Lodging taxes down, despite occupancy gains

By Paul Huggins, Staff Writer, The Decatur Daily

City lodging tax numbers are down for the sixth time in the past seven months, but this time it occurred while there was an increase in hotel guests.

Decatur collected $56,284 in hotel taxes in February, down 10 percent from the $62,528 the same month in fiscal 2009. The room occupancy rate for the same months, however, showed a 10 percent increase, from 40 percent to 50 percent. The figures came from the Decatur-Morgan County Convention and Visitors Bureau.

The reason for the smaller tax collection is because hotels charged less for rooms, said Tami Reist, bureau president.

“When hotels started seeing that trend of business dropping, their automatic thing was lower rates to build up occupancy,” she said. “It used to be just your smaller franchises did that, but now it’s your Westins, too.”

Lower rates

The average daily rate for February 2009 was $67.19 compared to $64.44 in February 2010. A difference of $2.75 may not seem like much, but it adds up, Reist said.

The city collects a $2 per room night fee that goes toward special projects like Ingalls Harbor, but it also collects a tax that is a percentage of hotel revenue. Seventy-five percent of that tax revenue goes to the bureau for operating expenses.

The cheaper rates did help build back business, she added, but now hotels are raising rates again, leading to customer complaints. The bureau has advised hotels to maintain rates and ride out the economic storm so they can profit more when business returns, she said.

With the reduced lodging tax revenue, the bureau’s ledger has remained in the red all fiscal year. It was $11,000 over budget in April and $84,000 over budget for the fiscal year.

“The expenses aren’t out of line,” said Wade Weaver, board treasurer, noting the bureau already cut $60,000 from the yearly budget. “It’s the income.”

Budget cuts did not affect direct advertising and promotions, he said, which must be stronger during a downturn in tourism.

“Even though these are ugly numbers, it’s not a crisis we can’t handle,” Weaver said.

Having anticipated downturns in the industry, the bureau has sufficient reserves to withstand the 2010 budget shortfalls, he said.

The bureau has saved money this year in a variety of ways: relying more on mass e-mails instead of sending promotional materials via standard postage; not attending some trade shows; reducing print materials; and reducing hours for weekend staff.

The bureau avoided a $15,000 fee to host the Wo­men’s Bass Tournament when the event canceled and was refunded $20,000 when an FLW fishing tournament lost television coverage.

Reist said lodging tax numbers should improve next month as preliminary accounting shows hotels had a 3 percent increase in revenue during March.