Local hotel industry: Room tax revenue sets record in 2011 as occupancy strengthens
Melanie Maxwell | AnnArbor.com
The average daily occupancy rate in the county jumped from 54 percent in 2010 to 62.5 percent in 2011 — indicating that the local hotel industry is strengthening, but not quite back to its 2006 levels of 68 percent occupancy.
“Washtenaw County has come back very strongly,” said Chuck Skelton, president of the Hospitality Advisors Group of Ann Arbor. "In 2011, it had the highest occupancy in the state, and really, in any major Midwestern metropolitan area.”
At the same time, the 2011 hotel room tax collections mark a 13 percent increase over 2010 when revenue totaled $3.5 million, and a 31 percent increase over 2009’s $3 million.
The tax — which is imposed on all hotel guests in the county’s 51 lodging establishments — was increased to 5 percent in 2009 from 2 percent.
Guests pay the 5 percent accommodation tax based on their room costs and that money goes to both the Ann Arbor Area Convention and Visitors Bureau and the Ypsilanti Area Convention and Visitors Bureau for tourism marketing efforts.
The 2009 tax hike, said Skelton, has helped generate enough revenue to put Washtenaw County in a national advertising spotlight via a new Pure Michigan campaign.
Ryan J. Stanton | AnnArbor.com
The $1 million campaign, which was announced in February, features Washtenaw County in national cable TV ads and on the state’s Pure Michigan website. Four articles will appear on the site throughout the year, written by the local Convention and Visitor Bureaus (CVBs) and featuring various local attractions.
A 30-second TV spot featuring Ann Arbor was posted to the Pure Michigan YouTube channel in March. The ad’s message: “Ann Arbor does it up different.”
“I think this is a huge deal,” Skelton said. “Now we’re on every major cable network out there, when we never would have been able to have that variety and exposure without that increase in funding.”
He added: “People see that ad everywhere and they get this picture of Ann Arbor in their minds.”
The Michigan Economic Development Corp. plans to contribute $500,000 to the campaign, with Ann Arbor SPARK allocating $70,000. The CVBs are allocating the remaining $430,000, which will come directly from the county’s hotel room tax revenue.
“In years past, (the CVBs) wouldn’t even have been able to consider contributing that money,” Skelton said. But the county’s increasing room tax revenues made it a feasible option.
Aside from the Pure Michigan campaign, the tax revenue increase is paying off in additional marketing campaigns by the bureaus, said Mary Kerr, president of the Ann Arbor Area CVB and Debbie Locke-Daniel, executive director of the Ypsilanti Area CVB. The CVBs also:
-- Brought nearly 50 travel journalists to the county, generating 300 stories and an estimated $2.6 million in media publicity.
-- Ran online sweepstakes on visitannarbor.org and visitypsinow.com while increasing the number of unique visitors to the sites.
-- Developed a Japanese language micro website. . -- Serviced hundreds of conventions and events.
Locke-Daniel attributed those marketing campaigns with helping to drive up the county’s occupancy.
“You have to say some of it is helping,” she said. “You have to spend money to make money, and I think the tax revenue is very critical. It puts us on a more level playing field with our competitors.”
With the launch of the Pure Michigan campaign this year, she said, she hopes to see the county’s hotel occupancy rates continue to increase in 2012.
Skelton agreed: “What we’re hoping is that by making this investment in Pure Michigan and other campaigns, that we are going to be able to look at solid growth going into 2012 and moving forward into 2013.”