Big summer crowds help City of Duluth hold the line on property taxes

DULUTH — Duluth’s 2025 summer tourism season is shaping up to be one of cautious but genuine optimism, with a series of blockbuster events helping to crowd the city’s hotels, restaurants and waterfront in a way not consistently seen since before the pandemic. The economic ripple effects are already showing up in city coffers — and helping hold the line on local property taxes.

Early figures from the Duluth City Treasurer’s Office show tourism tax collections hit roughly $1.57 million in June, up about 1.8% over the same month a year ago. Year-to-date through June, collections sit at nearly $6.29 million, a modest 0.9% improvement on 2024.

Those numbers may not seem flashy, but they mark an important stabilization after two years of post-COVID fits and starts. By comparison, Duluth saw tourism tax receipts jump a robust 9% in 2023, reflecting a pent-up return to travel after the pandemic. This year’s steadier pace suggests a return to more typical seasonal growth patterns.

Still, hoteliers, restaurateurs and city officials are quick to point out that it’s the high-impact signature events — sometimes pulling in six-figure crowds over several days — that fuel Duluth’s summer economy and, by extension, help keep local property tax rates from spiking.

It can’t be overstated how important these events are to the city's general fund. When visitors come to Duluth and stay in the hotels, eat in the restaurants and buy a T-shirt in Canal Park, the local sales and tourism taxes they pay directly offset the burden on property taxpayers.

In fact, Duluth’s tourism taxes — a combination of lodging, food-and-beverage, and admissions surcharges — pump roughly $13 million to $15 million annually into the city’s general fund. That money pays for basic local services, from police and fire protection to street maintenance. Each year, officials note, it effectively trims the property tax levy by about 20%.

St. Louis County receives about $150,000 annually from Duluth’s tourism tax receipts, explicitly earmarked for supporting the Depot Foundation, but otherwise doesn’t draw on these funds for its general budget. Meanwhile, Duluth Public Schools (ISD 709) does not benefit at all from the city’s tourism taxes — its roughly $186 million general fund relies entirely on state aid, property taxes and traditional education funding streams, with no share coming from local tourism revenue.

A busy summer stack-up

So far this summer, there’s been plenty to cheer about. Grandma’s Marathon shattered records with more than 7,500 finishers, the largest field in the event’s 48-year history. The race drew an estimated 20,000 spectators, packing Canal Park from Thursday’s 5K through Saturday’s marathon finish, with many restaurants and hotels reporting all-time high sales weekends.

The Tall Ships Festival stormed back into Duluth’s harbor for the first time since 2022. Organizers estimate more than 200,000 people took in the sailing ships and waterfront vendors over five days, with many attendees booking multiple hotel nights. The scale easily surpassed the 2022 edition, which drew closer to 160,000 over four days.

The Duluth Air Show also returned to full throttle with the Blue Angels, bringing roughly 60,000 to the airport grounds — up from about 50,000 for last year’s smaller demonstration team.

Duluth’s Fourth of July celebration packed 30,000 to 35,000 people along the waterfront for fireworks, with Bayfront Festival Park itself at capacity. Homegrown bluegrass-rock stars Trampled by Turtles drew a crowd that rivaled major touring acts, while the bombastic cover band Hairball pulled in thousands more.

Compared to recent years

That steady drumbeat of events stands in contrast to the rollercoaster of recent summers. In 2020, tourism tax collections cratered by 30% during the pandemic. By 2021, the numbers had largely rebounded, but with fewer large-scale gatherings. The 2022 season was strong on paper, driven by pent-up demand — Duluth posted tourism tax receipts of roughly $14.5 million, near pre-pandemic highs. But last summer’s softer weather and fewer big conventions slightly dented returns.

So far in 2025, tourism leaders say they’re seeing a healthier, more predictable event calendar that allows businesses to staff up and stock supplies with more confidence.

It’s not a ‘boom year,’ but it feels very stable, and that’s crucial. Businesses can plan, the city can budget responsibly, and the big weekends are delivering exactly as hoped.

Local property taxes tied directly to visitor traffic

For property owners in Duluth, the connection is direct and financial. The more successful the city is at filling hotel rooms and attracting visitors, the less pressure there is to raise local levies.

A 2023 city finance report showed that if Duluth’s tourism taxes had disappeared entirely, residential property taxes would have needed to climb by nearly 24% to maintain existing police, fire and street services. Instead, the consistent flow of outside dollars helps stabilize local bills.

That’s why Duluth invests so heavily in being a tourism city. Visitors enjoy the lakefront, the trails, and the vibrant arts scene. And their spending here literally helps pay to plow the snow and fix the potholes. It’s that simple.

Looking ahead

With the Bayfront Blues Festival, the Tribute Fest, and a slate of late-summer sporting tournaments still ahead, tourism officials are optimistic that Duluth will close out 2025 with another year of solid gains.

Every hotel bed Duluth fills in July and August helps pay for police and plows in January. It’s the Duluth way.