Regional hospitality revenue on the rise

by The City Wire staff ([email protected]) 153 views 

Tourists and local residents alike have pushed hospitality revenue higher in 2012. Hotels and restaurant sales across Northwest Arkansas show marked improvement from a year ago.

The cities of Bentonville, Rogers, Springdale, Fayetteville and Siloam Springs collected more than $1.112 million in hospitality taxes in the first quarter, a 14.95% improvement from a year ago. (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 sales revenue of $23.744 million in the first quarter of 2012, a 10% increase from 2011, and the best start since 2007. The region’s 7,910 rooms were occupied 45.1% of the time, improving from 42.2% in the prior year. Room rates averaged $73.49 per night, up 6.2% from a year ago.

The overall U.S. hotel industry’s occupancy rate improved to 56.8% in the first quarter, this was 3.8% better than last year. The average daily room rate rose 4% to $103.54 in the year-over-year period, according to STR.

“The industry’s positive momentum continued in the first quarter against difficult year-over-year comparisons,” said Bobby Bowers, senior VP of operations at STR. “First-quarter demand slowed somewhat versus the same period last year but remained surprisingly robust.”

Bowers expects room rates to continue upward with some deceleration in occupancy growth for the balance of 2012.

Kalene Griffith, CEO of the Bentonville A & P Commission, said warmer weather this winter and continued traffic to Crystal Bridges has helped the region jumpstart 2012.

Bentonville hotels and restaurants collected $339,877 in the hospitality taxes in the quarter, 15.95% better than a year ago and the city had two fewer hotels.

Griffith said Motel 6 has just opened in the former Sleep Inn, which closed last fall along with the Clarion Inn.

“We also have several new restaurants and most are reporting more sales. Panera Bread relocated toward I-540 on Walton Boulevard and their business is up 37% from a year ago since that move,” Griffith said.

In the first quarter, Griffith said Bentonville businesses benefited from 20 different bus tours from Branson, Eureka Springs and Springfield that stopped over in Bentonville – some for the day and others overnight.

Griffith said Bentonville isn’t the only city to benefit from the 270,000 visitors that have made their way to Crystal Bridges since it opened Nov. 11.

The Rogers Advertising and Convention Bureau collected $143,383 in hotel taxes during the first three months of this year, up 12.61% from the prior year.

Siloam Springs collected $12,676  in hotel hospitality taxes in the quarter, flat compared to a year ago. There were eight hotels reporting in both years.

Roger Davis, general manager of the Holiday Inn and Convention Center in Springdale, said group rentals have been steady along with traditional business travel.

Springdale’s hospitality taxes jumped 59.94% from a year ago. The city’s hotels collected $54,297 in the quarter, up from $33,948. 

In late 2011, Springdale raised its hotel tax to 2%, which now matches what other cities are collecting. This hike is partly responsible for the hefty revenue increase according to Davis.

Like Bentonville, Fayetteville also collects a prepared food tax on top of the hotel tax. Total hospitality revenue rose 11.63% from a year ago with $562,198 collected in the first quarter.

A major renovation of The Chancellor Hotel, formerly the Cosmopolitan in downtown Fayetteville, is in full swing. New owners Ike Thrash and Sam Alley hope to reopen in early September in time for Razorback football.

This venture has a $15 million pricetag, with $7.1 million going to a major overhaul of the 30-year old high-rise.

These partners are no stranger to the hospitality sector as their company, Dawn Properties, co-developed the Sheraton Four Points Hotel in Biloxi and Alley’s construction firm VCC built the Westin Hotel at Galleria in Dallas.

Thrash and Alley strive for a four-star quality, full-service, yet affordable hotel to serve downtown Fayetteville and the University of Arkansas. Plans call for 200 standard rooms with a dozen or so suites, 15,000 square feet of meeting space, a full-service restaurant and revamped lobby scene.

“Make no mistake this isn’t just a facelift on an older hotel. We want guests that have stayed at the hotel in the past to enjoy a completely new experience,” Thrash said a few months back.

Gross Hospitality Tax Receipts (first quarter of each year)

2012:  $339,877
2011:  $293,119

2012:  $143,383
2011:  $127,328

2012:  $54,297
2011:  $33,948

2012:  $562,198
2011:  $503,617

Siloam Springs
2012:  $12,676
2011:  $12,756

Source: Respective cities