This study is aimed to analyze the tax collection system for hotels implemented by the Division of Local Financial Management in the Pasuruan Regency and to find out its contribution to increase local revenues. This study applies descriptive method with a qualitative approach. This study uses results of interview with Head of Revenue at Division of Local Financial Management. While the secondary data was obtained from archieve and formal documents from the Division. The findings show that the Division of Local Financial Management in the Pasuruan Regency has implemented the self-assessment system for collecting taxes for hotels since 2010. The system allows the taxpayers to compute, calculate, and report their tax payables to the Division. Since the implementation, the tax revenues from hotels have increased. This finding indicates the contribution of the tax revenues from hotels for increasing the local revenues of Pasuruan Regency. This study recommends to the Division of Local Financial Management in the Pasuruan Regency to improve efforts to manage the potential sources for the local incomes more effectively. This is necessary in order to define such a correct level of targeted tax revenues from hotels.