As it looks to the future, the City of Monterey’s cash cow – tourism – faces new challenges.

When Monterey City Council held a workshop on Jan. 29 to set goals for the coming years, among those given top priority was bolstering economic development. This comes after impacts from Covid-19, which led to revenue losses, budget cuts and layoffs that totaled $32 million in just 18 months.

That impact underscored the city’s outsized dependence on tourism to generate revenue. In the 2023-24 fiscal year, about 30 percent of the city’s revenue came from transient occupancy taxes (paid by hotel guests), and 15.4 percent came from sales taxes.

On March 26, the council revisited the topic in a study session led by Assistant City Manager Nat Rojanasathira, who walked the councilmembers through a draft 2025 economic development strategy for the city, and asked both the public and the council for feedback.

Rojanasathira said that while the hospitality industry is and would remain the “heartbeat” of the city’s economy, it was important to recognize Monterey’s hotels will soon be facing increased competition from new rooms in nearby Seaside and Sand City.

Add to that, Rojanasathira emphasized, the city’s hotel stock is aging, and much of it is in need of a makeover.

The plan – which will include strategies for financing, diversification and business retention – will be refined in the coming months and come back before the council in the fall, though its importance might be felt well before then.

Rob O’Keefe, CEO of See Monterey, told the council there was fear of a “Trump slump” in the industry with a potential decrease in foreign visitors. “We’ve got real critical issues right now that we need to deal with,” he said.