NWA hospitality sector improves in 2011

Hotels and restaurant sales across Northwest Arkansas continued to improve in 2011 despite excess capacity created from robust expansion several years ago.

The cities of Bentonville, Rogers, Springdale, Fayetteville and Siloam Springs collected more than $4.472 million in hospitality taxes last year, a 6.37% gain over 2010. (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 96 hotels in the two-county area posted cumulative annual sales revenue of $107.13 million in 2011, a  7.7% increase from 2010, and the best year since 2007. The region’s 8,000-plus were occupied 50% of the time, improving from 46.5% in the prior year. Room rates averaged $71.88 per night, up slightly from 2010.

The overall U.S. hotel industry’s occupancy rate improved to 60.1% in 2011, this was 4.4% better than  2010. The average daily room rate of $101.64, rose 3.7% in the year-over-year period, according to STR.

“It is encouraging to see the industry experience a solid rebound during a period of considerable economic difficulties,” said Randy Smith, chairman of STR. “In 2012 the hotel industry will face tough year-over-year comparisons, though we are still optimistic.”

Roger Davis, general manager for the Holiday Inn and Convention Center in Springdale, agreed 2011 was a much improved year over 2010 in terms of business travel, corporate group meetings and casual vacationers. But he said it will likely take several more years to grow into the excess capacity created in region between 2006 and 2008, when 1,650 limited-service rooms were added to the local market.

“In 2011, traffic was higher across the board, the best results we have seen in four years. Springdale’s receipts were also boosted when the tax rate went from 1.5% to 2% last fall, but the majority of the revenue increase is linked to the improving economy and more group business,” Davis said.

Springdale’s Advertising and Promotion Commission collected $203,885 in hotel tax last year, up 5.66% from 2010. Davis, chairman of the commission, said the tax rate was raised to match what the other cities in the region collect.

The Rogers Advertising and Convention Bureau collected $598,911 in hotel taxes during 2011, up 8.12% from the prior year. Tax collections were higher nine of 12 months last year when compared to 2010. Siloam Springs collected $57,428 in hotel hospitality taxes last year, up 8.23% from 2010. There were eight hotels reporting in both years.

Bentonville hotels collected $409,253 in hospitality tax, up 6.57% from the prior year. The city lost two hotels in September when the Clarion and Sleep Inn closed their doors, taking 208 rooms out of the mix.

While the region still has a surplus of rooms, it is the meeting space that is missed the most according to the Bentonville-Bella Vista Chamber of Commerce.

In addition to hotel tax, Bentonville restaurants collected $917,448 in prepared food tax from 160 vendors. The city added five new restaurants in the back half of 2011, including the Tusk & Trotter on the downtown square, Panda Express next to the Wal-Mart home office, and Eleven, the restaurant inside Crystal Bridges Museum.

Fayetteville reported $240,831 in hotel taxes in 2011, up 1.3% from the prior year. Restaurants and food vendors throughout the city also generated $2.014 million in food tax, compared to $1.943 million a year earlier.