After downtown hotel owners banded together to offer to tax themselves and raise money to boost tourism, aldermen advanced their plan Friday.

The new “Tourism Improvement District” backed by hotel, labor and business groups would allow dozens of large Chicago hotels to impose a new 1.5% tax on overnight stays to give Choose Chicago, the city’s tourism marketing organization, more money to promote the city.

The ordinance won approval from the City Council’s Finance Committee and could face a final full council vote next month.

“We don’t come to you today to ask you to find additional funding. We come to you today with a solution,” said Kristin Reynolds, president and CEO of Choose Chicago. “A solution that is driven by our hotel industry and provides a new privatized funding stream designed solely to attract visitors and create jobs.”

The tax would add the fee to overnight stays at hotels with over 100 rooms downtown, near McCormick Place, near the Illinois Medical District and in Hyde Park.

The money would be used solely to promote tourism by attracting events and conventions and advertising the city’s cultural riches. The plan will bring in $40 million, Reynolds said.

Choose Chicago’s current budget of around $33 million is far below the cities it competes with, like a $120 million budget in Orlando or another north of $200 million in Las Vegas, Reynolds said. Even after the influx of money, Chicago’s tourism budget would still be below that of many competitors, she said.

“Our competitors know very well that Chicago is underfunded, and they use it to their advantage, not only to attract the same conventions, events and visitors that we’re trying to attract to Chicago, but to lure away our legacy clients,” Reynolds said.

The change will touch every neighborhood as it brings more business to Chicago, said Ald. Jason Ervin, who sponsored the plan in the council.

“This is a necessary and vital component for Chicago to stay competitive in the convention market,” Ervin said. “The other smaller cities are starting to gain ground on us for the fact that they have the incentives and we do not.”

Ald. Brian Hopkins called the measure an “easy yes vote.”

“Anyone who has participated in the budget process for the past couple of years can’t help but notice how rare and uncommon it is for any sector of our Chicago economy to raise their hands and say, ‘Please tax me more,’” he said. “They know this is going to work. There is a direct connection to the public investment that we will make, to the benefit that we as a city will receive.”

But some supportive aldermen called for more clarity on how the money will be spent. Ald. Pat Dowell, the Finance Committee’s chair, said she felt the plan is “a little light on specifics” regarding spending.

Ald. David Moore, the lone “no” vote, questioned the need for a boost to the convention business and shared concerns that it could make “staycations” for Chicago residents staying at downtown hotels more expensive.

“I am concerned about how this impacts people who are living in this city that may want to go out and enjoy their city,” he said.

Spending would be approved by a committee made up of 11 hoteliers, with non-voting seats for a labor representative and a representative of the city, according to Michael Jacobsen, president and CEO of the Illinois Hotel and Lodging Association.

“They will decide an annual budget, and then every single expenditure from this fund,” he said. “We have to be nimble.”

Jacobsen said some spending focuses will be rebuilding Chicago’s reputation as a destination for international tourists, a hotspot for domestic visitors and recruiting business travel.

If approved, the tax would be approved for five years. A renewal would require more support from the council and hotels, Jacobsen said. Hotel owners can also vote to remove the tax if it does not deliver growth, he added.