Revenue rises among NWA hospitality sector

The overall economy may have slowed a bit in the second quarter but the local hospitality sector didn’t feel it in the least. The region’s four largest cities collected $1.288 million in hospitality taxes from hotels and restaurants, up 11.41% from the same three-month period in 2011.

In the first half of this year tax collections rose 14.85% to total $2.428 million, making it the best year since 2007 for the cities of Bentonville, Rogers, Springdale and Fayetteville. (All four 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 86% of hotels in the two-county area posted cumulative sales revenue of $7.091 million in the second quarter of 2012, a 6.75% increase from 2011. The report surveyed 1,863 rooms that equaled 169,670 room nights to fill during the second quarter. The 22 hotels in the report registered a 56.43% occupancy rate during that period. Occupancy rates improved from 52.6% a year ago and 48.5% in the same period of 2010.

Room rates averaged $74 per night, up 4.1% from a year ago, according to STR.

All of cities showed steady improvements in the second quarter in both traffic and revenue.

GROUP GAINS
Roger Davis, general manager of Holiday Inn and NWA Convention Center in Springdale, said April was his venue’s biggest month on record.

Springdale hotels collected $79,462 in tax revenue in the second quarter, up 54% from a year ago. Some of that increase is related to a higher tax rate of 2% that has been collected since the end of 2011 after the city raised the rate from 1.5%. 

But Davis said there has been more traffic as well.

“We had a spectacular April thanks to group sales from multiple soccer events and a huge National Guard Convention as part of a bigger recruiting effort from our A & P commission,” Davis said.

He said the SMERF initiative is a concerted effort to sell Springdale as a meeting site for sports, military, education, religious and factory/manufacture groups.

“When these groups visit Springdale, they spend money across the region and many of them want to see Crystal Bridges while they’re here,” Davis said.

While April was record-setting, Davis said business was up in May and June as well with solid bookings through the fall months.

Allyson Dyer, director for the Rogers Convention and Visitors Bureau, said 27 groups have stayed overnight in Rogers in the first half of this year, booking 10,873 room nights among them.

Rogers hotel tax collections totaled $184,070 in the second quarter, up 12.22% from the year ago period.

Dyer said June was the best month on record for the city, helped by the LPGA Tournament. This group booked 1,182 room nights in June, compared to 780 booked last year when the tournament was held in September.

Matthew Disheroon, general manager for Homewood Suites in Rogers and A&P board member, said the second quarter returned higher revenues as business travel remained strong — roughly 80% of his business. He also said non-business groups recruited by Dyer’s team have helped to provide some better pricing power in weekend room rates.

“We have also recently upgraded our televisions to provide high definition cable and the fastest internet speed in addition to opening a new fitness center for our guests. Adding these upgrades has also helped us to boost room rates,” Disheroon said.

Davis agreed there is some pricing power available for the first time in several years.

“Of course we have not been able to make up the ground we began loosing in 2009, he said.

MUSEUM DRAW
Bentonville has seen more traffic than any other NWA town this year thanks to Crystal Bridges Museum of American Art. More than 350,000 people have visited the world class venue this year which has helped boost hospitality tax collections 13.44% in the second quarter over the same period in 2011.

Restaurants collected $262,220 in food tax during the second quarter, up 10.63% from the prior-year period.

Daniel Hintz, director for Downtown Bentonville Inc., says the downtown area restaurants in particular are benefiting from locals coming out more as well as legions of Crystal Bridges visitors.

The hotel sector in Bentonville has decreased in size over the past year with the closing of  the Clarion, Days Inn and Travel Lodge, but revenues jumped 19.3% from the year-ago period. The hotels collected $135.511 in hospitality taxes in the second quarter, up from $237,005 collected a year ago.

The 21c Hotel will open in 2013 and provide another option for art enthusiasts. Davis said the hotel will be a nice venue for a niche audience and shouldn’t have any negative impact for the region as a whole which is still overbuilt.

Total hospitality collections in Bentonville for the second quarter were $397,731, up 13.44% from a year ago.

FORWARD LOOK
Fayetteville’s hospitality sector reported $627,119 in tax collections during the second quarter, up 6.14% from the year ago period. While these collections improved, the year-over-year gains were substantially less than other three cities surveyed.

Alex Jerde, general manager for the soon-to-open Chancellor Hotel in downtown Fayetteville hopes to change that metric in the coming months.

Marilyn Heifner, executive director for the Fayetteville A & P commission, said the city has been held back without a full-service hotel to serve the downtown area.

The Chancellor is set to open in early September and Jerde said bookings around the University of Arkansas Razorback games are going strong. But those collections won’t begin showing up until the end of this year. Heifner says the fall is always busy with Bikes Blues and Barbecue, football and back-to-school time for the university crowd.

She said collections are trending a little stronger after a couple of down years. Fayetteville’s food venues collected $559,453 in taxes during the second quarter, up 5.8% from a year earlier.

For the three month period Fayetteville’s hotel and meeting room tax collections rose 8.9% to $67,666, from a year-ago.

Fayetteville isn’t the only city looking forward to a stronger fall season.

Dyer said Rogers recently began promoting the city for overnight stays at a website called www.checkintorogers.com/.

She said this summer campaign features great packages from Rogers’ hotels for folks wanting to drive in from Dallas, Oklahoma City or Kansas City to see Crystal Bridges. When Cabela’s opens this fall she said the campaign will convert to “stay over and shop Rogers”.

All of the hospitality contributors say they are optimistic for the back half of 2012 despite a gloomier outlook for the nation as a whole.

Gross Hospitality Tax Receipts
(January through June; numbers from Siloam Springs were not available)

Bentonville
2012:  $737,608
2011:  $643,707
14.58%

Rogers
2012:  $327,986
2011:  $291,351
12.57%

Springdale
2012:  $133,759
2011:  $85,409
56.6%

Fayetteville
2012:  $1.229 million
2011:  $1.094 million
12.34%
Source: Respective cities