Bend hotels endure slow year

Published 5:00 am Thursday, July 3, 2003

Occupancy rates and room taxes from Bend hotels and motels were down as the industry approached the end of the fiscal year June 30.

Area hotel managers are looking for an upturn the next fiscal year now that the war with Iraq has slowed and tourists are no longer influenced by the perception of last winter’s low snowfall.

But the Central Oregon lodging industry still faces challenges going forward. The city room tax rate is increasing and may go even higher if an increase passes in the Legislature. Further, the last fiscal year added about 220 rooms in Bend with the addition of Sugarloaf Mountain Motel, the Marriott Fairfield Inn and Suites and Comfort Suites.

Data compiled by the city on a fiscal year basis (July to the following June) shows city hotels, motels, RV parks and condos had 55 percent occupancy on average from July 2002 to May 2003 compared to 57 percent last year, July 2001 to May 2002. Data were only available through this May.

Taxable rents fell 7 percent to $23.1 million from $24.9 million between July and May in comparable years.

Room tax rates in Bend were raised in January 2002 to 8 percent from 7 percent and bumped up again in June to 8.5 percent.

On Tuesday, Bend hotels and motels increased their room taxes to 9 percent from 8.5 percent, the last step of a city decision to increase the rate from 7 percent to 9 percent over a year and a half. Effectively, a $100-per-night room would cost 50 cents more than last month and $2 more from a year-and-a-half ago.

But room taxes may increase even more if a state bill passes that would raise room taxes statewide one percentage point starting January 2004.

The rates would then be 10 percent in Bend, 8.5 percent in Redmond, 8 percent in Sisters, and 8 percent in unincorporated Deschutes County.

The bill also would make cities devote 70 percent of any further room tax increases to be used for tourism promotion or certain tourism-related activities and 30 percent for general fund use, said Brett Evert, area director of the Oregon Lodging Association and owner of three hotels in Bend.

In Bend, a quarter of all transient room taxes collected goes toward tourist promotion, with 46 percent of the total going into the general fund. Street operations collects 23 percent and public transit gets 6 percent.

Evert said if the bill passes, it would discourage the city from approving any further room-tax increases because the city wouldn’t get as big a chunk.

The increase in Bend’s tax to the current 9 percent will discourage travelers, especially corporate groups, from coming to Bend, he said. When companies are shopping for rates, they are confined by a budget and may go where the tax is lower, Evert said. For tourists, their discretionary dollars are also limited, and they may not vacation in Bend, or they may stay for fewer days, he added.

Other area hotel managers saw the issue differently.

At the Red Lion Inn’s north Bend location, acting general manager Joseph Monahan said the 0.5 percent increase wouldn’t affect families or corporate groups from coming to Bend. When hotel staff members tell guests the room rate is $79 but tax brings the total to $86, the guests don’t balk, he said.

”They understand they’re going to pay tax,” he said.

Business this coming fiscal year was ”looking to be a little better than last year,” Monahan added. The summer is projected to be a good season in contrast to last winter when business had been down 15 percent to 20 percent due to late winter snowfall.

Business at the Bend Holiday Motel was brisk all winter, according to manager Sue Heising. She said it slowed down in the beginning of June.

A lot of travelers have been blue-collar workers, she added.

With the increased room tax, the motel’s per-night stay is about 20 to 25 cents more. She said the increase wouldn’t discourage people from coming to Bend, since travelers come for attractions that are found only in Bend.

”People like our nice dry, hot weather,” she said.

At the Shilo Inn, manager Donnis Shirley said the tax increase wouldn’t have that great an impact because it is higher in other places, but ”the more the tax goes up, the more impact it’ll have on our business.”

The Shilo Inn has had slightly lower occupancy this June compared to last year, but Shirley said she thinks the economy will get better and occupancy will improve.

Chris Young can be reached at 541-383-0350 or at cyoung@bendbulletin.com.