Bright spot: City's restaurant, hotel taxes show strong growth rate

Monday, July 7, 2008
FRED LYNCH ~ flynch@semissourian.com Restaurants and hotels near Interstate 55 helped bring in more sales tax dollars for the fiscal year that ended June 30.

Cape Girardeau restaurants are on a pace to exceed $108 million in sales and hotels could ring up $15 million in room charges when all the figures are compiled for the year ended June 30.

The sales totals, based on receipts from the city's restaurant and hotel taxes, are based on 11 months of receipts and the strong growth rate that has continued to boost the local hospitality industry. The growth in receipts is an economic bright spot for a local economy that has recently showed sluggishness in other retail sectors.

The 4 percent tax on hotel room charges brought in $548,324 through June, an increase of 6.66 percent over the same period in 2007. During the 2007 fiscal year, tax receipts grew at 7.04 percent and in fiscal 2006, the first full year following the opening of the Holiday Inn Express, receipts grew 15.17 percent.

The restaurant tax, a 1 percent charge on meals, collected $998,570 during the first 11 months of the fiscal year, up 5.39 percent over the same period of fiscal 2007. For fiscal 2007 and 2006, the tax receipts grew 9.41 percent and 7.95 percent, respectively.

Translated to actual sales figures, the tax receipts indicate that consumers spent $13.7 million on hotel rooms over the 11-month period. Restaurant sales totaled $99.8 million over the 11 months.

The figures are good news for Chuck Martin, director of the Cape Girardeau Convention and Visitors Bureau. Other tourism cities in Missouri are reporting significant drops in traffic, he said. The Cape Girardeau figures, even when inflation is taken into account, show the city is at least holding its own in hotel and restaurant sales.

Other indicators of economic activity in the area have not been so rosy. During the first six months of the year, collections on all taxable sales are down in Cape Girardeau, Jackson and the county as a whole. Jackson is the worst hit, with receipts falling 2.3 percent, while Cape Girardeau is down slightly at 0.3 percent compared to the same six months of 2007.

"To be above zero, given especially the last six months when we have heard the 'R word'" -- recession -- "tossed around more than anyone would like to hear, is very good," Martin said. "Most people in the surrounding five-state region think Cape is under water at this point."

The hotel and restaurant taxes fund the CVB budget, which was set at $509,400 for the coming year, a 3 percent increase. The remainder is used to make payments on the city's bonds that financed the Southeast Missouri State University River Campus.

Part of the increase could be attributed to rising prices for both hotel rooms and restaurant meals, Martin said. But all prices are rising, he said. "That comparison is one that crosses all market segments."

What makes the restaurant and hotel numbers encouraging, Martin said, is that both industries represent discretionary purchases. Unlike groceries, clothing and fuel, a restaurant meal or an out-of-town trip with an overnight stay are optional purchases, he said.

Cape Girardeau's restaurant taxes have been helped by the addition of several new establishments in the past year. And more are on the way.

The growth rate was encouraging news to an investor, Robert McGillivray of Sikeston, Mo., who has been working on opening a new Beef O'Brady's restaurant in Cape Girardeau. McGillivray said the restaurant, first announced last year with a projected opening date of December, hit unexpected delays. Those issues are in the past, and the city issued a building permit in June for a $160,000 project to build the 3,510-square-foot restaurant at 1812 Carondolet off North Kingshighway.

"We started this process back in 2007 when things were still rocking and rolling," he said. "But this is a unique market, being a lot more of a service industry area and the hospitals. A lot of folks are eating out more and they are going to continue to eat out more."

McGillivray and his partner, Lee Hillman of Cape Girardeau, are confident of success at the new restaurant, which will offer mid-priced entrees in a pub with a family theme.

"We are very excited about this opportunity," he said. "Bad economy or not, I think it fits a niche."

rkeller@semissourian.com

335-6611, extension 126

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