Tourism panel to cut budget, use surplus as revenue falls

FAYETTEVILLE — The Advertising and Promotion Commission will cut promotional and event-related expenses and dip into surplus money to compensate for projected loss in revenue from the hotel and hamburger tax it depends on to operate.

Commissioners on Monday approved cutting nearly $1.3 million from the nearly $5.4 million budget approved in January. The move leaves a $734,358 shortfall for the surplus money to cover. The commission has about $1.2 million in total available surplus. That leaves a balance of $511,779 in unrestricted surplus.

The city collects a 2% hotel, motel and restaurant sales tax, half of which goes to tourism, with the other half going to parks.

The commission received $171,029 in April, representing a 48% drop in revenue from the same month a year ago. March revenue was $219,186, a 33% decline.

Closings statewide because of the covid-19 pandemic began in mid-March. Phase I opening began in May. That means April numbers should represent the worst impact from the pandemic, said Molly Rawn, chief executive officer of the city’s tourism bureau, Experience Fayetteville.

The commission is the governing body over the Experience Fayetteville bureau, the Town Center and Clinton House Museum.

Revenue for the year is anticipated to be close to $3.4 million, a 37% decrease from the almost $5.4 million balanced 2020 budget.

The revised budget estimates ending the year with $2.4 million in hotel, motel and restaurant sales tax revenue, a 37% decrease from the budgeted $3.8 million for 2020.

Rental income and alcohol sales are projected to be $279,000, down 64% from the $781,377 budgeted amount. The events budget was cut 86%, projecting $4,100 in income

this year, as opposed to the $29,500.

First Thursday is canceled for the rest of the season and a scaled-back Lights of the Ozarks is planned.

Revenue from merchandise sales, Town Center parking, advertising and the Clinton House Museum all are down across the board, from $91,400 total to $61,500. Money from grants to hold cyclocross events and interest income remained about the same to round out the remainder of the income.

Two full-time positions have been eliminated, with all part-time employees except one laid off. Two of seven full-time Town Center staff members were furloughed, and four of 10 bureau employees are on a partial unemployment workshare program.

The projected shortfall, combined with the dip into surplus, means the commission won’t have the financial

leeway it usually does, Rawn said.

“It’s going to mean next year we’re budgeting in a really, really, really strict way, and we’re accounting for every dollar spent and we’re very careful,” she said.

In January, the commission approved $120,000 in event grants. Rawn said the commission likely will end up awarding about $70,000 of that amount. Some of the events took place before the pandemic hit, and others either haven’t made a call yet on whether to cancel or have adjusted to some type of virtual format, she said.

“I think it’s going to have to be a case-by-case decision,” said. “I think it would be difficult to say everybody has to return the money and nobody is getting their funds, or everybody is getting 50% of their funds. It’s going to vary depending on each event and each applicant. Our intent

is to make that decision as a staff.”

Commissioners asked about other commitments, such as the $200,000 dedicated annually over 15 years to TheatreSquared, and the $179,000 retainer with Sells Agency marketing firm. Rawn said she would inquire about any wiggle room on the timing of committed dollar amounts.

Commissioner Katherine Kinney, regional vice president of sales for the Graduate Fayetteville, said the hotel has started to see some demand for shorter-term stays. Guests will be welcomed back Thursday.

“We are seeing indicators that people are starting to travel more to this area,” she said.

It’s likely the commission will need to adjust the budget again, Rawn said. Virus cases could begin to decline in Washington County, putting less of an impact on revenue and making some events feasible, she said. In the alternative, the commission might have to look at liquidating assets.

“I don’t think we’re at that point yet,” Rawn said.

Stacy Ryburn can be reached by email at sryburn@nwadg.com or on Twitter @stacyryburn.