Fox Cities room tax revenues fall sharply as coronavirus slows journey
APPLETON – Space tax revenues in the Fox Cities declined more than 75% in the second quarter of the year and are likely to have declined more than 50% in the third quarter due to the coronavirus pandemic.
Pam Seidl, executive director of the Fox Cities Convention & Visitors Bureau, said it could take four years for tourism activity to return to 2019 levels as COVID-19 cases rise in east-central Wisconsin and beyond.
“That’s what we hear from Tourism Economics, the group that conducts our visitor spending study,” Seidl told The Post-Crescent. “Currently, the United States estimates that full recovery will take four years.”
A room tax is a user tax for travelers staying in hotels and motels. The tax within the Fox Cities tourist zone is 10% and has four components:
- 3% for the debt at Fox Cities Exhibition Center in Appleton of $ 31.5 million
- 3% on the debt at the $ 30 million Community First Champion Center in Grand Chute
- 2.85% for the operation of the Fox Cities Convention & Visitors Bureau
- 1.15% for the respective municipality
So far, seven months after the pandemic, the Fox Cities Exhibition Center and Champion Center have sufficient reserves to pay off debts despite the decline in land tax revenues.
Tony Saucerman, Appleton’s finance director, said two reserve funds totaling $ 3.3 million have been set up for the exhibition center.
“We assume that even if we received the same amount we received for Q2 2020, which was historically low due to the pandemic, we would collect enough room tax every quarter in the future to meet the debt servicing obligations fulfill.” 2022, “Saucerman said.” At this point in time, we expect the collection of space taxes to be back to normal.
Should the reserve run out, Appleton is required to make advances to its recovery agency to pay the debt. The advances would be returned to the city with future surplus tax levies.
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The setup is similar for the Champion Center. Julie Wahlen, Grand Chute’s chief financial officer, said two reserve funds totaling $ 3.4 million are in place to cover deficits.
The amount “would be enough to meet all debt servicing payments for the next three years,” Wahlen said. “This assumes that the room tax collections remain at the current level for the entire time.”
If the reserves were used up, Grand Chute would be responsible for any deficits but would be repaid with future revenue from the space tax.
Revenue decimated by pandemic
Visitor spending in the Fox Cities was a record-breaking $ 511 million in 2019.
Solid performances followed in January and February. Then came March and the coronavirus. Governor Tony Evers declared a public health emergency on March 12 and issued a home security order on March 25, stopping unnecessary travel and closing places of public entertainment and activity.
Room taxes were down 8.7% in the first quarter, mainly driven by the underperformance in March.
The stronger impact of the pandemic and home security was felt in the second quarter, when room taxes fell 76.2%.
“It was holistically devastating for the industry,” said Seidl.
The room tax for the third quarter has not yet been calculated, but Seidl estimates that it will decrease by 50% to 60%.
“When the mask mandate came through in August, we lost some sporting events that were supposed to take place,” said Seidl. “The participants couldn’t play in masks, so they canceled these events.”
The third quarter is usually the largest for Fox Cities room tax revenue, with EAA AirVenture in Oshkosh, Mile of Music in Appleton, and Green Bay Packers preseason games. None of them took place this year.
The decline in room tax revenue is as widespread as the coronavirus.
For example, in Sheboygan, room tax collections fell 44% for the first two quarters, from $ 670,000 in 2019 to $ 374,000 this year.
The fourth quarter looks bleak
It’s unlikely that Fox Cities will see a turnaround in the fourth quarter. The number of nights spent in hotel rooms is highly dependent on business travel, and many companies had travel bans in place by the end of the year.
This, in turn, reduces air traffic through Appleton International Airport, thereby reducing the number of flight crews staying in hotels.
“It’s death by a thousand cuts,” said Seidl.
The Fox Cities market is also powered by large group events such as conventions and sports tournaments. They too were hit by the pandemic.
In March, when officials expected a six to eight week slowdown due to the pandemic, organizers worked to postpone the events to a later date in the year. As the pandemic continued and worsened, most events were canceled until at least December.
The Fox Cities Exhibition Center will have only one event before the end of the year: a blood donation on December 26th, which was deemed essential.
“There are still some things in the books in January,” said Seidl. “I think people are taking it month after month now.”
Even vacation trips to the Fox Cities involve large-group activities like minor league baseball and Broadway shows. The Wisconsin Timber Rattlers season was canceled and the Fox Cities Performing Arts Center closed its doors until the next year.
“The top performing destinations in Wisconsin are the world’s outdoor leisure capitals: Bayfield, Minocqua, Door County,” Seidl said.
Care for the future
The decline in land tax revenues affects not only debt payments, but also the operation of the convention and visitor bureau. She uses her part of the money to promote the area and support tourism development.
The office has not filled any vacancies, but has otherwise been able to employ its eight employees thanks to a financial reserve without vacation or layoffs. Employees are working to book events for 2022, 2023 and 2024.
Before the pandemic broke out, however, the office had planned to allocate nearly $ 500,000 to tourism projects by 2020. Now that number has been brought down to $ 225,000.
“If these revenues go down, we can’t give back grants to the community for things like Loop the Lake,” said Seidl.
The Champion Center was closed while ordering Safer-at-Home, but has reopened with a reduced level of activity mainly serving local sports teams for revenue.
“His mission is to drive overnight hotel stays through major sports tournaments,” said Seidl. “Obviously the plant did not achieve this goal as we did, but it is in operation.”
According to Seidl, organizations like Fox Cities PAC and Appleton Downtown Inc. are particularly hard hit by the pandemic and need support so that they can resume their programs for the benefit of visitors and residents after the health crisis has ended.
Any loss of programming could affect the community’s quality of life and its ability to attract top talent, Seidl said. “It’s really just a vicious circle.”
Contact Duke Behnke at 920-993-7176 or [email protected] Follow him on Twitter @DukeBehnke. Sheboygan Press reporter Diana Dombrowski contributed to this report.