EAU CLAIRE — It was supposed to be a banner year for attracting droves of tourists to the Chippewa Valley.
In addition to the perennial summer concerts that bring big musical acts to the area, there was an air show and Farm Technology Days also planned this summer in Eau Claire.
“This was supposed to be the best summer for tourism by far,” said Benny Anderson, interim director of Visit Eau Claire.
But then the coronavirus pandemic hit, leading officials to issue safer-at-home orders. One after another, events announced they were canceling or postponing until next year. Along with their disappearance from the calendars, so did vanish the hopes of area businesses looking to cater to out-of-town visitors.
Chief among those businesses are hotels, which saw their revenues plummet when the COVID-19 became a worldwide problem.
“Room tax collections didn’t start dropping until March. Since April they’ve been slowly rebounding,” said city finance director Jay Winzenz.
The 8% tax collected by the city on hotel stays is used to fund attractions and organizations that usher in tourists, but it’s also been an indicator this year of how the lodging industry has been hurt by COVID-19.
April’s room tax collections were 80% below normal as mandatory safer-at-home orders were in effect. As people adapted to the pandemic and government orders became less stringent, business got better, but not to what it had been.
In 2017 to 2019, Eau Claire hotels would ended up turning over about $2 million annually in room taxes. But the city’s projection, which it consulted with Visit Eau Claire to arrive at, is that 2020 will end with about $1.1 million in room taxes — a 45% drop from normal.
Anderson was optimistic for September’s figures, which weren’t yet available last week, to show a good month. However, he’s worried that hotel revenues will be hampered for the last three months of the year due to the Chippewa Valley and rest of the state reporting high numbers of COVID-19 cases and health officials advising against holiday travel and gatherings.
The pandemic is expected to continue its negative impacts on the leisure industry for at least the start of 2021. Recent developments toward a reliable COVID-19 vaccine is fueling Anderson’s hope for tourism bouncing back sometime next summer, but he’s still projecting local hotel revenues will be 30% to 35% below normal in 2021.
Seeing that hotels would be among businesses struggling the most with the pandemic, the city decided earlier this year to allow them to defer turning over their room taxes. So far Eau Claire hotels have held onto about $160,000 in room taxes to keep for their own cash flow. However, the room tax deferral was possible through the city’s emergency declaration, which lasted from mid-March until late October. Since the order ended, hotels have until Dec. 26 to pay those taxes to the city, according to Winzenz.
Even though hotels were seeing less business, the city is living up to its contract with Visit Eau Claire.
The contract calls for the city to pay 70% of room taxes projected in its 2020 budget — not 70% of revenues actually coming in — to the convention and visitors bureau.
For this year, that means $1.37 million to Visit Eau Claire, which is more than the total the city is expecting to collect from hotels.
But the contract does call for Visit Eau Claire to settle up after the year’s end for the difference between budgeted room tax collections and actual revenues.
“We were getting a surplus in prior years,” Anderson said.
That’s meant getting a check for around $50,000 from the city when hotels did more business than originally projected, he said. This time though the local convention and visitors bureau will be paying back the city in installments due to this year’s room tax revenues falling short.
For the 30% of room taxes it keeps, the city spends that money on projects at Hobbs Ice Center, Fairfax Park Pool, public parks and recreational trails, which have all been linked to attracting overnight guests.
With less room tax revenue coming in this year, the city did defer some projects.
A water play feature, new concession stand and pavilion were supposed to be built at Fairfax Park Pool, which was closed this summer, but those projects are now delayed, Winzenz said.
When tough times appeared on the horizon earlier this year, Visit Eau Claire did some belt-tightening.
Part-time staff at its local welcome centers were laid off, but the organization’s permanent staff of seven employees have remained. Visit Eau Claire also sold a Chevy Suburban and pickup truck and did what it could to lower other rent costs.
However, it still sought to promote the area however it could given limitations created by the pandemic.
With travel discouraged during early spring when safer-at-home orders took effect, the plan for marketing the community focused inward to ask residents to support area businesses.
“We made a pivot right away to go to a local community support, restaurant strategy,” Anderson said.
This $50,000 digital-based marketing campaign started by targeting people in the Chippewa Valley, but eventually spread to people as far as the Twin Cities and Chicago.
But as local COVID-19 case numbers have increased dramatically in recent weeks and put a strain on Eau Claire hospitals, the reach of the campaign has been scaled back to people who live in this area.
The city’s new budget, which was approved earlier this month, anticipates $1.27 million in room tax money next year. Based on its contract, Visit Eau Claire will get $887,250 of that.
In late October, Visit Eau Claire did get good news that it received a $500,000 tourism grant funded by government coronavirus relief money. The only other convention and visitors bureaus in the state to get that much were in Madison, Milwaukee, Green Bay and Wisconsin Dells.
“That helps us keep whole,” Anderson said. However, he added that doesn’t fully make up for the expected decline in next year’s room tax revenues and needing to pay back overages from this year.
That has led Visit Eau Claire to budget more conservatively for itself, Anderson said, but still plan campaigns to promote the area for when the pandemic no longer hampers the leisure industry.
“We have to be online as people are planning that revenge travel, those next family visits,” he said.
