40 consecutive months of Arkansas tourism tax growth ends

For 40 consecutive months, beginning in March 2021, revenue from Arkansas’ 2% tourism tax has been above the same month in the previous year. But that ended in July when the revenue was $2.62 million, just below $2.62 million in July 2023.

To be sure, 40 months is a great run, and one month certainly does not constitute a trend or suggest the state’s tourism industry is in decline. The marginal miss could be explained by lower prices year-over-year, and July 2023 also had an extra weekend compared to July 2024.

The state’s tourism industry took the biggest hit during the COVID-19 pandemic but quickly bounced back and began setting employment and tourism tax revenue records. In April 2020, the first full month of the pandemic in Arkansas, the tourism tax revenue was $502,087, a drop of 66% compared with April 2019. Revenue in 2020 was down 23% compared with 2019.

Business and tourism travel services taxed under the state’s 2% program include guest accommodations, long- and short-term lodging rentals, rental of watercraft, and admission fees to tourist attractions.

According to the recent January-June Arkansas Tourism Ticker, the 2% tourism tax revenue between January and June was $13.51 million, up 6.1% compared with $12.74 million in the same period of 2023. Revenue in each of the first six months of 2024 set a new record, with those gains compared to record numbers in 2023. A record for monthly 2% collections was set in June with $2.83 million.

The tourism tax revenue in 2023 was $25.44 million, up 5.8% compared with $24.04 million in 2023. Revenue in each month of 2023 set a new record, with those gains compared to record numbers in 2023.

The Arkansas Tourism Ticker also showed that combined hospitality tax collections in the 17 cities surveyed for the report totaled $36.12 million in January-June 2024, up 4.2% compared with $34.67 million in the same period of 2023. Monthly average tourism sector jobs in January-June 2024 was 128,840, down 0.05% compared with 128,900 in the same period of 2023. The sector reached record monthly employment of 130,200 in March. Arkansas tourism jobs in July were an estimated 127,400, better than 126,600 in July 2023.

Business and tourism travel in Northwest Arkansas, including the Fort Smith metro, continues to be robust. Reviewing the state’s top five counties in terms of 2% tourism tax revenue points to where there might be moderation in tourism activity.

Following are the January-July collections in the top five counties:
• Pulaski: $3.1 million, down 1.5% compared with the same period in 2023.
• Benton: $2.25 million, up 14.4% compared with the same period in 2023.
• Garland: $1.72 million, down 1% compared with the same period in 2023.
• Washington: $1.44 million, up 13.4% compared with the same period in 2023.
• Sebastian: $674,300, up 7.1% compared with the same period in 2023.

January-July tourism tax revenue in Carroll County, home of Eureka Springs, one of the state’s more unique tourism spots, totaled $595,921, just above the $593,611 in the same period of 2023.

Steve Arrison, CEO of Visit Hot Springs, which is located in Garland County, recently said the city is seeing pre-pandemic visitor trends.

“We are settling into a pattern of collections that we saw before the pandemic with collection growths of 3% to 6% the norm with record-setting growth in collections a thing of the past,” Arrison said.

Arkansas Tourism Director Delaney Thomas told the Northwest Arkansas Business Journal that the July numbers “are in line with what we’ve been hearing regionally from our national tourism partners.” Delaney also noted that July 2023 had an extra weekend. She said the state’s marketing strategy has a seasonal component as part of an effort to take advantage of the state’s various tourism assets. Part of the strategy also includes responding “to address traveler trends as the year progresses.”

“We continue to actively promote the state as a year-round leisure destination. We’ve seen particular success in winter marketing efforts touting the availability and quality of our mountain biking, climbing and hiking opportunities when other states may be experiencing winter extremes. We are also integrating strategies throughout the year to encourage extended travel across the state when visitors are already here for business purposes,” Thomas said.