Bed tax receipts
Recent record highs in Marietta’s hotel/motel tax appear to be based more on the accelerating oil and natural gas industry than traditional tourism, but some members of city council say that doesn’t mean less of the revenue should go to the local convention and visitors bureau.
The city currently gives 50 percent of the 6 percent tax on stays in hotels and motels, commonly called the “bed tax,” to the Marietta-Washington County Convention and Visitors Bureau. That revenue is the organization’s largest source of funding.
The total collections have been higher than normal in the last couple of years: $786,154.32 in 2012 and $895,938.32 for 2013. That’s thanks in large part to people coming into the area to work on various aspects of exploring and extracting natural gas and oil from deep underground shale formations, although some merchants and hotel operators have indicated a recent increase in leisure travel as well, said Jeri Knowlton, executive director of the CVB.
“In the non-tourist months, I would say at least 75 percent of our business is oil and gas,” said Shelbi Welsh, assistant general manager at the Comfort Inn on Pike Street in Marietta.
In months with more leisure travelers, the oil and gas industry still accounts for 50 percent or more of the folks occupying the hotel’s 120 rooms, Welsh estimated.
“Ours are mostly a week at the very least,” she said. “Some of them are here Monday to Friday; they go home for the weekends, and then they’re back again.”
Business at the Magnuson Hotel by the River on Muskingum Drive is up this year over 2012, said general manager David Fitzgerald. While he didn’t have estimates on how much of the hotel’s occupancy is generally related to the oil and gas industry, it “seems to be the major driver,” he said.
“They last for several weeks, and then they’re gone and some new function (of the exploration or drilling process) comes in,” Fitzgerald said.
The Lafayette Hotel on Front Street was seeing about 80 percent of its business from the industry in the early days of the recent boom, said Julie Hambrecht, front desk manager.
“When they first started coming here, quite a bit of it was,” she said. “Now ours is more the tourists and (Marietta) college and the overflow from the interstate motels.”
Hambrecht said tourism and folks in town for college events account for about three-quarters of the hotel’s business now. But the Lafayette does play host to a number of oil-and-gas-industry-related events, as it did Monday evening.
Some might assume the Fairfield Inn and Suites that opened on Pike Street in 2012, and the neighboring Comfort Suites, set to open next month, were lured by the promise of oil and gas business, but that wasn’t the case, according to Michael Holtz, president of Florida-based MPH Hotels Inc.
“We made the decision to do (those) long before the oil and gas came about,” he said, estimating the industry accounts for perhaps 20 to 30 percent of the business at the Fairfield.
Holtz did say oil and gas could determine whether the company decides to locate another hotel in the Marietta area, although there are no plans for that at this time.
As exploration and interest in the Utica shale formation has increased, so have hotel occupancy rates in eastern Ohio, said Shawn Bennett with Energy In Depth, a research, education and public outreach campaign launched by the Independent Petroleum Association of America. As more and more locals are trained to perform the tasks professionals from outside the area are coming in to do, that may decrease, he said, but there are many opportunities, including pipeline construction and the proposed ethane cracker plant in Wood County, W.Va.
The demand for hotel rooms “should be happening for years to come,” he said.
While visitors connected to the oil and gas industry have increased in recent years, Councilman Harley Noland, D-at large, has noticed a decline in leisure travelers, both at his business, Marietta Trolley Tours, and others. Five years ago, the trolley tours ran three times a day, sometimes adding a fourth to accommodate folks who couldn’t get on the first three.
“How many runs a day do we do now? One,” he said. “(But) our bed tax revenues are the highest ever.”
Knowlton said the recession as well as the disappearance or decline of traditional draws like Lee Middleton Dolls in Belpre and Fenton Art Glass in Williamstown have played a part in the leisure travel decrease in the area. But that trend appears to be reversing, she said, and the area is positioned well to take advantage of increasing interest in outdoor recreation and experiential travel.
Noland said he doesn’t think the city should decrease the funding to the CVB, but he would like more research into how the agency’s marketing is working.
Knowlton said the bureau is able to acquire some of that information, including a return-on-investment study that showed every marketing dollar spent in 2012 generated $39.93. Other data, including attendance and from where visitors are coming, is shared by some destinations but not others, she said.
Even if tourism isn’t the overwhelming reason for increased hotel stays in Marietta, Councilman Tom Vukovic, D-4th Ward, doesn’t favor diverting a portion of the CVB’s share of the bed tax to city services at this time.
“The infusion of money means that we have more money to spend on tourism to get our message out,” he said. Cutting the funds “means that they are able to do less to bring people into town.”
Vukovic noted the other half of the bed tax revenue already pays for city services through the general fund. If the city continues to see reductions in funding by the state, council might have to look at the way that revenue is distributed.
“At this point, I don’t think we need to do that,” he said.
And the CVB does provide services to people who aren’t technically tourists, Vukovic said.
“Everything starts with a visit,” Knowlton said.
The bureau acts as an information conduit for people who are new to the area, giving them ideas for where to spend their off hours, where to go, where to eat and the like, she said.
With the new facilities opening, the area has seen its number of hotel rooms increase by about 250, and the bureau needs to work to bring people to them even after oil and gas activity dies down, Knowlton said.
Toward the end of 2012 and into 2013, the CVB reimbursed the city $27,731.69 in bed tax money that exceeded what the agency had budgeted. This year, collections are below the $480,865.75 the bureau anticipated but still $60,000 more than what was actually received in 2012.