STARKVILLE — When the city of Starkville’s 2-percent hotel sales tax revenue arrived for month of January, the numbers would have made even a novice bookkeeper do a double-take. The state’s department of revenue returned $75,675 in hotel tax money to the city, almost $60,000 more than the previous January and the largest single-month tax receipt ever.
It was good news for Jennifer Prather, interim CEO for The Partnership, which receives all of the hotel tax revenue for the city’s convention and visitors bureau.
Even so, she wasn’t over the moon about it.
“That sort of thing happens (sometimes),” Prather said. “What happens is that some hotels don’t turn in the tax money for a month or two, then all of the sudden in arrives and it’s put into the next month’s disbursement. You can’t really read too much into it.”
That might explain what happened in January, but what has happened since is harder to explain and a definite source of optimism.
“We are absolutely excited about what we’re seeing so far,” Prather said.
When the May hotel tax receipts arrived last week, it showed a consistent pattern of explosive revenue.
In fact, when the June receipts come in next month, it’s possible — even likely — the hotel tax through the first six months of 2019 will have eclipsed the receipts for all of 2018.
Regular sales tax is up by about $100,000 through the first five months of the year ($603,984) while restaurant tax revenues ($930,309) are up approximately $67,000 over the same time period.
That’s good growth, but nothing like what’s happening with the hotel tax revenue.
In five months, the city’s hotel tax has brought it $196,664, more than $100,000 more than it brought in through the first five months of 2018.
While that January number may distort the year-to-date total, each month since then has shown big jumps over 2018. Take away January figures and the hotel tax is generating an average of $31,000 per month, by far the most since the tax was initiated in August 2011.
At its current pace, the tax may generate more than $400,000, easily outdistancing the record year of 2014, when the city collected $321,000, a year that featured the Mississippi State football team’s ascension to the top of the college football rankings.
“Obviously, a lot of this has to do with Mississippi State’s athletics programs,” Prather said. “Not just the games, but the times the games are played, which can mean people staying an extra night. The sports have been successful, with things like postseason games on campus. That’s helped.
“You also have to give credit to the city parks and recreation department,” she added. “They’ve gone after tournaments that bring visitors to the city and are way ahead on projects, too. We’ve been pretty active in bringing in special events and throughout grant programs, helping other groups with events that bring in people. There are a lot of pieces to this.”
If anything, the June figures may show another factor in the increased demand for hotels.
“Mississippi State is being a lot more aggressive in their recruiting,” Prather said. “In June, they brought in 6,000 students for orientation. That’s a lot of hotel rooms.”
Likewise, the convention center at The Mill at MSU conference center is also moving the dial, Prather said.
“When it opened and they started bringing in conferences, the thought was that it would fill up the hotel there,” Prather said. “What we didn’t realize is that those big conferences were filling up other hotels, too.”
Prather said The Partnership doesn’t put too much stock in the hotel receipts on a monthly basis, primarily because they can deviate dramatically.
“We budget conservatively, but when we see the numbers for the year, that is something we can use to plan our budget,” she said.
With hotel tax receipts certain to easily eclipse last year’s totals, it looks as though there will be more budget money next fiscal year, which begins in October.
“All of this money goes to the CVB,” Prather said. “What this will allow us to do is put on more special events and also expand our tourism grants program. Those are things that bring visitors to the city, so that’s where the majority of the funding goes every year. If this holds up, we’ll have more money for that, plus more money to advertise and expand our reach into other markets.”
While none of the hotel tax revenue goes to the city, Mayor Lynn Spruill said the robust growth increases tax revenue that does go to the city.
“When people stay in hotels, they eat at our restaurants and shop at our businesses,” Spruill said. “A person who eats at a restaurant or shops at our stores may or may not be staying in our hotels. But people who stay at our hotels all eat at our restaurants and shop here. So the hotels do have an impact on our sales tax and restaurant tax revenue.”
Slim Smith is a columnist and feature writer for The Dispatch. His email address is [email protected].
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