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Hotels generate $2M in taxes, fees

November 26, 2010

Tourism remains a strong aspect of Catawba County's economy, with more than $2 million in property taxes and other fees expected to be collected in 2010 from county hotels.
According to a recent study from the Western Piedmont Council of Governments, hotels in the county bring in $2.17 million in revenue from property taxes, hotel occupancy taxes, sales taxes and water and sewer fees.
A 2006 Catawba County Tourism Study estimated that in 2005, visitors spent about $318 million in Catawba County. That figure, however, didn't take into account money generated from local taxes and fees from the county hotel industry.
Taylor Dellinger, with the Western Piedmont Council of Governments, helped create a formula to determine how much property tax, local sales tax, hotel occupancy tax and water and sewer fees are generated each time a guest stays in one of Catawba County's hotels. Dellinger and other WPCOG staff spent about 60 hours compiling data and crunching numbers for the study.
Catawba County has 22 hotels in the municipalities of Claremont, Conover and Hickory, which range in age from more than 50 years to less than one year. The hotels have a total of 1,936 rooms as of April 2010.
The data revealed that, on average, each hotel room in Catawba County generates $1,181 in taxes and fees.
"The story isn't really told, and people don't really know how much money we're bringing in," Dellinger said. "Even though (tourists) are contributing a lot of money, they're not using services like residents do."
Some people think only of hotel occupancy taxes when thinking about hotel-generated revenue, but that's only part of the picture, Dellinger said.
When considering property tax, occupancy tax, sales tax and water and sewer fees, the resulting revenue for six hotel rooms is 4.5 times as much tax revenue as the property taxes on a median-priced house in the county.

Property tax
WPCOG data analysts used real estate data from the Catawba County real estate database to determine hotel property value. They calculated the amount of property tax collected by multiplying the property value by the hotel municipality's tax rate.
Analysts determined that in one year, more than $492,000 was collected in property tax from Catawba County hotels, which amounts to more than $250 per room.

Hotel occupancy tax
Almost $1 million in hotel occupancy taxes was collected in 2009 from county hotels. Conover and Hickory had a 5 percent occupancy tax rate from Jan. 1, 2009, to Sept. 30, 2009, and a 6 percent occupancy tax rate for the remainder of that year. Claremont had a 4 percent occupancy tax rate in 2009. About $519.85 per room was collected in occupancy taxes from area hotels in 2009, according to the WPCOG.

Local sales tax
The total sales tax rate in Catawba County, which includes local and state tax rates, was 8 percent in 2009. Dellinger said of the eight percent collected, about 2.25 percent remains in the county.
To determine the local sales tax collected, data analysts used the amount of occupancy tax collected to determine the amount of hotel room sales. They then applied the hotel room sales to the local sales tax rate to determine the 2009 local sales taxes.
The data showed that more than $407,925 in revenue was collected in 2009 from local sales tax for area hotels.

Water and sewer fees
Municipalities charge water and sewer fees for each hotel in the county. The WPCOG sent a survey about water and sewer usage to area hotels to determine the fees incurred from services. The analysis revealed that in 2009, the average hotel room generated $182.42 in water and sewer fees.

The revenue from travel and tourism continues to be a large part of Catawba County and North Carolina's economic well-being. According to the North Carolina Department of Commerce, the cost of lodging alone brings in more than $3 million to North Carolina, which is only a portion of the state's estimated $22 billion a year generated from travelers.
The estimated $2.22 million in expected revenue and fees from Catawba County hotels is conservative, Dellinger said.
Most people who stay at area hotels don't remain in the hotel for their entire visit. They eat at restaurants, shop at malls and attend other tourist attractions nearby.
"(The estimated revenue) doesn't include vending machine sales," he said. "It also doesn't include sales tax revenue from restaurant sales."
Data for the surrounding counties and their hotels' revenue hasn't been analyzed, but Dellinger said compiling that data in the future and comparing it with Catawba County's statistics is a possibility.

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