Tax revenue steady despite Hogs’ results

Data: City hospitality economy independent of football success

FAYETTEVILLE — Does a disappointing Razorback football season negatively affect the amount of hospitality sales tax dollars the city rakes in?

The answer appears to be: Not really, but kind of.

The city has a 2% tax on hotel and motel stays and restaurant and bar sales. Short-term rentals also have to pay the tax. Half of the revenue goes toward tourism efforts, while the other half goes to park development, acquisition and maintenance.

The Razorback football team last year missed a bowl game for the first time since 2019, going 4-8 on the season. The team went 7-6 in 2022 and 9-4 in 2021.

Hospitality sales tax dollars were down about 2% for September and October compared to those months’ totals for the year before, according to the city’s finances. However, November’s collections went up about 10% compared to same month a year prior.

Those numbers don’t match Razorback football game attendance. The two home games played in September averaged nearly 74,000 in attendance, with the one game played in October against Mississippi State having about 71,500 in attendance, according to ESPN. com. Average attendance for the final three games played in November dipped 10% to about 64,400.

At that point, the team was on a six-game losing streak, with the only hope of getting to a bowl game being to win out the season. Once the Hogs got to No. 10-ranked Missouri, all bowl game hopes were vanquished, and attendance reached a low point of about 59,800.

Even with the Razorbacks in dire straits, hospitality tax revenue stayed steady. Revenue for November was slightly lower compared to the two months prior, but that’s the usual pattern every year, city finances show.

In fact, the largest dip month-to-month in hospitality sales tax revenue happened between October and

November of 2022. The city saw nearly $900,000 in revenue for October, followed by about $781,000 — a 13% drop.

The Razorbacks were 5-3 heading into November 2022, better than the 2-6 record the team had going into this past November. Yet, hospitality tax revenue only dipped about 2% from October to November.

All that is to say, sure, the team’s success can have an impact on hospitality sales tax revenue, said Paul Becker, the city’s chief financial officer. But there’s not much of a correlation, he said.

There are many other factors to consider, Becker said.

For instance, September is always the month with the highest amount of hospitality sales tax revenue. That’s when the University of Arkansas, Fayetteville students return, often with their parents, and the weather is still nice. As the year goes on, it gets colder outside and many students end up leaving the city for the holidays, Becker said. There also are a number of other events that can draw people to town during the football season.

Additionally, the pandemic impacted people’s behavior, he said. Once safety restrictions in public places were lifted, people became eager to get out and spend money as they got more comfortable with being around a crowd. Given the surge in activity, it’s inevitable spending will start to level out, Becker said.

That could explain the consecutive months last year with a slight dip in hospitality tax revenue — general sales tax faltered a bit as well compared to the year before, he said.

“If hotels, motels and restaurants were down and everything else was up to the same level, I would say, yes, there’s an argument there,” Becker said. “But when the other segments of sales tax soften too — retail sales, big box stores, internet — I don’t think you can correlate all of that strictly to the sporting events.”

The football team has an impact on hospitality sales tax revenue when looking at the big picture over the course of years, said Molly Rawn, chief executive officer of the city’s tourism bureau, Experience Fayetteville. Individual games, on the other hand, tend not to move the needle so much, she said.

“While we certainly see the economic impacts that events like these do bring, it is not the case that any one single event is responsible for that month’s hotel, motel and restaurant success,” Rawn said.

Hotel occupancy stayed relatively consistent for September, October and November for the past three years. Occupancy ranged 54% to 70% for about 2,100 hotel rooms available in the city each month.

Hospitality businesses still notice a change in customer behavior depending on how the football season pans out.

Sean Hearn, general manager at Candlewood Suites on Martin Luther King Jr. Boulevard, is one of two hotels that provides free shuttle service to the games and is a popular spot for fans. He said he can tell the difference between a good and bad season by looking at the hotel’s booking window.

When the team is doing well, guests tend to book rooms two or three months in advance. Last year, the hotel saw a lot more bookings the week of a game, Hearn said.

“It’s almost like an afterthought, like, ‘Well, there’s nothing else to do, I guess we’ll go to Fayetteville and watch a game,’” he said. “Whereas, if we’re killing it, then all of a sudden at that point they want to book it and make sure they have adequate lodging.”

Farrell’s Lounge on Dickson Street saw a different level of business this year, especially the last couple of games, owner Tim Farrell said. A lot more Missouri fans in yellow and black came to get burgers for this year’s rival game than in years past, replacing the Hog fans that otherwise would have filled seats, he said.

It’s been a weird few years for the hospitality and restaurant business, Farrell said, from the dismal Chad Morris era, to the pandemic, to the ups and downs of Coach Sam Pittman’s teams.

“I don’t think fans are completely checked out or anything,” Farrell said. “If I could compare it to the end of the Chad Morris era — that was bad. Super slow. We’re still OK, but we definitely do feel it when we’re losing.”

Razorback sports generally serve as an economic catalyst for Northwest Arkansas, said Kevin Trainor, senior associate athletics director for the university.

“When the Hogs play at home, fans come from throughout the state and region, fill hotel rooms and frequent restaurants and local businesses,” he said. “It provides a consistent economic boon for our region each year.”

Attendance numbers at football games back up the claim — at least 70,000 fans attended every home football game in 2022 and for all but the final two games last year. Donald W. Reynolds Razorback Stadium has a capacity of 76,000.

“Razorback fans are passionate,” Trainor said. “One thing that our region can count on is they will be here to cheer on the Hogs in all of our sports annually.”