Hotel occupancy and room sales taxes falling

I found that the Pennsylvania Dutch Convention and Visitors Bureau has a Web page which includes reports to their members:

www.padutchcountry.com

This PowerPoint presentation includes some interesting trivia:

Lancaster County Lodging Occupancy Rates
2004: 54.3%
2005: 56.7%
2006: 54.3%
2007: 56.4%
2008: 53.4% (as of December 2008)
Actual occupancy rates were down by 5% over 2007

Most likely, this is due to the recession. However, it can be argued that the current economic upheaval will result in permanent changes to how both individuals and corporations view travel, as costs are being closely examined, and borrowing money for current expenses is no longer looked upon favorably.

It is worth noting how this has affected "hotel tax" receipts: for the first eleven months of 2008, collections NOT counting delinquent payments were down 7.69%; gross collections were down 4.86%. This becomes even more striking when looking at the details, once again NOT counting delinquent collections:

January 2008, down 52.28% over 2007
March 2008, down 23.99% over 2007
April 2008, down 43.83% over 2007
June 2008, down 17.06% over 2007
September 2008, down 25.05% over 2007
November 2008, down 27.85% over 2007

Some of this may be attributed to delinquent payments; for example:

May 2008, up 20.70% over 2007
August 2008, up 16.13% over 2007

But all of the other moves were in the single digits. As unemployment continues to climb, the year-to-year changes in "hotel tax" collections can be expected to continue into negative territory. It can also be expected that as employment stabilizes, and eventually increases, both tourism and business travel will lag behind as individuals and companies try to rebuild their balance sheets.

How might this affect the convention center project? Not much, for now; collections are still above what are needed to make the Wachovia/Wells Fargo bond payments. But two potential issues could quickly change this situation: if the cost of borrowing by the LCCCA were to increase substantially for an extended period of time, which is possible but not highly likely; and if the operational losses of the convention center significantly exceed estimates. Nearly half of the current "pro-forma"
revenue estimates for the convention center appear to be nothing more than wishful thinking; this alone could force an increase in the "hotel tax" millage rate.

Without a short-term rebound in "hotel tax" collections, which is highly unlikely, the need for increased taxpayer subsidies to the convention center could be accelerated.