Visitors help to boost NWA hospitality sector (Corrected)

story by Kim Souza
ksouza@thecitywire.com

Editor's Note: This report has been updated since it was brought to The City Wire attention that Fayetteville had submitted the incorrect numbers. The story has been updated to reflect the correct revenue provided by the Fayetteville Advertising and Promotions Commission.

Northwest Arkansas has been a popular destination this year and hospitality taxes collected through September indicate visitors are more spending money in this region, a tell-tale sign the economy has indeed improved.

But looking at the third quarter collections, results were mixed among the five largest commercial districts across Benton and Washington counties. Fayetteville, Rogers, Springdale and Bentonville each posted solid quarter-over-quarter gains for the three months ending Sept. 30.

Siloam Springs collected less revenue in the quarter.

The five cities collected a total of roughly $1.55 million in the quarter, up 5% from the same period in 2011, according to city records.

Through the full nine month period tax collections rose 13.9% over 2011 revenue. The five cites collected a total of $4 million, compared to $3.510 million in the same period of 2011. (All five cities collect a 2% room tax on hotel and meeting space, Bentonville and Fayetteville also collect a 1% tax on prepared food.)

The hotel industry STR report provided by Smith’s Travel Research, indicates 80% of hotels in the two-county area posted cumulative sales revenue of $33.3 million in the third quarter of 2012, a 16.75% increase from 2011. Occupancy rates improved to 60% in September, up from roughly 55% a year ago.

Room rates averaged $91 per night, up 16.6% from a year ago, according to STR.

Rogers hotels set a record September and have collected the most taxes in history through the first nine months of 2012, according to Allyson Twiggs Dyer, executive director for the Rogers Convention and Visitors Bureau.

Year-to-date collections in Rogers are up 14.28% from 2011. Third quarter results jumped 17.4% with $185,593 collected between July through September. Dyer credits the stellar results to a healthier economy.

“Business travelers who pared down visits a few years ago to one or two nights, are back to staying three to four nights a week. The warmer winter weather meant fewer cancelations which led to our best February collections ever. So the year started with a bang that has just stayed up,” Dyer said.

She also credits the increase to more regional travel for leisure, saying Crystal Bridges, Bikes  Blues and Barbecue, War Eagle and now Cabela’s have each brought more traffic across the entire region.

“Cabela’s is the top referral on our website. We get more request for information on Cabela’s than anything else. People are seeking out the retailers as a destination, there is no question about that,” Dyers said.

Bentonville reported strong tax collections in both food and lodging this year. Hotel collections totaled $347,462 up 13.10% from the year-ago period. Food tax brought in $783,734 in revenue, up 15.51% from the same nine months in 2011.

Fayetteville reported $2.103 million in taxes collected through the first nine months of the year, up 11.26% from a year ago. And that does not include a banner October. (Fayetteville previously reported the wrong numbers. The error has been corrected and this story has been updated with the correct figures provided by the Advertising and Promotions Commission.)

Marilyn Heifner, executive director for Fayetteville Advertising and Promotions Commission, said three Razorback games and Bikes, Blues, Barbecue did elevate the city’s collections to a record October and she feels really good about the balance of 2012.

“We will host those 'ragin cajuns' for the LSU game on Black Friday here in Fayetteville and we are very excited about that. The Lights of Ozarks is always a popular draw and now that the Chancellor Hotel  is open downtown we are bound to see more conventions in the city. I feel really good about where collections will be at year-end,” Heifner said.

Northwest Arkansas suffered from an excess supply of hotel rooms following a building boom that crested just as the economy sank into recession. Dyer said it was a bleak couple of years with new hotels empty much of time, so it’s exciting to see them used more.

Through September, the U.S. hotel industry has performed well, according to Vail Brown, senior VP of global business development and marketing for STR, parent company of HotelNewsNow.com. She said supply, demand and revenue reached all-time highs in the recent months.

Analysts expect the hotel / hospitality sector recovery to continue into 2013, after a somewhat tepid third quarter.

“Our (hotel) outlook, while weaker than this summer, remains intact,” said Warren Marr, managing director at PricewaterhouseCoopers.

Marr cited three main reasons for PwC’s revised forecast, which in August had revenue-per-available-room growth at more than 7%:
• Difficult third-quarter results;
• More muted macroeconomic outlook;
• Effects of superstorm Sandy.

Despite these changes, hotel “demand and (hotel) pricing remain headed in the right direction,” he said.

Marr expects the largest gains in revenue to come at the higher luxury scale hotels, forecasting a 6% revenue growth in 2013.

The midscale and economy segments, on the other hand, are projected to experience growth of less than 4%.

Gross Hospitality Tax Receipts
(January through September)

Bentonville
2012:  $1.131 million
2011:  $985,704
14.76%

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Rogers
2012:  $513,579
2011:  $449,404
14.28%

Springdale
2012:  $215,830
2011:  $141,224
52.82%

Fayetteville
2012:  $2.103 million
2011:  $1.890 million
11.26%

Siloam Springs
2012: $41,092
2011: $44,045
-6.7%

Source: Respective cities

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