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Hotel Rates To Rise In Los Cabos As Lodging Tax Increase Announced

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An increase to the hospitality services tax has been approved in the state of Baja California Sur, which Los Cabos is a part of. This means that people who book a room in Los Cabos will now have to pay a 4% tax on the total cost of the reservation to the state government. This tax will apply on hotel, motel, and hostel reservations made throughout the whole state. Airbnb reservations will also be affected by this tax.    

Pool Area & Bar In Los Cabos Hotel

The Reason Why You’re Getting Charged Extra For Your Cabo Vacation

The increase in the amount of taxes that need to be paid to the state for lodging services is an issue that has been looming over Los Cabos for a while now. While the increase was officially agreed upon by local lawmakers there’s still no set date for it to take effect. 

View of the ourdoor bar at Rancho Pescaero in Todos Santos with palm trees and ocean in the background

There is speculation though that reservations made in Cabo facilities for later dates could see an increase in their final price tag. If you’re traveling to Los Cabos starting next year don’t be alarmed if you get an email from your booking company informing you that the price of your reservation has increased. You may also be asked to pay the difference at the hotel. At this point lawmakers have not cleared up the issue of previously booked rooms.  

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Paying At A Local Hotel in Los Cabos

Airbnb reservations had been immune from this tax entirely, which previously was set at 3% of the total cost of the reservation. As recently as November state authorities ruled that Airbnb could not be exempt from having to pay these taxes. While announcing the ruling local lawmakers even mentioned that Airbnb executives let them know to them which other platforms had been exempt from the tax to ensure that no lodging facility would be safe from taxation.  

Cabo Airbnb
Image Courtesy of: Airbnb

What The Taxes Are Going To Be Used For

One of the big selling points to ensure that tourists accept this increase in the local tax code is that the money collected from this 1% increase will go towards improving Cabo roads and overall infrastructure. Currently, about 80% of the money that’s collected from the existing 3% tax goes towards promoting Cabo, and Baja California Sur in general, throughout Mexico and other countries. 

Cabo Sign

Since Los Cabos is by far the municipality that will be collecting the most taxes it is set to receive 60% of the total money collected throughout the entire state. The new law dictates that the municipality that collects the most tax revenue throughout the year will be entitled to receive 60% of the 1% increase. While the rest of the regions across the state will have to divide the remaining 40% amongst each other. The hope is that this new tax will directly translate to a better overall experience for travelers when they return to Cabo. 

Reparing a road in a Mexican beach city

Los Cabos Doesn’t Feature The Most Expensive Lodging Tax In Mexico    

As we mentioned this rise to the state tax on lodging was heavily discussed by lawmakers for the better part of a year. One of the justifications behind the increase is that Baja California Sur did not feature a particularly expensive lodging tax. Virtually all states in Mexico feature a specific lodging tax, but the tax rate varies from state to state. For example if you were to book a hotel in Tijuana, Ensenada, Rosarito or any other city in the neighboring state of Baja California Norte you’d have to pay a 5% lodging tax. 

Grand Velas Hotel Los Cabos

In Mexico City the rate varies per part of the city that you’re staying at. It can go from 3 to 5%. People against the tax claim that ultimately this tax is more expensive in Los Cabos because the region features some of the highest prices for hotel rooms in the country. An average night at a Cabo hotel is currently at 450 dollars. 

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