After a record-setting 2024, when Arkansas’ place in the path of the solar eclipse provided a lift, statewide 2% tourism sales tax collections dipped early this year and remain off nearly 2%.
State records and a survey of nine cities that collect local taxes on lodging and restaurant sales show that travel spending has rebounded since July. And though overall local tourism tax collections are off about 1%, receipts are trending up in cities like Bentonville, Eureka Springs and Little Rock.
Overall consumer wariness took a toll on lodging, but restaurant sales have taken up some of the slack. So have new business openings.
Bentonville’s $3.47 million in taxes on hotel and restaurant receipts through September was up about 6% from the year before. Collections on the same taxes in nearby Fayetteville were up 2.1% through September.
“We’re in a unique situation in Bentonville, with numerous hotels opening up in 2025,” Visit Bentonville President and CEO Kalene Griffith said. “That means you have more supply, not necessarily more people coming in.”
The AC Hotel by Marriott opened in May at the entrance of Walmart Inc.’s new home office, and new restaurants also bolstered receipts.
“What has benefited us is our restaurant tax and the new restaurants that have opened up,” Griffith said. “Without that benefit, if you look at our numbers, we’re pretty flat.”
Business travelers are still coming in, but not at previous levels, she said.
Jennifer Walker, chief financial officer at Experience Fayetteville, agreed that hotel stays have suffered with inflation persisting nationwide.
“Lodging collections are down year-over-year, reflecting lower hotel occupancy compared with 2024,” Walker said. “This is consistent with what other destinations across Arkansas — and many across the U.S. — are experiencing as hotel demand softens from post-pandemic highs.”
Restaurant sales growth offset the decline in lodging, she said. “Fayetteville remains one of the strongest restaurant markets in the state.”
‘Less Compression’
Springdale, which has only the lodgings tax, has suffered. Through October, its hotel tax receipts were $498,350, compared with $573,745 through the same period last year. That’s about a 13% decline.
“Due to an increase in rooms throughout northwest Arkansas, we’re seeing less compression than in years past,” Springdale Chamber of Commerce CEO Bill Rogers said. “Also, the fall numbers took a hit with no Razorback night games.”
The University of Arkansas’ dismal 2-10 football season also took a toll. The Razorbacks’ home finale, a 31-17 loss to Missouri, had total ticket sales of 61,500, and even fewer fans in the stands. Donald W. Reynolds Razorback Stadium seats more than 76,000.
Eureka Springs, the artsy and funky Victorian-era town nestled in the Ozarks 30 miles east of Bentonville, saw its modest hotel and restaurant tax haul rise more than 9% in the first eight months of the year. The numbers went from $1.26 million to $1.38 million. The city, known for its soaring Christ of the Ozarks statue, “The Great Passion Play” and Victorian-era architecture, has drawn tourists since its heyday as a medicinal springs spa in the 1880s.
Vacation Rental Effect
Hot Springs, Arkansas’ top tourist destination with attractions like its national park, lakes, trails and Oaklawn Racing Casino Resort, saw modest growth in tourism tax receipts this year. The total of about $9.5 million through November was up 1.4% over last year. Total collections for 2024 were about $10.1 million, second only to Little Rock’s record $18.77 million.
But Steve Arrison, CEO of Visit Hot Springs, said short-term rentals, especially in the resort communities, are hampering lodging tax collections.
“Our collections for the year are up 1.35% in comparison to last year at this point in time,” Arrison said on Dec. 2. “But that’s with over 1,000 short-term rentals in Garland County that do not collect the tax. They are outside of the city limits. It has definitely impacted our collections.”
Arrison offered no opinion on whether vacation rentals should be subject to tourism taxes, but he said they’re certainly hurting hotel occupancy rates, “which in turn affect A&P lodging collections.”
In south Arkansas, El Dorado had a rough year with hotel tax receipts through August of about $264,000, down more than 18% from 2024. September’s receipts of $33,000, October’s $40,797 and November’s $36,127 showed a positive trend, “but nothing to write home about,” Mayor Paul Choate said.
Local advertising and promotion sales taxes in Arkansas are not uniform. They vary by city both in the kinds of businesses taxed — food and drink establishments or hotels, or both — and in rates, which usually range from1% to 3%. The proceeds pay for local tourism promotion.
The state’s 2% tourism sales tax applies to hotel stays, campground fees, boat rentals and the like. It funds the Tourism Development Trust Fund, which the Department of Parks, Heritage & Tourism uses to promote statewide tourism.
LR, NLR and Jonesboro
Little Rock, which applies a 4% tax on hotel stays and a 2% tax on prepared food and beverages, was headed for another record year through October.
The city collected $16 million in the first 10 months of this year, compared with $15.6 million at the same point last year, and Little Rock Convention & Visitors Bureau CEO Gina Gemberling expects 2025 to set another record. Between the lodging tax and the restaurant tax, total receipts are trending up about 2.4%.
“We’re pacing right now to come in strong,” Gemberling said in a telephone interview. “Of course, we have two more months of collections to go yet, but right now, everything’s looking fairly strong and ahead of last year. Prepared food has the highest increase, whereas lodgings will have a good month and a not-so-good month.”
Through the end of November, North Little Rock was running 1.1% ahead of last year, $9.4 million compared with 2024’s $9.3 million through 11 months.
“North Little Rock has seen much economic growth over the past several years, including the addition of three large warehouse facilities: Amazon, Lowe’s and Dollar General,” city Chief Financial Officer Ember Strange told Arkansas Business. “We continue to invest in our street infrastructure as well as our facilities.
Burns Park is a destination for travelers in surrounding states, Strange said, and the city expects the new Funland attraction there to bring in more people and events. Newly opened restaurants like Layne’s Chicken Fingers and The Pizza Hub are driving growth, along with a new TownePlace Suites by Marriott off East McClain Boulevard.
In northeast Arkansas, tourism tax numbers through November were running just a little better than last year’s, just over $6 million compared with $5.99 million in 2024. “We’re pleased to see Jonesboro’s hotel and motel tax collection up so far in 2025,” said Craig Rickert, executive director of the local A&P commission. “When you have great anchors like Arkansas State University, our hospitals, manufacturers and several construction projects happening at once, it provides for a lot of hotel stays. With strengths like that, Jonesboro is in a unique position to keep growing.”
Walker and Griffith expect continued if not spectacular growth in northwest Arkansas next year.
“With the expansion of [Crystal Bridges Museum of American Art] in 2026, I think we’ll be able to take advantage of growth in arts tourism,” Griffith said. “I think we’ll see opportunities with medical and wellness tourism in the next few years. We need to grow in cycling and evolve as the bike park opens up next year.”
Walker sees no big changes on the horizon; she sees opportunities. “We have an extra Razorback football home game, strong outdoor recreation activity and several statewide tourism drivers.”
Those, she said, include America’s 250th birthday, nearby FIFA World Cup events, and the Route 66 centennial. “All of that gives us a solid foundation as we head into 2026.”
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