2020 ‘a year unlike any other’ for Arkansas’ travel and tourism industry

One thing is for certain, 2020 was a year like no other. That was especially true in Arkansas’ tourism industry, which was the hardest hit of any state economic sector largely because of mandated closures and occupancy restrictions resulting from the COVID-19 pandemic.

“As we finish out the year of 2020 we look back on a year unlike any other. We saw the extremes at both ends of the spectrum – starting out the year with record high tourism tax collections then watching our numbers drop with the onset of the pandemic,” said Travis Napper, director of Arkansas Tourism.

Tourism had a strong economic impact on Arkansas in 2019 with just under 69,000 working directly within Arkansas’ travel industry, a 1.4% increase over 2018, according to data released in September from the Arkansas Department of Parks, Heritage and Tourism. Those ambassadors greeted more than 36 million visitors to The Natural State in 2019, a 10.2% increase. Total travel expenditures were up 4.2% in 2019 throughout the state. The 2% tourism tax rose 7.5% over 2018. Other travel-generated revenues also were up in 2019, including local tax (up 5.4%), payroll (5.1%), state tax (5.3%), and federal tax (4.9%).

The first part of 2020 looked strong with $2.3 million in tourism tax collections in January and February, a 13% increase from the $2.03 million collected in the first two months of 2019. Then came a pandemic caused by the easily spreadable and deadly new COVID-19 virus.

“While some businesses held steady or even saw increases, many hospitality-related businesses struggled,” said Arkansas Parks, Heritage and Tourism Secretary Stacy Hurst.

Arkansas’ 2% tourism tax revenue between January and June of 2020 was $5.905 million, down 30.4% compared with the $8.488 million in the same period in 2019. The tax was up 7.2% in 2019. January-June hospitality tax collections among 17 cities surveyed for the Arkansas Tourism Ticker fell 21.9% compared with the same period in 2019. The tourism tax revenue in the cities was up 5.2% in 2019. In the third quarter of the year, tourism tax revenue was $4.4 million, down 12.87% from the $5.04 million collected July through September of 2019.

Some areas of tourism, however, saw an uptick in 2020. Visitation at Arkansas State Parks increased 9.9% in 2020 over 2019. In 2020, there were 7.275 million visitors to the state parks, up from 6.618 million visitors in 2019, said Melissa Whitfield, chief of communications for Arkansas Department of Parks, Heritage and Tourism.

“We believe this is due to people traveling out of state less and taking the opportunity to stay in state, at places where they can socially distance and enjoy the outdoors,” Whitfield said.

It is still unknown how much the COVID-19 pandemic will impact the tourism economy throughout the state in 2020.

“Tourism is vital to Arkansas’ economic prosperity,” Napper said earlier this year. “2020 has presented significant setbacks, but we continue to explore new opportunities to sustain growth. We’ve worked to inspire travel by participating in national campaigns such as ‘Let’s Go There’ with the U.S. Travel Association. And in collaboration with other state agencies and partners, we’ve worked to inform the public that ‘Arkansas is Ready for Travel.’”

The Arkansas Department of Parks, Heritage and Tourism, the Arkansas Economic Development Commission, and the Arkansas Department of Finance and Administration awarded $48 million in grant funds Dec. 23 to 2,136 Arkansas businesses significantly impacted by the COVID-19 public health emergency.

“The pandemic has hit the hospitality and personal-care industries particularly hard,” said Gov. Asa Hutchinson. “The CARES Act grants will help stabilize these small businesses, which in turn will strengthen our economy. Before COVID-19, we had record-low unemployment, and the economy was booming. Small business owners were an essential element of Arkansas’ success, and they will be again soon.”

Applicants were notified of grant awards from the Business Interruption Grant program Dec. 23, and funds were deposited into their bank accounts and available to them beginning Dec. 24.

“This grant program has been a rewarding exercise with state agencies coming together to get financial assistance into the hands of struggling businesses,” Hurst said. “Members of the General Assembly provided key insights for making this an impactful program and helped get the word out so we reached as many Arkansans as we could. We hope this brings some relief in enabling businesses to continue to safely provide services during these challenging times.”

There were 3,118 completed applications submitted from Nov. 16-25. The pool of applicants was narrowed to a final 2,136 based on eligibility reviews and the validation of claims, documentation and other key application information.

The Business Interruption Grant program was created to provide economic assistance to certain Arkansas businesses in the personal care, tourism, travel, recreation and hospitality industries. These businesses were directly impacted by government mandates related to the public health emergency, a press release said. The grant provided reimbursement for a portion of specific eligible expenses incurred by businesses in these industries between March 1 and Sept. 30.

“Arkansans are strong and have learned new ways to appeal to the public and help them enjoy the many things that make Arkansas a great destination. These lessons learned will help us as we begin our economic recovery in 2021,” Hurst said.

Arkansas’ travel and tourism industry began showing slight improvement toward the end of 2020. Arkansas’ 2% tourism tax revenue between January and October was $11.72 million, down 23% compared with the $15.204 million in the same period in 2019. The October number is a slight improvement compared with the 24.9% through August and the 30.4% decline through June. The tax was up 7.2% in 2019. February revenue of $1.366 million set a new monthly record for the tax.

January-October hospitality tax collections among 17 cities surveyed for the Arkansas Tourism Ticker fell 18.8% compared with the same period in 2019. The biggest hit was in lost revenue from hotel collections. The decline is an improvement compared with the 20.6% decline between January and August, and a 21.9% decline between January and June.

Napper said the tourism industry is looking toward 2021 with hope for a year filled with more positives.

“Arkansas, The Natural State, was able to be a strong draw for visitors in state and out of state. We look to continue to build on our brand and all our resources, natural and man-made, to be able to share what we know and love about Arkansas,” he said.