Hotel tax revenue up 15 percent

Revenue from Cape Girardeau's hotel tax has soared in recent months, and city officials are pointing to several reasons: the new Holiday Inn Express has opened, room rates have risen sharply and thousands more visitors have filtered through town thanks to events like the recent HOG Rally.

For the first four months of fiscal 2006 -- July 1 to Oct. 31 -- hotel tax revenue totaled $192,720.61, a 15.56 percent increase from the same time period last year, according to a city report.

During those four months last year, $166,765 was raised from the 4 percent hotel tax that is collected from hotel patrons. For the entirety of the 2005 fiscal year, hotel tax revenue was down 1.29 percent from the year before, when $457,459.51 was collected.

Convention and Visitors Bureau director Chuck Martin said a main factor was that the Holiday Inn Express opened in June, bringing 102 rooms into the picture after the old Holiday Inn closed in September 2003.

"That is a huge part of it," Martin said. "We lost those rooms for that time, and the tax revenue was down a bit. So getting them back obviously played a big part."

But there were other factors. According to Randy Kluge, regional manager for Drury Hotels and a member of a CVB advisory board, hotel rates in the area have risen 20 percent from this time last year. Kluge agreed that the Holiday Inn Express may have been the biggest factor, but the increased rates also obviously contributed to the increased tax revenue.

In Cape Girardeau, Drury Hotels owns Drury Lodge, Drury Suites, Pear Tree Inn and Hampton Inn. Drury Hotels is owned by Charles and Bob Drury. Midamerica Hotels, which owns the Holiday Inn Express, is owned by Jim Drury. Cape Girardeau has 11 hotels, a total of 803 hotel and motel rooms and 16 bed and breakfast rooms.

Kluge said that hotel rates are jumping nationwide because of fuel prices, which are increasing the shipping costs of inventory. He also said that hotels across the country are making major renovations, such as the Drury Lodge's recent renovation, which also drive up costs.

5,000 at HOG event

Martin added that more people from outside the area are coming to town -- and staying in hotels. He pointed to several conventions that took place recently including the HOG Rally, which drew 5,000 people here in September; the Beta Sigma Phi state convention, which drew 700 in October; and the Rural Letter Carriers state convention, which brought in 600. None of those events happened last year.

The hotel tax is part of a 5 percent hotel-restaurant tax, 4 percent for hotels and 1 percent for restaurants. The restaurant portion of the tax generates much more money -- $296,516 from July through October. That's a 3.7 percent increase over last year.

The money raised from the tax is used to pay off city bonds. The money retired Show Me Center bonds and is being used to pay off current bonds, like those issued for Southeast Missouri State University's River Campus.

The CVB also gets its budget from the hotel-restaurant tax. Martin said the CVB gets about a third of the tax revenue and that this year's budget is $466,000.

But the increase in revenue won't necessarily mean that the CVB will get more money next year, said John Mehner, president and CEO of the Cape Girardeau Chamber of Commerce, which oversees CVB operations.

He said that the increase for the total fiscal year would have to be 10 percent, which isn't likely to happen. Even if the total increase is 10 percent, then the chamber can only request an increase in the CVB budget and then it would be up to Cape Girardeau City Council to decide.

When the restaurant tax is factored in, the increase for the last four months is 8.07 percent. The highest total increase since 2001 was 5.42 percent.

The money that doesn't go to the CVB -- two-thirds of the total generated tax revenue from hotels and restaurants -- will likely be used to pay off bonds earlier.

"Increasing the CVB budget is not what we're concerned with now," Mehner said. "We're much more interested in getting more people to visit here and going about the business of doing that."

smoyers@semissourian.com

335-6611, extension 137