or civic sponsorships, SDTMD funding is not awarded simply because an event is culturally valuable or locally popular. Applicants must provide detailed projections estimating how many hotel room nights their event will generate, and those projections are a primary metric in determining whether funding is awarded.
An event drawing 20,000 local residents may have relatively little value to the Tourism Marketing District if few attendees require hotel accommodations. Conversely, a sporting tournament bringing several thousand athletes and their families from across the country for multiple nights may generate thousands of hotel room nights and receive substantial support.
That philosophy explains why sports occupy a significant portion of the funding portfolio. Approximately $2.135 million was awarded to Sports San Diego, the nonprofit responsible for attracting and supporting athletic competitions throughout the region. Among the events benefiting from this year's funding are the California State Summer Games, ECNL Showcase, USA Pickleball National Championships, National University Bill Walton Classic, Rady Children's Invitational and the San Diego Bowl.
Beyond the major marketing organizations, SDTMD allocated approximately $745,000 to individual tourism-generating events, including:
- USTA Billie Jean King Girls' National Championships — $70,000
- San Diego Bayfair Thunderboat Races — $150,000
- Mission Bayfest — $74,500
- Old Town San Diego Día de los Muertos — $50,000
- San Diego Food & Wine Festival — $74,500
- San Diego Open tennis tournament — $40,000
- 54th San Diego Crew Classic — $142,000
- Gator By The Bay — $70,000
- United States Police & Fire Championships — $74,000
Collectively, SDTMD estimates all FY2027-funded programs will generate approximately 4,650,222 hotel room nights within qualifying City of San Diego lodging properties, producing nearly $971.5 million in hotel revenue and approximately $110 million in Transient Occupancy Tax revenue for the city. The grants are not viewed as expenditures. They are considered investments, with every dollar intended to produce a measurable financial return for both the hospitality industry and the city through increased tax revenue.
A Brief History
To understand why SDTMD exists, it helps to understand a simple reality: destinations are no longer competing only with their neighbors. They are competing with the entire world. A family in Phoenix deciding where to spend spring break is choosing between San Diego, Hawaii, Mexico, Disneyland, Las Vegas and dozens of other options. A meeting planner considering a national convention may compare San Diego against Nashville, Orlando, Chicago or New Orleans. Simply having beautiful beaches and ideal weather is no longer enough.
That realization prompted California lawmakers in the 1990s and early 2000s to authorize Tourism Marketing Districts, allowing lodging businesses within a defined geographic area to assess themselves collectively in order to fund destination marketing. Unlike taxes imposed by government, these assessments originate with the hotel industry itself and are approved through a formal petition process by the businesses paying them. San Diego embraced the model in 2008.
Today, qualifying lodging businesses with 70 rooms or more within the City of San Diego collect a two percent assessment from guests, with proceeds dedicated exclusively to tourism promotion. The assessment is distinct from the city's Transient Occupancy Tax, which flows into public revenues and helps finance municipal services including police, fire, parks, libraries and road maintenance. The Tourism Marketing District assessment, by contrast, never enters the city's General Fund and can only be spent on programs designed to increase hotel demand. In effect, visitors help fund the marketing that attracts future visitors.
Why This Matters Beyond Hotel Lobbies
For many San Diegans, tourism is something that happens somewhere else — the crowds in the Gaslamp Quarter during Comic-Con, families lining up outside the San Diego Zoo, convention attendees wearing badges downtown. But tourism's economic footprint extends far beyond those familiar scenes.
When a family from Chicago stays at a Mission Bay resort for five nights, they have breakfast at neighborhood cafés, grab fish tacos in Ocean Beach, browse boutiques in Little Italy, rent kayaks, buy Padres tickets, visit North Park breweries, attend concerts at The Rady Shell, explore Balboa Park museums and dine at restaurants throughout the city. By the time they board their flight home, dozens of San Diego businesses with no direct connection to the hotel industry have benefited from that single vacation.
Tourism is one of the few industries that effectively imports outside money into the local economy. Unlike sectors that simply circulate dollars already within the region, visitors bring entirely new spending into San Diego — supporting local businesses, creating employment and generating tax revenues that fund municipal services relied upon by residents year-round. More than 200,000 jobs throughout San Diego County are supported by visitor spending, and the majority of those employees never work inside a hotel.
Looking Ahead
San Diego is entering what could be one of the most consequential periods in its tourism history. The region recently hosted practice matches for the 2026 FIFA World Cup, placing San Diego before an international television audience measured in the billions and introducing the city to first-time visitors from around the world who may return for future vacations or conventions. The opening of the Gaylord Pacific Resort & Convention Center has dramatically expanded the region's ability to host large-scale meetings, and continued investment in attractions and hotel development further strengthens the city's position as an international destination.
At the same time, the competitive landscape has never been more demanding. Artificial intelligence is reshaping how travelers discover destinations. Social media increasingly determines where younger travelers vacation. Travelers are demanding more personalized experiences and placing greater emphasis on sustainability, local culture and authentic neighborhood exploration. Destinations from Barcelona to Nashville are spending record sums to capture the same finite pool of visitors.
Some residents question whether San Diego should continue encouraging record visitation while grappling with housing affordability, traffic congestion, crowded beaches and aging infrastructure. Those concerns are legitimate and increasingly common in major tourist destinations worldwide. Supporters counter that the solution is smarter tourism - spreading visitation throughout the year, encouraging exploration beyond traditional beach destinations, and diversifying San Diego's offerings to sustain economic growth while managing quality-of-life impacts.
SDTMD's funding portfolio reflects that philosophy. This year's investments support not only major sporting events and destination advertising, but also cultural celebrations like Old Town San Diego's Día de los Muertos, culinary events such as the San Diego Food & Wine Festival, longstanding community traditions including Gator By The Bay, rowing competitions on Mission Bay and youth championships across multiple sports — experiences that encourage visitors to explore different parts of the city at different times of year.
For most residents, SDTMD will likely remain an unfamiliar name. Visitors checking into downtown hotels may never notice the small assessment helping fund future marketing campaigns. Families attending Bayfair or the Food & Wine Festival may never realize those events received tourism marketing support. Yet the organization's influence is visible across San Diego's visitor economy, from nationally televised sporting events to the festivals and competitions that fill hotel rooms during traditionally slower seasons.
This year's $44.5 million allocation is more than a budget. It is a statement about how San Diego intends to compete, and a long-term bet that sustained investment in tourism marketing will continue paying dividends far beyond hotel lobbies.
For more information about SDTMD and to view full activity reports, visit sdtmd.org/reports.
Originally published on July 7, 2026.
