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Downward spiral in lodging industry continues

Sally J. Taylor

Despite good weather and high hopes, lodging statistics for April continued to reflect a depressed industry as well as the close of ski season.

The city collected $346,417.55 in transient occupancy taxes, or room taxes, a 9.58-percent drop compared to April 1996.

The occupancy rate of 33 percent was 3 percent less than a year ago. The average room rate increased by $1.35.

In March, many visitors squeezed in ski trips postponed with the closure of U.S. Highway 50. That month closed with only a 1.07-percent decrease in TOT collections.

The improvement did not last, with April continuing a decline consistent with the year-to-date trend.

From January through April, TOTs declined by 9.58 percent, carried downhill by severe weather and the closure of Highway 50 for most of January and February.

February dropped the most dramatically with 11.94 percent less collected compared to February 1996. Occupancy was down by 6 percent that month.

Motel size did not seem to make a difference in occupancy rates for April. The largest decrease in occupancy, 8 percent, was experienced by mid-sized motels with 51 to 75 units. Both the smallest and largest motels also experienced significant declines; a 5-percent decline for motels with one to 15 units and a 6-percent decline for motels with more than 126 units.

Occupancy gains were experienced by motels with 16 to 30 units, at 2 percent, and 31 to 50 units, with a 1-percent increase.

Occupancy for rental agencies, often the most positive in the industry, was flat in April, 1997 compared to April, 1996 at 14 percent. But compared to the March occupancy of 41 percent, rental agencies in April experienced a sharp decline.

The decline in the lodging industry continues a years-long downward spiral on the South Shore.

Decreases of a few percentage points in one month are deceiving, said Jan McCarthy, co-owner of Stardust Lodge. Lodging was also down the last three years. Added together, the South Shore lodging industry is depressed compared to what it was in 1989.

In April 1989, lodging properties collected more than $3 million in gross revenues. In April 1997, revenues amounted to $2.9 million.

Despite the poor showing for the first four months of 1997, some lodging owners are hopeful that improving economic conditions in the state and nation as well as good weather and mostly open roads will begin to spill some good news into Lake Tahoe.

In the short term, McCarthy reported that May occupancies at the Stardust are an improvement over the year’s trend.

“April was definitely a soft month. May was better,” she said.


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