Tough times continue for area hotels, restaurants

The hospitality sectors in Fort Smith and Van Buren continue to struggle according to hospitality tax collections in the two cities.

The Van Buren Advertising and Promotion Commission reports that its October collections were $31,746, down 7.2% compared to October 2008.

The year-to-date comparisons in Van Buren are, unfortunately, moving in the wrong direction. For the first six months of 2009, the year-to-date decline was 4.1%, but has moved higher by two percentage points as of October. For the first 10 months of 2009, the tax collections total $322,587, down 6.1% compared to the same period in 2008.

“We are still feeling the effects of the economic decline of the last year. My revenue projection for ’10 will be flat with ’09 actual revenue. I’m hoping that our revenue will finish the year right at budget or very slightly below,” said Maryl Koeth, director of the Van Buren A&P.

Hospitality tax collections for Van Buren in 2008 totaled $410,914, up 7.4% over 2007 and up more than 14.5% over 2006. Van Buren collects a 1% tax on lodging and restaurants.

The picture isn’t any better in Fort Smith.

October hospitality tax collections in Fort Smith were $53,258, down 18% from October 2008. And here’s the bad news: October 2008 collections were 11% below October 2007 collections.

Claude Legris, director of the Fort Smith Convention & Visitors Bureau, said October 2008 marked the point where area hoteliers began to feel the effect of the recession — especially with corporate travel.

“A lot of folks who used to have a lot of (corporate) travel in this area just aren’t there anymore,” Legris said.

For the first 10 months of 2009, Fort Smith hospitality tax collections total $573,785, down 16.2% from the same period in 2008, and down 5.2% compared to the same period in 2007.

Fort Smith hospitality taxes are collected from a 3% tax on hotel room rates. Fort Smith hospitality tax collections in 2008 totaled $803,591, 11% more than the $723,548 collected in 2007, and more than 19% above 2006 collections.

Legris said he recently talked to several Fort Smith hoteliers and they report business began to improve in November and continues to be relatively strong in December. Despite the “glimmers of hope,” Legris said, any recovery in 2010 will be minimal. The bureau has set a 2010 revenue budget of $818,484, which is the same level as 2009.

“It’s a no-growth budget as far as revenue is concerned. We’ll be lucky to” meet the projected revenue, Legris explained.

A recent interim report from The Compass predicted that Fort Smith metro sales tax and hospitality tax collections will continue to decline or be flat until late 2010.

“Both retail as well as hospitality are likely to lag recovery in the national economy, leaving retailers and hoteliers to look to a better than expected holiday season and a tough first half of 2010,” Jeff Collins, economist for The Compass, noted in the conclusion of his report.

Funded and managed by The City Wire, The Compass is a quarterly regional economic report with data collection and analysis handled by Collins, a nationally respected economist based in Springdale and co-founder of Streetsmart Data Services. The Compass, presented by Benefit Bank, is the only comprehensive economic analysis of the Fort Smith metropolitan area.