State Capitol Week in Review – March 26, 2022

LITTLE ROCK – The Arkansas tourism industry is recovering from the devastating impact of the Covid-19 pandemic.


Based on collections of the state two percent tourism tax, the industry now exceeds pre-pandemic levels of economic activity. However, other gauges of tourism indicate that fewer people are working at Arkansas hotels than in 2019.


The two percent tourism tax is collected when people rent hotel rooms, condominiums, lodges, motor courts and other accommodations. It also is collected from campground fees and boat rentals. It is added into the price of tourist attractions.


In 2021 the state collected $20.5 million from the tax, which was a record. In 2020, when the tourism industry was affected by restrictions due to the Covid-19 pandemic, collections from the tourism tax were $13.6 million. That was the lowest it had been since 2013.


Revenue from the tourism tax pays for the state’s marketing budget.


According to the director of the state tourism department, Arkansas came through the pandemic better than other states that are competing for the tourists. One reason is that Arkansas quickly stopped marketing in other states, so as not to waste dollars on advertising campaigns when people were not traveling.


Tourists and visitors to Arkansas spent about $6 billion in 2020, down from about $8 billion in 2019.


The state Tourism Ticker is sponsored by the Arkansas Hospitality Association and operated by Talk Business & Politics, news-gathering website. The ticker measures the health of the tourism industry using three categories. One is revenue from hospitality taxes collected by 17 Arkansas cities and towns. Another is revenue from the state two percent tourism tax. The third category is employment figures compiled by the federal Bureau of Labor Statistics.


The employment statistics indicate that Arkansas has not completely rebounded from the pandemic. For the first ten months of 2021 the average number of jobs in the tourism sector was about 111,500. That is better than 2020, when the average was 103,650, but it is still below 2019, when the average number of jobs in tourism was 122,900.


Northwest Arkansas is the only area in the state which has seen job growth in the tourism sector above pre-pandemic levels. In 2019 the average number of tourist-related jobs in the area was 26,000. It is not 26,500.


Many cities levy an advertising and promotion tax, or a hospitality tax. Sometimes it is colloquially known as a “hamburger tax.”


During the first ten months of 2021, hospitality taxes in 17 Arkansas cities were up more than 30 percent from 2020. They were up 5.6 percent from 2019.


In total, the 17 cities collected $47.8 million in hospitality taxes in the first ten months of 2021. Of that amount, restaurant taxes, also known as prepared food taxes, accounted for about $36.5 million, compared to $33 million collected in the same period of 2019.


The tourism department adapted its marketing strategy in response to the pandemic. Previously the state tourism magazine, which is digital, was titled “Discover Arkansas.”


In recognition that long-distance travel was most affected by the pandemic, the department changed the title of the magazine to “Rediscover Arkansas.” It changes the target audience to Arkansas residents and urged them to get to know the tourist destinations close to their homes.