Everett’s declining hotel tax revenue could hurt nonprofits

EVERETT — Fewer and fewer visitors are checking into Everett’s hotels each year, and no one’s sure exactly why. But the declining revenues could mean that nonprofit groups that had hoped to get a share of the city’s hotel tax money will be out of luck.

Lodging tax revenues in the city tumbled 17 percent last year. In the rest of the county, tax collections went up slightly in 2003.

The same trend has held since 2000: Everett hotel revenues plummeted 35 percent between 2000 and 2003, while receipts in the rest of the county rose 5 percent.

Lodging and tourism officials can’t explain why Everett hotels are lagging others in the county.

"I just can’t think why they would have such a large decrease," said Sandy Fischer, president of the Snohomish County Lodging Association.

"We are very perplexed," said Sandy Ward, executive director of the Snohomish County Tourism Bureau. "We certainly hope it’s an anomaly and those numbers come back soon. We expected the figures for 2003 in Everett to be flat."

Everett officials hoped to use money from the 2 percent lodging tax to fund local festivals and other events. Local groups have been calling City Hall to ask about applying for a share of the funds.

But finance director Debra Bryant is recommending that the city wait before sending out applications because there might not be any money to give out.

"I don’t want organizations to go through a lot of trouble if we’re not going to have funding," she said.

The city projected hotel tax revenues to rise 18 percent in 2004 to $200,000. Long-term agreements earmark $152,311 of that for the Everett Events Center and Everett Memorial Stadium, leaving the city with $47,689 to distribute to nonprofit groups.

But hotel tax collections for December, the latest month for which statistics are available, were down 13 percent compared with the same month in 2002, a worrying sign for the future.

The city receives hotel tax revenues two months after rooms are rented, so money from November and December will be put into the 2004 lodging-tax pot.

This could be the fourth year in a row that the 18 hotels and motels in the city perform worse than the city expected. For example, the city projected $245,000 in tax revenues in 2003 but only got $170,000.

October and November tax receipts were up dramatically compared with 2002, indicating that the Everett Events Center, which opened in September, might be helping business. But it’s too early to tell whether those higher numbers are because of the center or other factors, Ward said.

For the past several years, only the events center project, the stadium, the county tourism bureau and the Salty Sea Days festival have received lodging-tax money.

In October, the City Council canceled a controversial "perpetual" contract that guaranteed the Salty Sea Days Association $70,000 a year in tax money, and voted to have nonprofit groups compete for a share of the funds. Salty Sea Days is not applying for tax money this year.

The county tourism bureau used the $16,512 it got from the city last year to help fund its visitor information centers. Ward said the centers may have to cut back on services if they don’t receive any city money, which makes up about 17 percent of the budget for the visitor centers.

Managers at local hotels cited the slumping Snohomish County economy and the falling Canadian dollar — which has made rooms more expensive here for Canadians — as among the main culprits for falling revenues. But other hotels in the county face those same challenges and have not seen their revenues drop as much.

Business at the Days Inn on Broadway in Everett dropped by double digits in 2003, said June Woinowsky, the hotel’s manager. She did not have specific statistics.

One reason for the downturn was that the USS Abraham Lincoln was at Naval Station Everett for only a few weeks, she said. The May homecoming of the aircraft carrier provided a short-term boost in business at many hotels, but the Lincoln spent most of the year in the Middle East and in Bremerton, where it is undergoing repairs. That hurt business, managers at several hotels said.

"When the ship’s in port, a lot of sailors on leave want to get off the ship, and they rent rooms here," Woinowsky said.

In addition, family and friends visiting sailors sometimes stay at the hotel, she added.

Woinowsky said the events center hasn’t brought much business to her hotel. "A lot of visitors going there are local or within driving distance," she said.

It’s a different story at the Inn at Port Gardner, manager Theresa Harris said. About half the hotel’s 33 rooms this weekend are reserved by people attending the Everett Boat Show, she said.

Keith Lander, general manager of the Best Western Cascadia, said it’s hard to tell how much the events center has helped, because guests usually don’t identify themselves as events center patrons. But a hotel clerk noticed that up to nine Lynyrd Skynyrd fans "stumbled in after the concert" Feb. 6 to rent rooms, apparently because they drank too much and were unable to drive home, Lander said.

And the November state volleyball tournament filled many rooms at the Cascadia and Howard Johnson Plaza Hotel down the street.

Howard Johnson is the host hotel for hockey teams that play the Silvertips, but outside of that, the events center hasn’t increased business a lot, said the hotel’s director of sales, Tanya Christenson. She is hoping that more concerts and conventions at the events center will help bring in business. More than 20 rooms already have been reserved for fans attending the April 3 Rod Stewart concert.

Revenues at the hotel, Everett’s largest, stayed about the same in 2003, Christenson said. Howard Johnson has nearly a fifth of the city’s 1,350 hotel rooms.

Room rentals in December and January went up "big time," largely because of more sporting events than in December 2002, she said. But based on advance reservations, she expects February and March rentals to be flat compared with last year.

Publicity over the bankruptcy filing by Everett Pacific Hotel Associates LLC, the company that operates the hotel, hurt sales in 2003 because of concerns the hotel would shut down before groups could hold their events, Christenson said.

The hotel’s withdrawal from the nationwide Howard Johnson reservation system in July also hurt sales, she said.

Reporter David Olson: 425-339-3452 or dolson@heraldnet.com