Jonesboro hotel tax collections slightly dip in 2017; no word on new hotel/convention center work

Jonesboro will have to collect a record number of hotel taxes in December if it hopes to keep pace with the number of collections in 2016. The city has collected $622,280 in hotel taxes through November, a 1.2% drop from the $630,080 collected in the same period of 2016.

The city collected $591,196 through the first 11 months this year than during the same period in 2015, an increase of 8.1%.

Hotel tax receipts peaked in July with $67,092, typically the city’s best collections month. Receipts dipped to $45,637 in January, the city slowest month, based on historical standards. The first few months are typically the slowest, and then a slew of baseball and softball tournaments bring 40,000 or more tourists to the city. Collections continue through the fall fueled by Arkansas State University football games.

One factor that might have impacted collections in September was the cancellation of the ASU-Miami game slated for Sept. 9. Hotel tax collections dipped $6,468 in September to $56,900 as compared to 2016. Miami officials opted to not play the game in Jonesboro, as Hurricane Irma loomed in the Caribbean. The move was criticized because all other Florida college football teams played, and ESPN offered to move the televised game to Friday, Sept. 8.

The economic impact to the city losing one of its primary tourism attractions in the fall is not insignificant. ASU home games generate $1.285 million in out-of-town tourist economic activity per game, according to a study conducted by ASU. A marquee opponent like Miami would have lured a better than average crowd, meaning the impacts are likely greater.

HOTEL UNCERTAINTY
It’s still uncertain when construction on the hotel/convention center project will begin in the city.

The Jonesboro A&P Commission agreed in November to give up to $2.5 million in hotel tax rebates for a proposed hotel/convention center to be located on the Arkansas State University campus. Jonesboro Communications Director Bill Campbell told Talk Business & Politics that O’Reilly Hospitality Management will keep the hotel taxes collected after its 203-bed Embassy Suites hotel, Houlihan’s Restaurant, and the proposed 40,000-square-foot Red Wolf Convention Center open. The agreement is for 10 years after the open date, but is capped at $2.5 million, he said.

OHM CEO Tim O’Reilly had previously asked the city to give his group $300,000 to market and advertise the project in addition to hotel tax incentives but that isn’t part of the deal, Campbell said. OHM has 90 days to begin work on the project or the agreement will be voided.

Jeff Hankins, ASU vice-president for strategic communications and economic development, told Talk Business & Politics the timetable for construction will be set by OHM. Multiple attempts to reach O’Reilly on his cell phone were unsuccessful.

ASU and OHM have an initial 50-year lease agreement that can be extended another 40 years. Starting in the 4th year, OHM will pay ASU $250,000 annually, and then starting in year 10 the amount will rise by a positive percentage difference based on the Consumer Price Index. The university will also receive other benefits such as yearly room stays and others.

O’Reilly initially believed the project would cost about $35 million when it was first proposed in 2015. Since then, the price has steadily grown to an almost $60 million price tag. Permitting and cost issues delayed the project, but O’Reilly previously told Talk Business & Politics the project will move forward.

“We’re too far down the road on this project … we will complete it,” he said.