Restaurant, Hotel Business Down
Last updated Sunday, January 11, 2009 5:13 PM CST in News
By Skip Descant
THE MORNING NEWS
FAYETTEVILLE -- No one really expected Northwest Arkansas to be immune to a slowing national economy.
Retailers felt the tightening wallets early. And now so have restaurants.
November collection of the hotel-motel-restaurant tax in Fayetteville was down 0.69 percent from the same time the previous year. It was the first downturn the restaurant tax collection has seen all year. The hotel tax was down a whopping 18.8 percent in November, according to a report released by the Fayetteville Advertising and Promotion Commission.
“There is no doubt that people are spending less money,” said Ed Knight, owner of Penguin Ed’s Bar-B-Que in Fayetteville.
“The number one thing on everybody’s mind is job losses,” Knight warned, speaking Friday. The Labor Department on Friday said the national jobless rate in December was 7.2 percent. The unemployment rate for Arkansas was 5.7 percent in November.
Penguin Ed’s is on track to rank at No. 7 among other Fayetteville restaurants in HMR tax collection. The collection is a direct reflection of sales. Penguin Ed’s combines the sales of its three restaurants and catering operation as one total.
“I would say this is a time to hunker down and hope your food costs aren’t too high,” Knight said. As demand has slacked, commodity costs for staples like beef and dairy have actually dropped.
“You can call it bittersweet,” Knight said.
The story among hotels is even darker. Tax collection was down nearly 19 percent in November and 5 percent in October. For the year, the hotel collection is up 7.3 percent. But a combination between a slowing economy and an increase of some 200 rooms in the past year is resulting in a number of empty rooms, say hotel managers.
“I think we’re seeing a big increase in supply and a drop in demand,” said T.J. Angeleno, general manager for the new Courtyard Mariott in Fayetteville.
And to fill those rooms, overall business activity in the area will have to improve, he noted.
“I think it’s going to take an upswing in the economy, and attracting additional business that’s going to get us moving again,” Angeleno said Friday. The Mariott, a 114-room hotel, which opened last year, is ranked at No. 11 on the list of hotels in the HMR tax. The Clarion Inn is at No. 9 and the Hampton Inn at No. 12.
Staying in business could also mean offering niche services. The new Staybridge Suites in Fayetteville is a 109-room “extended-stay” hotel catering to business travelers or people relocating to the area.
“The extended stay segment of the hospitality industry is faring much better than the transient,” said Joy Koning, sales director for Staybridge Suites. She noted extended stay tends to see fewer fluctuations than conventional hotels, which tend to rely more heavily on vacationing and business customers.
“And people like to stay in new hotels, and we offer a range of services they may not find elsewhere,” Koning added.
Top HMR Collection in Fayetteville
January to November
1. Olive Garden
2. Red Lobster
3. Golden Corral
4. Chartwell’s
5. Chick-Fil-A
6. Shogun Steakhouse of Japan
7. Penguin Ed’s Bar-B-Que
8. Clarion Inn
9. Logan’s Roadhouse
10. McDonald’s on Joyce Boulevard
Source: Staff Report
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