Revenue from rooms
Did you know that Chico has 1,258 hotel, motel and bed and breakfast rooms?
I found that out when I read the summer edition of Chico Chamber of Commerce’s Insights magazine. What seems especially impressive is that the number went up by almost 20 percent in just two years with the opening of Hotel Diamond downtown, and Marriott Residence Inn and Marriott Courtyard next to the freeway.
And yet the number is pretty much in line with the statewide average. California, with 37 million residents, had 475,000 rooms in 2005. I’m a statistics nut, so I was interested to find out when I read the magazine that the average room rate statewide was just over $100 a night, up 7.1 percent over 2004. The average statewide occupancy rate was 69.6 percent in April 2005.
A little quick math reveals that the state’s hotel, motel and bed and breakfast establishments are bringing in $33 million a night.
It’s no wonder local governments like to tap into this great money-making force. Through its 10 percent tax on stays of less than 30 days in hotels, motels and bed and breakfast rooms, the city of Chico collects about $1.5 million a year. It’s the sixth-largest revenue source listed in its operating budget. Sales tax is by far the largest single revenue producer.
Much of the transient occupancy tax money goes into the city’s general fund, but about a third of it is allocated to arts, economic development and tourism — activities designed to increase room occupancy rates.
And what are the local occupancy rates? According to Insights magazine, many establishments either don’t keep good records or are reluctant to release them. But one insight that Insight was able to glean was that just about every establishment needs to increase Sunday through Thursday overnight stays.
Short of becoming Las Vegas or putting in a Disneyland North, the best way to increase room occupancy rates through tourism is to promote the kinds of events that last from Wednesday through Sunday or Friday through Tuesday.
The California Nut Festival, sponsored by the Far West Heritage Association, immediately comes to mind. The event’s inaugural run in February lasted a week. In bringing in a popular chef and partnering with Enloe Medical Center to promote a talk by a well-regarded nutritionist, the Association created reasons for people from other parts of the state to come to Chico.
Sunset magazine did its part to increase room occupancy rates by running a story in its April issue that outlined a three-day tour of Chico. By emphasizing the city’s perfect blend of small-town and bigger-city amenities, a case could easily be made for a five-day tour.
Of course, there are other ways besides tourism to fill hotel rooms from Sunday through Thursday. I’m in favor of exploring all other possible avenues because I don’t want Chico to become a tourist trap. A large number of occupants during the slower time of the week are business travelers. So economic development obviously has the potential to help hotels overcome their mid-week slump, especially if we attract the kinds of employers — Chico State University is a good example — that host seminars and conferences. Graduation most readily comes to mind when we think of the university’s power to cause hotels to post “no vacancy� signs, but people come to the campus from out of town for weekday events as well. It seems that the city could attract even more of these kinds of travelers by building a first-class convention facility.