Fayetteville Hospitality Tax Receipts Up

People like to eat chicken sandwiches in Fayetteville.

For the third straight year, Chick-fil-A on College Avenue topped the list of restaurants paying hotel, motel and restaurant taxes. Another Chick-fil-A franchise on Martin Luther King Jr. Boulevard was the second-highest taxpaying restaurant in 2013, followed by Olive Garden on Mall Avenue.

The Chancellor Hotel, in its first full year in business, paid the most taxes among hotels.

The hospitality tax, a 2 percent levy on hotel stays and prepared food, is an indicator of how the city’s service industry is performing. Sales tax proceeds would be more revealing, but they cannot be linked to individual businesses per state law.

Half of the hospitality tax goes to the Advertising and Promotion Commission in an effort to draw tourism to town. The other half pays for operations, maintenance and capital projects for the Parks and Recreation Department.

Overall, the ad commission collected $2.63 million in taxes in 2013, up $111,797, or 4.43 percent, compared to 2012.

“That’s a really decent increase,” Marilyn Heifner, commission executive director, said. She attributed some of the growth to the opening of The Chancellor Hotel in September 2012. Developers Ike Thrash of Hattiesburg, Miss., and Sam Alley of Little Rock bought the 33-year-old hotel, formerly called The Cosmopolitan, in 2011 and embarked on a multimillion renovation project that took nearly a year to complete.

Heifner said an improved hotel with plenty of meeting space inside and at the adjacent University of Arkansas Global Campus building will help draw visitors to Fayetteville for years to come.

Heifner said hospitality taxes should also continue to climb in 2014 with the opening of a Hilton Garden Inn off Wedington Drive. The hotel and convention center is expected to add 115 rooms and suites and 8,500 square feet of meeting space to the Fayetteville hotel mix.

Jay Johnson, general manager of The Chancellor, said the 15-story hotel south of the downtown square features 207 rooms and 15,000 square feet of internal meeting space.

Jim Bryant, owner and operator of the Chick-fil-A on North College Avenue, credited his business’s reign atop the hospitality tax charts to what he called “operational excellence.”

He mentioned quality food, cleanliness and just “focusing on the guest and their needs” as some of the reasons for nearly $4.4 million in sales last year.

Paige Frost, owner and operator of the Chick-fil-A on King Boulevard, said a growing student population at the University of Arkansas and new apartment construction nearby boosted sales at her store.

Bryant said his store had double-digit percentage sales growth each year between 1997 and 2007.

Frost said catering, which is subject to the hotel, motel and restaurant tax, accounted for about 4 percent of her restaurant’s sales last year. “North College does more,” she said. Chick-fil-A sales at Reynolds Razorback Stadium and Bud Walton Arena are included in the total for Frost’s store.

Technically, Chartwells, the company that serves food at University of Arkansas dining halls, was the top tax paying business in 2013, but it’s a food service business — not a traditional restaurant. Chartwells paid $55,619 last year, a $4,426, or 8.6 percent, increase compared to 2012.

David Davies, assistant vice provost for student affairs, attributed some of the increase to more students and the opening in fall 2013 of Founders Hall, a six-story dormitory at Dickson Street and McIlroy Avenue. There’s a direct connection on the second floor of Founders Hall to Brough Commons, a decades-old cafeteria that expanded by roughly 225 seats when the dorm opened.

Founders Hall also has a Slim Chickens and Papa John’s, which get factored into Chartwells’ hospitality tax receipts, as do sales at Starbucks, Quiznos and Au Bon Pain on campus.

Bentonville’s hospitality tax receipts grew at a faster clip than Fayetteville’s through the first 11 months of 2013. The Bentonville Advertising and Promotion Commission collected $1.55 million in taxes through November, up $160,444, or 11.53 percent, compared with the first 11 months of 2012.

Johna Duncan, database administrator for the Bentonville Convention and Visitors Bureau, said year-end figures will not be available until next month.

Bentonville also levies a 2 percent tax on all hotel stays. The city’s tax on prepared food and non-alcoholic beverages is 1 percent.

Rogers and Springdale have a 2 percent hotel tax.

Allyson Twigs Dyer, executive director of the Rogers Convention and Tourism Bureau, said tax collections increased $20,069, or 3.49 percent, through the first 10 months of 2013. The bureau received $574,624 in 2012 and $594,693 in 2013 during that time period.

Lance Eads, vice president of economic development at the Springdale Chamber of Commerce, said Springdale hotel tax receipts increased $27,252, or 8.74 percent. Taxes went from $311,708 in 2012 to $338,960 in 2013.

According to Fayetteville Advertising and Promotion Commission records, more than $40 million in hospitality taxes have been collected since 1977. Some of the money was used to help construct the Global Campus building, Town Center and Botanical Garden of the Ozarks.

Voters in November approved using hospitality taxes to help pay for Walton Arts Center expansion and development of a regional park in southwest Fayetteville.

After a 0.25 percent dip in 2009, tax receipts have grown every year since.

“We always strive for a higher HMR tax each year, and that’s what we got,” Heifner said.