As vaccination rates increase and local COVID-19 cases decline, Jefferson City is starting to see hope of a returning tourism industry.
In 2019-20, COVID-19 ravaged the nation, and the tourism industry ground to a halt. One measure of that decline was revenue derived from Jefferson City’s lodging tax, which is a 7 percent tax paid on hotel rooms in the Capital City.
In 2020, the lodging tax brought in $959,839, a 24 percent decline from 2019, which brought in $1,374,954. The 2019 numbers reflected a steady climb in lodging tax revenues from past years. For instance, in 2018, the tax brought in $1,226,119. In 2017, the tax brought in $1,235,783.
So far for 2021, numbers are inching back toward where they were pre-pandemic.
“In talking with the hotels, they seem to feel like things are going in a good direction,” said Diane Gillespie, executive director of the Convention and Visitors Bureau. “It’s kind of a hit or miss type thing, but no one’s had to close it up or anything. So, there is a business there.”
The CVB sees tax income two months after a person’s stay. For instance, stays from February are reported in April numbers.
The monthly reports from 2020 near perfectly align with the rise — and dips — in COVID-19 cases.
As cases rose in March, tax revenue dropped below where it was at the same time in 2019. The following month, Missouri had a stay-at-home order and revenue dropped to the lowest it had since before 2017.
While it climbed some in June and July — $94,499 and $96,451, respectively — winter made the tax revenue dip again to $60,099 in November.
For 12 straight months, the tax revenue stayed lower than it had the year before.
March 2021 showed a turning point with $110,467 coming in — around $30,000 more coming in than March 2020 at $80,913.
Since March, every month has brought in more than the same month in 2020 and are closer to the pre-pandemic numbers from 2019.
For the last two months reported, June numbers ($132,627) and July numbers ($118,674) surpassed 2019 numbers by a collective $60,000.
A middle ground
Gillespie said she spoke with other CVB directors in the state when the pandemic first started.
“The conversation had come up that we’re probably not going to hit recovery until 2023,” she said. “We were all like ‘Oh, no way. It won’t be that long.’ Then things started kind of going, ‘OK, maybe it’s going to be 2022.’ July hit, and now we’re all kind of going, ‘Things may not look (like 2019) until 2030.’ It’s kind of hit or miss.”
However, she said, it seems like Jefferson City is in the nice middle ground to bounce back faster.
“If a group wants to meet in a hotel, chances are they may be the only group in the hotel that’s meeting,” she said, “whereas some of these larger hotel complexes could have two or three different groups meeting. Maybe they would feel safer having their people in just kind of their own little group than being with other groups.”
Gary Plummer, president of the Jefferson City Chamber of Commerce, said he’s optimistic for 2022.
The hospitality industry, just like many others, learned how to adjust in 2020 and are still getting better at it.
“Some folks in the hospitality industry, particularly the food service side, have had some of their best years ever,” he said. “I think of Chick-fil-A and others who have focused almost all their business on their drive-thru. People are making adjustments to the times.
“Overall, even though we have this delta variant surge, I think this community’s optimistic about us getting through this and better times ahead,” Plummer said.
Trey Propes, president of the Missouri Hotel and Lodging Association, said things are improving, but the hotel industry continues to struggle with many still operating in the red.
“In my opinion, we received little to no help as far as government funds even though our industry was an industry that was hit harder than any other,” he said. “People still ate, people still did call-ins to restaurants and got pickup orders. Drive-thru restaurants flourished. But hotels in general, for the most part, have really suffered.”
While Jefferson City hasn’t lost any hotels, Columbia has lost at least one, he said.
“They turned in their keys because they couldn’t make it work,” Propes said. “It’s a huge hotel. They had to turn in their keys, gave it back to the bank. I think the bank has since sold it, but that’s what they had to do — just wash their hands and walk away.”
Propes said two things could help the hotel industry at this moment: give the industry some of the disaster recovery funding and offer a one-time property tax forgiveness program.
Of the federal funding which has been released, the hotel industry hasn’t received much, he said. He works for Ehrhardt Hospitality, which has hotels scattered around Missouri and Illinois.
“In Illinois, we’re blessed,” he said. “Their state has been doling out funds from the disaster recovery fund monies to hotels for the better part of a year. Missouri just hasn’t done that.”
Things are starting to look up, but there are still hurdles on that path, he said.
For instance, property taxes are due by the end of the year, and a break from property taxes could be beneficial to hotels at this time, he said.
“Property taxes on hotels are a heck of a sum of money,” he said.
Property taxes are collected by the city, county and school district. For Jefferson City hotels, the combined tax rate for 2020 is $6.67 per $100 of assessed value. For instance, if a property’s assessed value is $1,117,920 than the property tax bill would be $74,557.44.
“Any one-time property tax forgiveness that they could provide hotels would certainly be welcome,” Propes said. “It would definitely cut right to the bottom line as to what it’s going to take a hotel to continue to survive.”
Trending up or down?
Looking at the region’s occupancy and average daily rates, there are some signs of improvement for tourism.
The two lodging statistics work like supply and demand, Gillespie said. When the demand is high, the average daily rate (ADR) will be high, she said.
While the ADR for Jefferson City, Columbia and the Lake of the Ozarks are higher in 2021 than they were in 2020, Jefferson City has made greater gains than the other two.
Year to date for 2021 has Jefferson City’s ADR at $90.96 compared to $82.26 in August 2020. Meanwhile, Columbia’s rate is at $83.39 so far this year and was at $76.85 at this time last year. The Lake of the Ozarks is at $122 compared to $116 this time last year.
“I’m happy to see that our ADR is headed in the right direction. That’s a great plus for us,” Gillespie said.
But Propes said he’s concerned the ADR is still low.
“When I look and I see the percentage of rooms sold and I see the rate of what they’re sold at, I just don’t know everybody’s making it,” he said. “Credit to them if they had some savings and they’re burning through that, if they took (Paycheck Protection Program) money to help pay their people.”
Gillespie acknowledged there’s still a lot up in the air as people bounce back and forth about whether to host in-person conventions.
“I’ve talked to a couple different association directors here in this city, the last couple weeks and one is having their event in October, and their numbers are up,” she said. “Then I talked to another one of our members that had a conference, and they weren’t at 50 percent.”
But Gillespie suggested more tourism is returning to Jefferson City.
“We’ll continue with sporting events,” she said. “We’ve got a strong group of events coming into our community. I think you’ll start seeing some of the conventions come back. We’ll see how the legislative session goes.”
In terms of actually seeing visitors, Propes said, it comes down to people’s changing mindset.
“When the mindset of people change — that things are safe and things are clean — the more I think things will get back to normal,” he said.