Fears in Palm Springs of an economic downturn due to the decline of tourism, especially from Canadian visitors and snowbirds, appear to have been allayed so far this season. However, both businesses and city officials remain cautious over the long-term implications of the welcome upswell in visitors.
Just take a stroll down South Palm Canyon Drive on a weeknight to witness throngs of people shopping in stores and dining in restaurants along downtown’s main drag. It’s a welcome sight for business owners, who worried throughout 2025 that tariffs imposed by President Donald Trump would keep visitors away and significantly impact their bottom lines.
A potential Canadian boycott of travel to America — caused in part by Trump’s mocking rhetoric, which offended many Canadians — seemed especially threatening. But in the midst of peak tourist season, many businesses are reporting stable or even greater revenue this year compared to last year.
“I’m pleasantly surprised with how this year is going,” said Jeffrey Bernstein, a Palm Springs councilmember and owner of the Destination PSP souvenir shop. “We are definitely up from last year, and it seems to be pretty consistent at least since the beginning of the year, but especially February and March.”
March and April are the busiest months for Palm Springs, a time when businesses must earn enough money to make it through the slower summer months.
After struggling with low sales through 2024 and experiencing a tepid season in 2025, both city officials and local business owners hoped early 2026 would bring a return to the boom times of the early 2020s.
So far, tourists appear to have cooperated, though no reliable figures are available on how many visitors are coming from Canada and how many from other parts of the United States.
“I live very close to downtown, and when I’ve got cars parking up by my house, you just know there are more people downtown,” said Peggy Trott, general manager of the Kimpton Rowan Hotel and chairperson of PS Resorts, a nonprofit hospitality group that advocates for local tourism. “There are seemingly more people.”
Trott said the Rowan had experienced the best beginning of a year since it opened in November 2017. A mix of good weather and bookings of large groups contributed to the stellar numbers.
“It’s just a better mix of business for us, which lends to a very strong Q1,” she said, referring to the first quarter of the year. “We’re still cautiously optimistic about the second half of the year, but I think we will exceed last year.”
Cautious optimism about Palm Springs tourism
Although some businesses have reported solid financial figures, local leaders are still expressing caution as the year proceeds. The Palm Springs City Council received some sobering statistics on tax revenue during a meeting in February.
Throughout the second half of 2025 (the first half of the city’s current fiscal year), revenue from the city’s transient occupancy tax, or TOT, was noticeably below the same period the previous year.
As a tax on hotel rooms, the TOT is a good benchmark for the number of tourists that have come to the city. Bookings in hotels of less than 50 rooms was 7% below the second half of 2024, while hotels with 50 rooms or more were down 9%. Vacation rental revenue also was down 10%. Only large group bookings showed an increase, of 13%.
Sales tax revenue in all months except September declined from the previous fiscal year.
However, the time period doesn’t cover the majority of the tourist season. City Finance Director Kristopher Mooney cautioned the council against reading too much into the numbers.
“We hear some pretty good things regarding TOT that the first quarter could be strong,” he said during the meeting. “Of course, we always like to adopt the wait and see approach and not get too confident.”
Another measure of the health of the local tourism industry — air travel — also showed declines at the end of last year and the beginning of this year. After the summer months exceeded previous patterns and October and November showed relative stable numbers, both December and January showed a decline of around 7% in the amount of passengers deplaning at the Palm Springs International Airport.
The figures for February have not been reported yet.
Changes in buying behavior
Some retailers have noticed a notable difference in shopping behavior that impacts local spending even as more people visit the city.
Dan Gore, the owner of Oscars in downtown Palm Springs, said more and more customers have opted to share meals rather than each purchase one. He also said ticket sales for events like his drag brunch shows have decreased slightly. Contributing to the decrease is the fact that he is seeing nearly 30% fewer customers from Canada compared to last year.
“We’re seeing the town is very full, but it’s not translating to revenue,” he said. “We can’t find parking. Tons of people are crossing the streets. We’re seeing eight to ten cars at every stoplight. But we don’t see that translating into people buying tickets or coming in and buying food.”
Despite being open more days of the week this year, Gore said Oscars had essentially maintained the same revenue as last year.
“People are just not spending money,” he added, “at least not in restaurants and entertainment.”
Looking ahead
As a city that relies on tourism to fund services like street maintenance and police, Palm Springs is especially sensitive to any changes in travel habits. Last year, lower revenue forced the the city to resort to creative financial techniques in order to balance the budget.
So far, local leaders maintain hope that tourist spending will be high enough to boost the city’s coffers. Financial projections show sales and transient occupancy tax revenue slightly exceeding budgeted amounts.
But hotter-than-expected March weather and increases in gas prices could impact future tourism.
“What I think this means is that there is no reason to panic at this point,” Bernstein said, “but to move forward cautiously, which is what we’re doing.”
Sam Morgen covers the city of Palm Springs for The Desert Sun. Reach him at smorgen@gannett.com.
This article originally appeared on Palm Springs Desert Sun: With 2026 tourism surging so far, Palm Springs ‘cautiously’ hopeful
Reporting by Sam Morgen, Palm Springs Desert Sun / Palm Springs Desert Sun
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