Tourism officials in Northwest Arkansas say hospitality revenue is recovering from the covid-19 pandemic, and for some cities, last year’s revenue exceeded that of 2019.
Overall, hospitality sales tax revenue for Fayetteville, Fort Smith, Springdale, Rogers and Bentonville fell about 28% in 2020 compared to 2019. The five cities reported more than $13.1 million in 2019 and about $9.4 million in 2020.
Last year’s revenue returned to 2019’s level with about a 1.5% increase. Cities reported $13.3 million in hospitality sales tax revenue last year compared to $13.1 million in 2019.
Some cities are doing better than others, and the rate and type of tax the cities collect has bearing on the revenue generated.
For instance, Fayetteville has a 2% tax on hotel, motel and restaurant sales. It reported more than $8.1 million in revenue last year, compared to $7.4 million in 2019, a 10% increase over the pre-pandemic year.
Rogers, which only taxes lodging at 3%, had a 34% decrease in revenue last year compared to 2019. The city brought in more than $1.4 million in lodging tax revenue in 2019, compared to a little more than $946,000 last year.
All five cities did better revenue-wise last year compared to 2020, when the covid-19 pandemic prompted shutdowns and stringent safety protocols in public places.
A report from the Arkansas Department of Parks, Heritage and Tourism released last week says visitor spending across the state fell more than 25%, to $6 billion in 2020, compared with the previous year. That spending generated about $364 million in state tax revenue, a 21% decline. Local tax revenue and revenue from the state’s 2% tourism tax also declined.
Areas most affected by tourism declines were Benton, Washington and Pulaski counties, according to the report.
Travel and tourism enhances the quality of life for a community, according to Destinations International, a tourism advocacy and research organization in Washington. Having a strong hospitality industry enhances the public image of a state or city by showcasing it as a dynamic place to live and work, generating jobs and tax dollars for improvement of public services and infrastructure, the organization’s website says.
Leaving the worst behind
Half of the revenue from Fayetteville’s 2% hotel, motel and restaurant sales tax goes toward tourism efforts, and the other half goes to parks development.
Molly Rawn, chief executive officer of Experience Fayetteville, the city’s tourism bureau, said September, October and November in particular did well in generating hospitality sales tax revenue. Contributing factors were a successful Arkansas Razorback football team and a cyclocross World Cup event in October, but no one event likely was responsible, she said.
Leisure travel to the city came back last year, local residents got back out to bars and restaurants and youth sports also got back into full swing, Rawn said. The bureau made targeted efforts to promote the city online and on social media and fostered partnerships with event organizers and hospitality businesses, she said.
“It’s such a significant increase that I think it is more than can be explained by any one thing. It’s really travel sentiment and travel to Fayetteville across the board,” Rawn said. “We were up almost every single month except for two. That tells me it’s broad.”
Customers are back in the city’s restaurants and bars, although many establishments are experiencing challenges in staffing and supply chain issues, as is the case nationally, Rawn said. Hotels in the city haven’t fully recovered from the pandemic, and national industry experts project revenue in that sector could normalize this year, she said.
Fort Smith’s revenue from its 3% lodging tax bounced back last year from 2020 and was higher than in 2019. The city saw a 7% increase in hotel tax revenue, with more than $988,000 generated last year compared to about $920,000 in 2019.
The city took on a new marketing strategy last year, focusing heavily on targeted digital outreach, said Timothy Jacobsen, executive director of the city’s Convention and Visitor Bureau. The bureau shifted from billboards and bus advertisements to investing in digital data analytics, reaching prospective visitors online through advertisements, newsletters, website engagements and other means, he said.
The efforts paid off, Jacobsen said. The bureau heavily promoted the city’s tourism assets, such as western heritage and history, arts and entertainment and outdoor attractions, he said.
Marketing Fort Smith more as part of Northwest Arkansas has helped encourage visitors heading north of the Bobby Hopper tunnel to stay overnight in the city on the way, Jacobsen said.
“I could sit here and try to take credit, but there was a lot of frustration with people wanting to travel,” he said. “I think that’s obvious with the numbers you see.”
Tax revenue from hotel stays in Springdale last year improved from 2020 but didn’t quite reach 2019. The city has a 2% lodging tax that brought in about $439,000 last year, about $281,000 in 2020 and about $523,000 in 2019.
Leisure travel to the city picked up late last year, but business travel lagged, said Bill Rogers, vice president of communications and special projects with the Springdale Chamber of Commerce. He suspected a return to business travel this year would lead to pre-pandemic-level lodging tax revenue.
“I think you have to reasonably say that we’ve left the worst behind us,” Rogers said.
Rocking and rolling
Rogers is in a similar boat as Springdale. The 3% tax on lodging in Rogers garnered a little more than $946,000 in revenue last year, which was 58% more than the $597,000 generated in 2020. However, 2019 was a banner year for the city, netting more than $1.4 million in lodging tax revenue, said J.R. Shaw, executive director of Visit Rogers, the city’s tourism bureau.
The 34% dip in lodging tax revenue last year compared to 2019 means the city’s tourism industry is still working its way out of the pandemic, he said. Shaw described business travel as the bread and butter of tourism revenue in the city with the largest convention center in the region. Like Springdale, officials anticipate business travel to return this year, he said.
Rogers also has some leisure tourism draws to look forward to this year. The Bikes, Blues & BBQ motorcycle festival will have its central location in Rogers after moving from Fayetteville, and the summer lineup at the Walmart AMP is loaded, Shaw said. The city also hosts the Walmart Northwest Arkansas Championship of the LPGA in September and regional craft fairs draw hundreds of visitors in fall, he said.
“Our leisure segment should be rocking and rolling, all pun intended, for 2022,” he said.
Hotel, motel and restaurant sales tax revenue last year in Bentonville was similar to revenue in 2019, albeit slightly lower. The city’s 2% tax on overnight stays and prepared food sales brought in about $2.7 million last year and was closer to $2.8 million in 2019. Revenue dipped 30% in 2020 with about $1.9 million.
Restaurant sales are doing really well in Bentonville, said Kalene Griffith, chief executive officer of Visit Bentonville, the city’s tourism bureau. Hotel revenue still lags pre-pandemic levels. However, city tourism officials are already seeing bookings rise, with cycling and the arts fueling demand, she said.
Griffith said she expected hospitality revenue to meet and likely exceed 2019 revenue this year and boom next year.
“We’re going to just blow it out,” she said. “I just feel like we’re on the verge of making some big things happen in our area. There are lots of events coming — from cycling, to sports, to the arts industry, to weddings — and even our bus tours are picking back up. We’re seeing all of those audiences starting to come back in full force.”
Hospitality tax revenue
Hospitality sales tax rates vary by city in Northwest Arkansas. The following is a breakdown of the type of tax and revenue by year for each city:
Fayetteville
2% hotel, motel and restaurant sales tax
2019 — $7,439,086
2020 — $5,957,972
2021 — $8,177,290
Fort Smith
3% lodging sales tax
2019 — $920,171
2020 — $627,726
2021 — $988,637
Springdale
2% lodging sales tax
2019 — $523,853
2020 — $281,831
2021 — $439,098
Rogers
3% lodging sales tax
2019 — $1,434,330
2020 — $597,863
2021 — $946,157
Bentonville
2% hotel, motel and restaurant sales tax
2019 — $2,796,812
2020 — $1,939,947
2021 — $2,758,385
Northwest Arkansas total
2019 — $13,114,252
2020 — $9,405,339
2021 — $13,309,567
Source: Fayetteville, Fort Smith, Springdale, Rogers and Bentonville tourism and finance officials
