Hospitality taxes up in Northwest Arkansas

It's a good time to run a restaurant or hotel in Northwest Arkansas.

Hospitality tax collections were up more than $485,000, or 9.2 percent, in the region's four biggest cities last year, an indication that the area service industry is thriving. The cities combined tax collections were about $5.8 million.

Representatives for Northwest Arkansas Advertising and Promotion commissions are confident the upward trend will continue this year.

Hotel, motel and restaurant taxes are added to hotel and restaurant bills in cities throughout Arkansas. The idea is that the money, used to promote tourism, will lead to even higher sales, thus growing tax proceeds even further.

Tax rates vary by city.

The Bentonville Advertising and Promotion Commission levies a 2 percent tax on lodging and meeting rooms and a 1 percent tax on prepared food sales. In Fayetteville, a 2 percent charge is added to all hotel stays and food purchases in restaurants. Rogers and Springdale just tax hotel stays -- both at 2 percent.

Bentonville saw the sharpest increase in 2014. Tax collections grew $216,108, or 12.9 percent, from nearly $1.7 million in 2013, according to data from the Bentonville Advertising and Promotion Commission.

"We're fortunate that we have many activities going on that continue to keep our numbers growing," said Kalene Griffith, president and CEO of the Bentonville Convention and Visitors Bureau.

She mentioned State of the Art, an exhibit on display at the Crystal Bridges Museum of American Art from Sept. 13 to Jan. 19, in particular. More than 127,000 visitors came from all over the country to view the exhibit, according to attendance numbers from the museum. Many of those people ate out in restaurants or spent the night in local hotels.

"I think that was one of our biggest drivers," Griffith said.

Twenty-one businesses were added to the Bentonville hospitality tax rolls in 2014, including Cracker Barrel, several food trucks and a Walmart To-Go store, where prepared food in the deli is taxed.

Griffith said a 105-room Four Points by Sheraton hotel that's scheduled to open in March should keep hospitality taxes growing in 2015.

A Chick-fil-A franchise at 209 S.E. Walton Blvd. topped the list of Bentonville restaurants last year. Chick-fil-A paid $37,757 in hospitality taxes in 2014, up $4,373, or 13.1 percent, from 2013.

Cracker Barrel, 2307 S.E. Walton Blvd., was No. 2 on the list. The restaurant paid $25,559 in taxes in just more than eight months in operation.

Charlie Brown, Cracker Barrel's general manager, attributed the restaurant's success to high-quality food at a reasonable price.

"It's about good country cooking," Brown said.

In Fayetteville, tax collections grew by more than $164,000, or 6.3 percent, from about $2.6 million in 2013, according to figures from the Fayetteville Advertising and Promotion Commission.

A Chick-fil-A franchise at 4180 N. College Ave. continued its reign atop the Fayetteville restaurant chart for a fourth straight year. The restaurant paid $50,555 in hospitality taxes in 2014, a $4,442, or 9.6 percent, increase compared to the year prior.

Jim Bryant, owner and operator of the franchise, attributed growth, in large part, to "great customer service."

"Chick-fil-A across not just Northwest Arkansas but the country as a whole has experienced really good sales increases," he said.

Bryant said his store does quite a bit of catering, which is subject to the local hospitality tax.

Another Chick-fil-A on Martin Luther King Jr. Boulevard, paid the second most, $43,801, in hospitality taxes last year. Sales at Reynolds Razorback Stadium and Bud Walton Arena were included in its tax figures.

Technically, Chartwells, the company that serves food at University of Arkansas dining halls, was the top taxpaying business in 2014, but it's a food service business -- not a traditional restaurant. Chartwells paid $58,367 last year, a $2,748, or 4.9 percent, increase compared to 2013.

Kym Hughes, executive director of the Fayetteville A&P Commission for about a month, said last week she was pleased with last year's tax collections.

"Arriving in Fayetteville with two consecutive years of increased collections ... suggests that the hospitality industry is finally moving toward post-recession recovery," Hughes said. "It's both encouraging and motivating to see such success as we begin the marketing efforts for the new year."

Marilyn Heifner, who retired as long-time executive director earlier in the year, said a new hotel -- the Hilton Garden Inn off of Wedington Drive -- and an extra Razorback football game gave tax collections an added boost last year.

"The economy got better and people started traveling more," she added. "Fayetteville's just always on the top of the list of places to go."

About 375 businesses paid hospitality taxes on prepared food sales in Fayetteville last year. It's not just restaurants and caterers that pay the tax. So do gas stations that serve hot food, movie theaters with concession stands, deli counters at grocery stores and snack bars at places such as Target and Lokomotion Fun Park.

Fayetteville's hospitality tax collection is split evenly between the Advertising and Promotion Commission and the city's Parks and Recreation Department.

In Rogers, tax collection grew by more than $68,000, or 10.1 percent, in 2014. The Rogers Advertising and Promotion Commission collected $744,674 from 22 hotels last year.

Springdale collections were $376,064 in 2014, a $37,013, or 10.9 percent, increase compared to the year before.

NW News on 02/22/2015