Olathe considers raising taxes for tourists to match other Johnson County cities
The Olathe City Council will discuss raising the tax rate visitors pay when staying at hotels or motels in order to match nearby jurisdictions.
Known as transient guest tax, the dollars are generated by visitors paying to stay at hotels for 28 consecutive days or less. Guest taxes are often used by other local governments in Kansas to help generate revenue for local development and tourism opportunities.
In Olathe, bed tax revenue goes to the Olathe Chamber of Commerce for economic development and the Convention and Visitors Bureau, which helps promote local businesses and tourism opportunities within the city limits.
The city approved its current 6% bed tax rate in August 2008. On Tuesday, the City Council will look at raising its rates to 9%.
The 2025 adopted budget shows that Olathe’s current guest tax rate will generate $1.8 million. Based on this forecast, the additional 3% would generate approximately $2.7 million per year — although some of the increase will be captured in existing tax incentive districts.
How does Olathe compare?
Olathe currently sits on the lower end of hotel guest tax rates in Johnson County, mirroring its smaller, western counterparts like De Soto and Edgerton — which also have 6% rates, according to the Kansas Department of Revenue. Spring Hill has the lowest transient guest rate in Johnson County at 4%.
If the Olathe City Council approves the 3% increase, the city would have the same rates as Overland Park and Mission, which have the highest guest tax rates in the state.
In recent years, Overland Park’s tourism industry has become a significant generator in its economy. Last year, the largest Johnson County city saw $964 million generated in direct visitor spending, a 4.8% increase from 2023, according to Visit Overland Park — a marketing organization for the city.
Two-thirds of the visitor spending was generated by 2.4 million overnight visitors — including $48 million in local taxes collected from visitors who stayed in Overland Park overnight.
Overland Park has more than 4,700 hotel rooms. By comparison, Olathe — Johnson County’s second largest city — has more than 2,000 rooms.
Mission, one of the smaller cities with about 10,000 people, formed its own Convention and Visitors Bureau in 2009 to help revitalize the Mission Business District. While it dissolved in 2016, the city maintains the fund to help account for revenue generated by its 9% tax rate.
Last year, Mission generated $70,500 in revenue from its guest tax, according to Mission’s budget. These funds are primarily used to distribute five issues of Mission Magazine — a city-based publication to showcase community events and information — but the funds can be used for beautification, wayfinding or other support throughout its commercial districts.
Who sits below Overland Park and Mission?
The Kansas City, Kansas, transient guest rate sits at 8%, which is the same rate as Shawnee and Lenexa — Johnson County’s third and fourth largest cities behind Overland Park and Olathe.
Wyandotte County’s bed taxes support the Convention and Visitor’s Bureau, Sister City Initiatives, and the long-awaited Rock Island Bridge project, according to Wyandotte County documents. KCK budgeted about $4.9 million in transient guest tax funds for its 2025 budget — making up 18% of its $28 million, non-general and enterprise funds, according to Wyandotte County budget documents.
In Johnson County, the Shawnee City Council decided to increase its bed tax rates from 6% to 8% in 2020 to bring needed upgrades to the Mid-America Sports Complex and Mid-America West Sports Complex along Johnson Drive.
The Shawnee City Council debated over raising the tax rate to 9% instead of 8%, but decided that the additional 1% was inappropriate, according to Johnson County Post reporting. The tax change went into effect in April 2021.
The City of Shawnee is projecting $982,400 of revenue in 2025, which represents a 15.6% increase from last year’s approved budget, according to Shawnee budget documents.
“The expenditures reflect the City’s pledge to assist Johnson County Parks & Recreation with Mid-America Sports Complex renovations, a contribution to the Visit Shawnee campaign, and a transfer to the unbudgeted Capital Projects Fund,” the city said in its budget documents.
Lenexa established its guest tax in 2011 and its Tourism and Convention fund, which includes the city’s convention and visitor’s bureau, the economic development council, art purchases, and Legler Barn operations.
In the 2024 fiscal year, the guest tax projected more than about $900,000 in revenue. This fiscal year, the projected close to $1.3 million, according to city budget documents.
The Olathe City Council will discuss its transient guest tax tonight at 7 p.m. at City Hall, 100 E. Santa Fe St.