Northwest Arkansas hospitality sector off to strong start in 2014

story by Kim Souza
ksouza@thecitywire.com

Snowy winter weather did not ding the local hospitality sector among the Northwestern Arkansas’ four largest cities as they cumulatively reported a 7.57% gain in hotel and restaurant taxes collected in the first three months of 2014. Hospitality tax receipts totaled $1.235 million, compared to $1.148 million in the same period of 2013.

The cities of Bentonville, Rogers, Springdale and Fayetteville collect a 2% room tax on hotel and meeting space. Bentonville and Fayetteville also collect a 1% tax on prepared food.

HOTEL REVENUE RISES
Allyson Dyer, executive director for Visit Rogers, said she is pleased with the first quarter hotel collections.

“I was expecting weather to be a factor but we had another record January and February collections. We hosted the Arkansas Municipal League Winter Meeting in January and that really helped our month,” Dyer said.

Rogers reports hotel tax collections of $157,814 for the first three months of 2014. Receipts rose 3.33% from the year-ago period. The hotel industry STR report indicates 98 hotels in the two-county area posted cumulative sales revenue of $27.719 million in the first quarter of 2013, a 4.7% increase from the same period in 2013.

STR reports occupancy rates averaged 47.2% in the first quarter, up from 45.6% in the same period in 2013. February was particularly strong with a 51.8% occupancy rating, compared to 48% a year ago. 

With better demand from business travelers, average room rates were $79.89 in the quarter, an increase of 2% from a year ago. Roger Davis, general manager for the Holiday Inn in Springdale, told The City Wire in recent months that there are less promotional rates given because personal and business travel is picking up steam.

Bentonville reported lodging receipts worth $118,544, up 12.62% from $105,261 collected a year ago. The city expects the Sheraton Four Points Hotel to open later this year in the former Clarion space. The new hotel will have roughly 105 rooms in addition to meeting space. 

Davis said the Sheraton Four Points and a new $12 million Hilton Garden Inn near Interstate 540 exit 64 and Wedington Drive in west Fayetteville will mean excess capacity in the region. The Hilton Garden Inn will have 115 rooms.

“There is still an excess room capacity in this market and both of these hotels will also add meeting space — 20,000 square feet combined estimate. Right now 2014 is off to a very slow start, but we expect when the weather clears that leisure and corporate business travel will pick back up. Even so, these two new venues will add to the excess room capacity,” Davis said.

Springdale reported hotel tax receipts of $62,021, compared to $57,905 last year, a gain of 7.10%. 

Fayetteville reported hotel receipts of $60,168, up 1.68% from a year ago, according to the Fayetteville Advertising and Promotion Commission report onfApril 14. 

Marilyn Heifner, director of the A&P, said two events — the Tyson Invitational Indoor Track & Field event and the Ozark Juniors Volleyball Club Tournament — picked up 2,290 room nights in February with an economic impact of $2,594,130.

FORWARD LOOK
Four new events booked will result in 10,780 room nights and will have an economic impact of $3,535,429, Heifner noted in the April 15 report. (The economic impact is annualized and includes food sales.)

“I expect a very healthy second quarter as June is always one of our biggest months with Walmart Shareholders, Poultry Festival, LPGA, and Daisy BB Gun Competition, plus the AMP opens June 7 and I believe that has potential to help our weekend hotel stays as well,” Dyer said.

Davis and Heifner also predict strong summer receipts as each city is aggressively pursing and booking more group travel.

On a national scale, the STR United States hotel forecast predicts revenue-per-available-room growth in 2014 and 2015 will slow. The forecast recently released by STR expects an approximate 5.3% RevPAR growth in 2014 and 4.7% growth in 2015. This comes on the heels of 5.4% growth in 2013.

FOOD SALES SHIFT
Bentonville reported food tax receipts of $278,576 during the first quarter, rising 5.27% from the year-ago period. The five McDonald’s restaurants in Bentonville reported taxes of $19,503 in the quarter making them the highest grossing restaurant group reporting. Tax receipts were down slightly in the period from $19,644 a year ago.

The Eurest Dining Services that run the Wal-Mart Cafeteria at the home office reported tax receipts of $18,953 in the quarter, down from $22,626 in the year-ago period.

Chick-Fil-A picked up sales from a year ago with tax collections of $8,563, up from $7,785 reported a year ago. Panera Bread had less sales taxes of $6,119 down from $6,272 a year earlier.

Upscale restaurants like The Hive at 21c reported improving sales. The Hive had total food tax receipt of $4,584 in the recent quarter, up from $2,750 a year ago. The restaurant opened in January 2013. Eleven at Crystal Bridges also grew its sales year-over-year, tax receipts rose to $3,956 from $3,063 a year earlier.

Fayetteville’s food tax receipts totaled $558,542 in the first quarter of 2014, up compared to $552,971 in the year-ago period.

Chick-Fil-A is the highest grossing eatery in Fayetteville. With three locations the chicken quick-serve venue has combined tax revenue of $29,684 in the quarter, up slightly from a year ago. 

Other top grossing restaurants include: Olive Garden, Red Lobster, Penguin Ed’s and Shogun Japanese Steakhouse. Fayetteville is opening a food truck court downtown on Dickson Street that will provide consumers more food options of the go.

The Shulertown food truck court has already signed up seven vendors who will soon stake out the spot in the former lot that was the outdoor beer garden for the Phoenix bar. The vendors signed up to date include:
• Shakedown StrEAT Grill
• Feltner Brothers
• Greenhouse Grille
• Mamma Deans
• Great Dane Pies and Tamales
• Baller Food Truck
• Burton’s Comfort Cremery

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The project must get final approval from Fayetteville Planning Commissioners on May 27. If approved, the businesses plan to open immediately.

THE NUMBERS
Hospitality Tax Revenue
Fayetteville 
2014: $618,710
2013: $612,226
1.04%

Bentonville
2014: $397,120
2013: $369,900
7.35%

Rogers
2014: $157,914
2013: $152,726
3.33%

Springdale
2014: $62,021
2013: $57,905
7.10%

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