Hotel-tax expert tells Duncanville council every "hot" dollar must 'directly promote' tourism

Justin Bregel, general counsel for the Texas Hotel & Lodging Association, told the Duncanville City Council at its June 30 budget workshop that every municipal hotel-occupancy-tax dollar must meet a two-part test under chapter 351 of the Texas Tax Code: it must directly promote tourism and the hotel/convention industry, and it must fit within a statutory category such as convention centers, advertising and promotion, arts or historic restoration.

"Every expenditure must directly promote tourism and the hotel and convention industry," Bregel said, stressing the meaning of "directly" and urging the council to preserve a clear link between projects and overnight stays. He used the industry shorthand, "heads in beds," to summarize the legal standard.

The presentation listed commonly used categories and statutory limits: an advertising-and-promotion floor of roughly one-seventh of annual hot revenue (about 14.28%) and caps such as 15% maximum for arts and for historical preservation, a rule Bregel said was clarified by the 2023 legislature. He also summarized allowed uses including transportation for tourists, wayfinding signage, and certain sports-related spending subject to restrictions and a five-year review of hotel activity tied to sports-facility improvements.

Council members pressed Bregel on how precise cities must be in estimating room nights and tourist impact. He said event organizers can and should track out-of-town participation and that digital location tools can supplement estimates. "You don't have to be extremely strict on this; it's more of an art than a science," Bregel said, describing methods such as event registration and third-party visitation analytics.

Staff presented Duncanville's current planning assumptions: roughly $1.2 million annual hot revenue, which implies a required advertising allocation of about $171,000. Staff described proposals to prioritize advertising, arts grants and maintenance at community facilities (including about $200,000 in recent field-house maintenance) and to consider using hot funds to support sports and tourism initiatives if they can demonstrate the required nexus to hotel stays.

What happens next: staff will incorporate the state-code constraints Bregel outlined into the FY27 budget recommendations and continue working with council on how to apply hot funds to advertising, arts, events and eligible capital repairs.

Sources: Presentation by Justin Bregel (Texas Hotel & Lodging Association) and staff remarks during the June 30, 2026 Duncanville budget workshop.