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Area tourism tax revenue slows in the third quarter

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.

The third quarter of 2013 was positive for the Fort Smith regional economy, but Fort Smith and Van Buren hospitality tax collections began to slow for the first time in several years.

“Overall, growth has been relatively flat over the last couple of quarters based on tax collections. The data for fourth quarter should provide insight as to whether the most recent data was an anomaly or whether the sector is slowing in the Fort Smith metro,” said Jeff Collins, an economist who provides analysis for The City Wire.

Collections in Van Buren during the first 10 months of 2013 total $357,694, up just 0.16% from the $357,115 in the same period of 2012.

October collections were $35,425, up 1.6% from the $34,859 in October 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, continues to project flat revenue for the 2013 and 2014 budget based on the 10-month trend line.

“As this trend continues I think we will end the year dead even with last year. I'm projecting revenue to be flat for 2014. I don't see anything in the economic indicators to lead me to believe that there will be a substantial increase in consumer spending,” Koeth explained.

Collins noted that third-quarter Van Buren collections were down 1.5% compared to the same quarter in 2012.

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 10 months of 2013 totals $624,764, down 3.1% compared to the same period in 2012. Fort Smith hospitality tax collections have improved during each quarter. Collections were down 6.4% in the first quarter, down 1.6% during the second quarter, and down just 0.5% in the third quarter.

October collections were $63,828, down 5.8% compared to October 2012. The city collects a 3% tax on lodging.

Claude Legris, executive director of the Fort Smith Convention & Visitors Bureau, said October occupancy was down 5%.

“Overall Fort Smith saw a decline in occupancy for the month of 5%, however our average daily rate saw an increase of 3%. Arkansas overall for the month saw a decline of 2% in occupancy but an increase of 1.7% in average daily rate. Little Rock saw a decline for the month of 7.9% but their average daily rate was also up 3.4%. So while we are all seeing less occupancy, our rate is holding nicely and even increasing,” Legris explained.

Legris said the Fort Smith Convention Center held more events in October

However, Collins noted that Fort Smith hospitality tax collections during the third quarter of 2013 were down 0.55% compared to the same quarter in 2012.

“Until recently, the hospitality industry in Fort Smith, as measured by hospitality related tax collections, had shown continual improvement since Q2 2009 (based on a quarter-on-quarter comparison). Tax collection data for the last two quarters indicate the sector has slowed,” Collins wrote in his analysis.

During 2012, Fort Smith hospitality tax collections totaled $746,182, up 5.37% compared to the 2011 period.

REGIONAL, STATE DATA
Employment in the Fort Smith regional tourism industry was 9,400 during October, unchanged compared to October and above the 9,000 in October 2012. The sector reached an employment high of 9,800 in August 2008.

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Arkansas’ tourism sector (leisure & hospitality) employed 102,600 during October, up from 101,900 during October, but below the 103,400 during October 2012. At a revised 103,700, January 2013 marked a new employment high in the sector.

Arkansas’ 2% tourism tax receipts totaled $9.943 million for the first nine reporting months of 2013, up 3.12% compared to the $9.641 million during the same period of 2012.

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.

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