ADR erosion equals 47% of lodging revenue decrease in August

The erosion in Average Daily Rate represents to a greater extent a threat to the financial future of North Carolina’s lodging industry than the drop in demand. Analysis of STR’s projected $30.7 million decrease in lodging revenues for August confirms what many may instinctively know, but haven’t taken time to document.

For the month of August, forty-seven percent (47.2%) of the revenue decline, some $14.5 million, can be directly attributed to lower hotel rates. Lost demand, or room nights sold, accounted for the remaining $16.2 million.

Lodging Revenues August 2009 StaText Colortewide: $195,827,743
Lodging Revenues August 2008 Statewide: $226,544,978
Decline in Revenues ($30,717,235) 13.6% decrease

Lost revenues from drop in demand $16,233,791 52.8%
Lost revenues from discounted rates $14,483,445 47.2%

No hotel for Wilmington Convention Center

The Wilmington City Council has terminated yet another agreement with a private developer to construct a hotel adjacent to the city's new waterfront convention center. Wilmington Development Group was awarded development rights in April 2008 but, even after numerous extentions of the original agreement, had been unable to provide a surety bond or the completion of the projet satisfactory to the city.

Cabarrus TDA Terminates Half of Staff

Donna Carpenter, Cabarrus County's new CVB director, had a busy first day on the job. Six of the bureau's 13-member staff were fired and escorted from the building under the watchful eye of local law enforcement. Included were the vice-president of sales and marketing, the communcations director, the leisure market sales manager, national sales manager, and the web developer. The firings were conducted with two board members present to support Carpenter in her strategy to reorganize the bureau.

Cary based SAS Institute joins Cornell's Center for Hospitality Research

One of the world's largest providers of business software solutions, SAS, has joined the corporate partners program of Cornell's Center for Hospitality Research. A private corporation with over $2 billion in revenues based in North Carolina, SAS has installations at more than 45,000 business, government, and university sites in 113 countries. Steven Pinchuk, vice president, profit optimization systems, will join the center's advisory board as part of the corporate partners program agreement. As a member of the partner program, SAS will have a seat at all center roundtables and the opportunity to interact with Cornell faculty to learn about research in progress.

“Cornell's Center for Hospitality Research has built a well deserved reputation as the premier name in hospitality thought leadership, education, and training,” said Pinchuk. “SAS is honored to partner with the center to help identify current industry trends and address needs that will continue to benefit and improve the global hospitality market. As an existing member of Cornell's Revenue Management Advisory Committee in both the U.S. and in Singapore, I have had a long history of working with Cornell and I am delighted to further this relationship.” (Cornell University: School of Hospitality Management 4-7-2009)

Bill filed imposing local health inspection fees of up to $500

A bill filed on Thursday (4-2-2009) in the House (HB 1081) would allow local heath departments to impose a cost-based annual health inspection fee of up to $500 on lodging establishments and restaurants. The local fee would be in addition to the annual $50 permit fee imposed by the State.

Local health departments now receive $33.20 of the State fee for each lodging and food service permit issued in their county and must be used to underwrite sanitation programs for the annual inspection of lodging establishments, and the quarterly inspection of food establishments. Additional funding is provided by county commissioners through the general fund including property taxes and local sales taxes.

HANC has consistently and successfully opposed previous efforts by county health departments to impose additional cost-based inspection fees on lodging estalishments, including food service outlets associated with lodging such as on-premise restaurants and meeting or banquet facilities. HANC has not rejected a reasonable increase in the State permit fee that would provide additional funding directly to sanitation programs at the local level.

Grandfather Mountain officially NC State Park

"Gov. Beverly Perdue has signed legislation that allows Grandfather Mountain to become North Carolina's newest state park. Perdue's signature on Tuesday finalized an agreement to create Grandfather Mountain State Park and protect its nearly 2,500 undeveloped acres. The heirs of company founder Hugh Morton will continue operating the Grandfather Mountain tourist attraction, including its nature center and "mile-high" swinging bridge. The state also will gain a conservation easement on 749 acres of the property. The state parks system is coordinating an interim management plan with the Morton family for the backcountry property and its 12 miles of trails. The property lies in Watauga, Avery and Caldwell counties, and contains the headwaters of both the Watauga and Linville rivers." (From NCDTFSD Newslink 4-1-2009)

Government Advisory: Federal Government Credit Cards

The General Services Administration (GSA) has begun issuing US Government credit cards beginning with "5565" under its new SmartPay2 program. This is in addition to cards previously issued beginning with 5568, 4486,and 4716. Only those cards with a sixth digit of either 0, 6, 7, 8, or 9 are exempt from State and Local Sales Taxes and local Occupancy Taxes.

Lodging properties are required to collect the State and Local Sales Tax and local occupancy tax on federal government credit cards beginning with these same numbers but with a sixth digit of 1, 2, 3, or 4.

Failure to collect the tax from the federal government traveler does not relieve the lodging property of its legal responsibility to remit to the NC Department of Revenue the dollar amount of taxes due from the transaction. Similarly, occupancy taxes due to local governments must be remitted even if the taxes are not collected. The North Carolina Department of Revenue has revised Section 37 of the State's Sales and Use Tax Bulletin to reflect changes made by GSA.

HANC has prepared an easy to read poster for use by front line and guest service staff to identify federal government credit cards that are exempt. The 8 1/2 X 11 inch poster is equally useful as a tool in explaining North Carolina law to federal government travelers with credit cards that are not exempt. (3-12-2009)

Download Poster for Guest Services and Front Office

Charlotte third highest travel taxes in U. S.

LODGING FACTS: Charlotte/Mecklenburg County has been awarded the dubious honor of having the third highest travel taxes in the U. S. in a report issued by the National Business Travel Association (NBTA). NBTA membership is primarily corporate travel managers with the nation’s Fortune 1000 corporations. HANC expects to release its own review of the NBTA findings, and its potential impact on North Carolina, in the coming weeks.