First quarter hotel tax revenue down 8.6% in Fort Smith

First-quarter 2010 hospitality tax collections in Fort Smith are down more than 8% compared to the same period of 2009, but signs are suggesting improvements from the sector slowdown that began in late 2008.

The January-March period saw collections total $156,212, down 8.6% compared to the $171,154 in 2009. Collections in March totaled $59,457, down 10.1% from March 2009. Fort Smith hospitality taxes are collected from a 3% tax on hotel room rates.

For 2009, Fort Smith hospitality tax collections totaled $671,912, down more than 16% from 2008. Fort Smith hospitality tax collections in 2008 totaled $803,591, 11% more than the $723,548 collected in 2007, and more than 19% above 2006 collections.

Van Buren hospitality tax collections in March were $31,605, down less than 1% from March of 2009, when revenues totaled $31,817. Van Buren collects a 1% tax on lodging and restaurants. For all of 2009, the city collected $381,372 in hospitality taxes, down 7.1% compared to 2008. Hospitality tax collections for Van Buren in 2008 totaled $410,914, up 7.4% over 2007 and up more than 14.5% over 2006.

Claude Legris, executive director of the Fort Smith Advertising and Promotion Commission, said several factors cause him to think the regional tourism industry may rebound in 2010. March visitation at the Miss Laura’s visitors center showed a 31% increase from March 2009 (1,244 vs. 949). He said the year-to-date visitation at the center is up 13% from 2009 (2,034 vs. 1,802). Also, early reports on April hospitality tax collections look good.

“I have seen preliminary collection numbers for April which indicate the first increase we have seen in more than a year. I don’t have all the detail and analysis as yet, but will have a positive report next month,” Legris explained.

Jeff Collins, economist for The Compass Report, noted that national economic conditions “are substantially impacting business and leisure travel,” but are having slightly different effects on Fort Smith and Van Buren.

“Comparing quarterly data, particularly (first quarter 2010) indicates that collections declined in each of the last four quarters. This trend was evident in data for both Fort Smith and Van Buren. In percentage terms the loss has been more pronounced for Fort Smith hoteliers. This is particularly striking given the Fort Smith hotel market is about twice the size of the Van Buren market,” Collins explained in his analysis for The Compass Report.

The Compass Report is the only independent comprehensive analysis of the Fort Smith regional economy. It is funded and managed by The City Wire, with presenting sponsor support from Fort Smith-based Benefit Bank.

Downward hospitality tax collections typically come with job losses in the sector.

“In addition to the tax revenue implications or declining activity, there are also employment impacts from reduced demand for hotel rooms. This is evident in employment statistics for the hospitality sector which includes hotel workers. March-on-March statistics from the U.S. Bureau of Labor Statistics indicates a loss of an estimated 500 jobs in the Fort Smith metro area (-5.4 percent),” Collins noted.