El Paso entered 2025 with the strongest hotel occupancy in Texas. A year later, a softer national market, a $1.13 million tax audit and a brand-new levy on Airbnb are reshaping who wins the border-city lodging race.
Key Takeaways
2025 set a high bar. Destination El Paso told city council in May 2025 that average hotel occupancy was about 73%, above state and national averages, across roughly 10,400 rooms.
The national backdrop got tougher. U.S. occupancy and RevPAR fell year over year in 2025 for the first time since 2020, so El Paso is defending a premium in a softer market.
2026 is the year of the rulebook. A city audit, a vote to tax short-term rentals and rising guest-facing fees are changing how hotels and Airbnbs compete.
Airbnb data is noisy. Two trackers disagree on 2026 short-term-rental occupancy, a warning to read every El Paso lodging headline carefully.
Why El Paso's hotel market punches above its weight
Most Texas cities chase conventions and oil-patch travel. El Paso runs on something different: a binational economy, one of the largest U.S. Army posts, a medical and university base, and a steady flow of cross-border business and shopping trips. That mix has kept occupancy high for years.
MapZot.AI reported El Paso County's 2023 annual hotel occupancy at 69.4%, ahead of the 62.3% Texas rate that year. By May 2025, Destination El Paso leaders told the council the city's average was about 73%. The same briefing put tourism's direct economic impact at roughly $2.3 billion a year and credited the sector with more than 32,000 local jobs.
Last year (2025): borders, groups and a national slowdown
March 2025 that increased border activity and tariff anticipation were rippling through El Paso hospitality, with group demand up 61% in the market. Group business is the kind of demand that fills weekday rooms, which is exactly where leisure-heavy markets struggle.
UTEP's Hunt Institute, which tracks the Paso del Norte region, noted that in June 2025 El Paso posted the strongest year-over-year hotel occupancy growth among the markets it follows, even as several others slipped. Its January 2026 report flagged year-over-year hotel occupancy declines in some Texas border markets for November 2025, a reminder that the second half of the year was not a straight line.
This year (2026): the rulebook rewrite
1. The audit that put hotel compliance in the headlines
On April 21, 2026 the city's Round 10 hotel occupancy tax review wrapped up. It found $1,131,941.83 in deficiencies across 19 of the 20 hotels examined, with one Comfort Inn & Suites cited for about $262,688. Auditors pointed to under-reported revenue, improperly claimed exemptions and untaxed add-on fees such as pet and cancellation charges. The city's CFO said earlier audit rounds had already recovered over $4 million.
Why it matters for occupancy watchers: hotel tax revenue is legally earmarked for tourism promotion and venues such as the convention center, so compliance gaps ripple into the budget used to attract the next conference or tournament.
2. Airbnb is now part of the tax base
On June 9, 2026, El Paso City Council voted to start collecting hotel occupancy tax on short-term rentals. City officials said El Paso had been the only large Texas municipality not doing so for about a decade. The city estimates about $3.5 million a year in new revenue and projects Airbnb revenue alone at roughly $23.7 million in 2026. Collection starts between 90 and 180 days after the vote, and a follow-up council vote in early September amended the city code to bring rentals under the hotel definition.
3. Short-term rental data tells two stories
This is where careful reading matters. AirDNA reports that from August 2025 to August 2026 El Paso short-term-rental occupancy rose 39.1% and RevPAR rose 19.1%. BNBCalc, using a different method, showed a more modest picture: in May 2026 it reported supply down 10%, occupancy up 2%, nightly rates up 18% and RevPAR down 17%. By its September 2026 update, listings were roughly flat year over year, average occupancy was about 44%, the average nightly rate was $137 (up 15%) and RevPAR was up 3%.
What to watch next
The STR tax go-live window. Between early September and early December 2026, short-term-rental guests begin paying the city portion. Watch for any shift in nightly rates and bookings back toward hotels.
Great Wolf Lodge. City officials have said the planned indoor water-park resort could bring a minimum of 500,000 visitors a year, with a state law change enabling hotel and sales tax incentives tied to a convention center. A major new room supply would test the market's 70%+ habit.
Border and trade flows. Cross-border business travel is a core driver, so trade policy and border conditions remain the biggest swing factors.
Military and medical travel. Fort Bliss-linked stays and hospital-related demand are the steady base load for airport-area hotels.
