Declines seen in regional tourism tax revenue

Editor’s note: This story is a component of The Compass Report. The quarterly Compass Report is managed by The City Wire and presented by Fort Smith-based Benefit Bank. Other supporting sponsors of The Compass Report are Cox Communications and the Fort Smith Regional Chamber of Commerce.

After finishing strong in 2012, the pace of hospitality tax collection growth has slowed in Fort Smith and Van Buren for the first two months of 2013.

Collections in Van Buren for the reporting months of January and February total $63,866, up 1.99% compared to the same period in 2012. February collections were $31,940, up 3.2% compared to February 2012. The city collects a 1% tax on lodging and a 1% prepared food tax.

Maryl Koeth, executive director of the Van Buren Advertising & Promotion Commission, said part of the slower growth could be from smaller paychecks resulting from the

“The loss of 2 percent per paycheck has left consumers with less disposable income to spend on what they consider non-essential items, such as dining out,” said Koeth, referring to the Social Security portion of the payroll tax returning to 6.2% after being lowered to 4.2% for two years.

Koeth said the restaurant numbers are up 1.56% for the year, and hotel collections are up 2%.

“That means business travel is still doing well,” Koeth said.

During 2012, Van Buren hospitality tax collections totaled $425,554, up 5.2% compared to the 2011 collections. Hospitality tax collections in Van Buren during 2011 totaled $429,561, up 2.34% compared to 2010. The 2011 collections ended a two-year skid in Van Buren.

FORT SMITH
Collections in Fort Smith for the first two months totals $105,146, down 8.2% compared to the same period in 2012.

February collections were $55,570, down 10.7% compared to the $62,252 in February 2012. The city collects a 3% tax on lodging.

Claude Legris, executive director of the Fort Smith Convention & Visitors Bureau, said an event schedule change is a big reason for the decline in collections.

“One of the primary contributors to this decrease in the Fort Smith market was the hosting of a religious conference in 2012 that did not reoccur in 2013,” Legris explained.

During 2012, Fort Smith hospitality tax collections totaled $746,182, up 5.37% compared to the 2011 period. The city collects a 3% tax on lodging.

Nationwide, the lodging industry is doing well.

STR (Smith Travel Research), the leading firm for data on the global hospitality industry, recently reported that the “U.S. hotel development pipeline” comprises 2,717 projects totaling 320,750 rooms. This development tally is up 9.2% in the number of rooms compared with March 2012, and a 19.3% increase in rooms under construction.

TOURISM EMPLOYMENT, ARKANSAS COLLECTIONS

Employment in the region’s tourism industry was 8,600 during January, down from 8,700 in December and unchanged compared to January 2012. The sector reached an employment high of 9,800 in August 2008.

Average monthly employment in the Fort Smith metro tourism sector ended a two year decline in 2012. During 2007, 2008 and 2009, the average monthly employment was 9,300. That fell to 8,700 during 2010, 8,500 during 2011, but rose to 9,000 during 2012. The sector reached an employment high of 9,800 in November 2008.

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Arkansas’ 2% tourism tax receipts totaled $751,792 in January, the most recent month reported by the Arkansas Department of Finance and Administration. The tally was the largest posted for January in the past eight years.

Arkansas’ 2% tourism tax receipts totaled $12.405 million during 2012, up 3.16% compared to the $12.025 million during 2011. The gains marked the third consecutive year of improving tourism tax revenue.

Arkansas’ tourism sector (leisure & hospitality) employed 103,700 during February, unchanged from January and ahead of the 102,700 during February 2012. The February and January jobs tally marks a new employment high in the sector. The previous high was 103,400 jobs during October 2012.

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