Cape's hotel, restaurant tax revenue up for second consecutive year

Additional income from rising hotel and restaurant tax revenue will allow the city to pay off bonds used to build Southeast Missouri State University's River Campus sooner than expected.

In October, a $3.8 million payment will be made, leaving a balance of $3,285,000, which city manager Scott Meyer said should be paid off by the end of 2014.

The city's hotel tax of 4 percent and restaurant tax of 1 percent generated $1.88 million in fiscal year 2012. The city paid Southeast Missouri State University $1.3 million toward its original $9.97 million obligation for bonds issued in 2003.

A portion of that tax revenue, $575,100 annually, goes to fund the Cape Girardeau Convention and Visitors Bureau per an agreement between the Cape Girardeau Area Chamber of Commerce and the city. The remainder goes to retire the River Campus bonds.

The city's hotel tax collections were up 8.33 percent during fiscal year 2012, which ended June 30, compared to the previous year. Its restaurant tax receipts were up 5.03 percent compared to fiscal year 2011.

Brooke Redfering prepares a lunch bill for a customer Monday afternoon at Broussard's Cajun Cuisine in downtown Cape Girardeau. (Laura Simon)

It's the second year in a row for those tax collections to increase; in fiscal year 2011, hotel tax receipts increased 6.89 percent from the previous year and restaurant tax receipts were up 4.07 percent.

The two years of increases in hotel tax revenue follow a decrease of 12 percent from 2009 to 2010.

Convention and Visitors Bureau executive director Chuck Martin said temporary construction workers and families traveling for amateur sports tournaments or for medical procedures are among the groups bolstering the revenue of local hotels and restaurants.

"One of the biggest differences between Cape Girardeau and a lot of other communities is that we truly are a regional hub with a very diverse group of entities that draw," Martin said.

A recent study conducted with local hotels identified eight top drivers that bring visitors to Cape Girardeau.

They are leisure travel; construction; amateur sporting events; medical procedures/appointments; social events, such as weddings or reunions; corporate business travelers; U.S. government business travelers; and entertainment.

"The beautiful thing about that picture is if we happen to be down in one particular area, we're up in others that help counteract. We are not solely dependent on leisure travel tourism. We have all of these things going for us that really do help draw," Martin said.

With only one month of fiscal year 2013 completed, hotel tax revenue was up 14 percent for July and restaurant tax receipts were up 11.3 percent.

Per the terms of an out-of-court settlement between the city and hotel owner Jim Drury of Mid-America Hotels Corp., who filed a lawsuit questioning the validity of the River Campus bond issue, the tax will expire when the bonds are paid in full, Meyer said.

"We really need to explore what is the next step here," he said.

Cape Girardeau City Council members John Voss and Loretta Schneider, who serve on the Convention and Visitors Bureau advisory board, have been charged to come up with a proposal for the council to consider, he said.

One possibility that has been discussed is using a portion of hotel and restaurant tax proceeds to fund the construction of a conference center in Cape Girardeau. A study is underway now to evaluate that possibility, Meyer said.

mmiller@semissourian.com

388-3646

Pertinent address:

518 S. Fountain Street, Cape Girardeau, MO

400 Broadway, Cape Girardeau, MO