A&P Trends Show Pandemic Pummelling Arkansas Visitors Bureaus

Boating on Lake Hamilton, one of the many natural attractions in and around Hot Springs (Sierra Wheeler)

The coronavirus pandemic has battered city convention and visitors bureaus in Arkansas and sapped their sources of revenue: lodging and restaurant taxes. An industry built on bringing people together and attracting tourists is uniquely vulnerable to an infectious disease.

“You know, it sucks,” said Steve Arrison, CEO of Visit Hot Springs. “That’s my statement on the matter: It sucks. We started with the best year in the history of Hot Springs. We were going to have a record year. I mean, tourism, convention center — we were on pace for the best year ever.”

Monthly collections of advertising and promotion taxes usually reflect the previous month’s sales, so April’s figures reflect the events of March, when the pandemic’s effects began to hit hard, particularly with the state ordering the closure of all restaurant dining rooms.

Hot Springs’ A&P taxes fell 45.5% in April compared with a year earlier, a decline experienced in varying degrees by all of the cities Arkansas Business surveyed (see chart below).

“March is our biggest month,” Arrison said. “It’s just a little bit bigger than July. So March, we had the first two weeks — we were killing it. And then obviously the pandemic hit,” he said, adding, “It’s been downhill since.”

Hospitality tax collections are down 23% for the year in Hot Springs, where the industry employs 8,000. Motels and hotels faced a 47.1% drop compared with 2019. Restaurants saw a 16.4% decline in business.

That’s $1.5 million in lost tax revenue alone, Arrison said.

Responding to the crisis, the Little Rock Convention & Visitors Bureau, whose April receipts were down 38.5%, has cut $6.2 million, “thus far,” from its budget, said CEO Gretchen Hall. That’s the LRCVB’s expected revenue loss for 2020.

“Of course, that’s still fluid, not knowing how long this is going to transpire,” she said. Looking at preliminary figures last week for May, Hall said, “we’re doing marginally better than we thought we would do, although it’s still pretty dismal.”

The bureau is also losing more from the rental of city-owned facilities like the Statehouse Convention Center and the River Market than it expected because “we’re still not able to host any events and don’t really know when we will be able to,” she said. “People are still continuing to cancel.”

But the hotel industry in Little Rock has suffered the most, in terms of tax collections, with May receipts down 80%.

To address the budget crunch, the LRCVB furloughed 65 full-time workers and 99 part-time workers, though it’s continuing to pay for the health benefits of full-time employees. “We anticipate bringing them all back, but we’re uncertain of the timing,” she said.

The bureau has also reduced its travel budget “because trade shows and meetings and conventions are being canceled across the country,” Hall said.

Programming cuts include Jazz in the Park and Movies in the Park, and the LRCVB has had to cut its sponsorships of local festivals and events, many of which have been canceled. “Some cuts were a little easier to make than others,” she said.

Unsurprisingly, the pain is being felt in destination marketing organizations and convention and visitors bureaus nationwide, most of which are funded by hotel taxes, Hall said.

“And those that are funded solely through a hotel tax are significantly more impacted right now. Our restaurants, I would say, are surviving — they’re not thriving, but they are surviving,” she said. “But the hotels are really dying.

“And they still have debt service on most of those properties. They’re heavily leveraged. And my fear is that we’re going to lose a lot of them across the country,” Hall said. In addition, she said, some DMOs and CVBs are considering closing.

Predicting the future, Hall said, is hard. The bureau still has a lot of events scheduled for the fourth quarter, “but the real question mark is how much of that is actually going to materialize if this continues or if there’s a second surge.”

As the pandemic began to be felt, Visit Hot Springs furloughed 43 employees and canceled its ad budget “until we could see what was going on,” Arrison said. “So we’re weathering the storm. We never did lay off our salespeople. The rest of us answered the phones, the few phones that were ringing.

“But we’re on the rebound,” he said, noting the ad campaign has resumed. “We don’t want to lose the momentum we had” before the pandemic, he said.

Visit Hot Springs has even tried something new, “a local ad campaign, which is something we never do, because our job is to bring people in from outside. But we’ve developed a campaign to get locals back out to our restaurants, a ‘vacation in your backyard’ campaign.”

“We’re going full bore,” Arrison said. “The last two weekends have been very strong for Hot Springs. Memorial Day was strong. It would be nice if we could get our restaurants more seating capacity because we have more visitors than places where they can eat, so there were waits this past weekend.”

Shortly after the interview with Arrison on Wednesday, Gov. Asa Hutchinson said he was easing some coronavirus restrictions, allowing restaurants, bars and other businesses to serve more customers.

In Bentonville — where hotel, motel and restaurant tax collections are down 20% through April — the pain really began to be fully felt when, on April 4, Hutchinson ordered curbs on recreational travelers from outside the state, said Kalene Griffith, president and CEO of Visit Bentonville.

“That made a huge change where our leisure travel was not able to come in,” she said.

The bureau is estimating an economic impact loss from March through May of between $5 million and $6 million.

But, Griffith said, things are looking up. Hotel occupancy is continuing to rise gradually by the week, she said.

“We knew with the COVID and some of the restrictions that were put in we were going to be impacted, but I think now we have to look toward how are we positioning ourselves for the future,” Griffith said.

People are calling Visit Bentonville and wanting to book events, particularly in the fall. “That’s a good sign for us, a good sign for our team and for our city,” Griffith said.

Visit Bentonville and community leaders are working together to create a “safe campaign that we’re going to be introducing to our businesses throughout the region.”

Visitors want to feel safe and comfortable, she said, so “our hope is that we work together, as a community, to create a positive and safe environment for our travelers.”

2020 A&P Tax Collection Trends in Selected Arkansas Cities

^*New convention center and hotel opened in January 2020.
^#A&P tax collected on hotels only.
^†Number of months reported varies   

Sources: the cities or their Advertising & Promotions Commissions. Monthly collections typically reflect the previous month’s sales.

George Waldon contributed to this report.