by Nancy Lavin, Rhode Island Current
August 14, 2023
Newport summers are back in earnest, having exceeded pre-pandemic tourism levels in at least one marker of activity.
Indeed, the $1.9 million in inflation-adjusted tax revenue Newport hotels brought in fiscal 2022 is 32% more than fiscal 2019, according to a new report by the Rhode Island Office of Revenue Analysis.
The Aug. 10 report only measured revenue through the 1% local hotel tax, which reflects the number of rooms sold in a hotel, along with short-term home rentals. It did not include the 5% statewide hotel tax or the 7% state sales tax.
The rebound in local hotel revenue in Newport carried the state’s overall local hotel tax revenue just above pre-pandemic levels, with the $6.3 million in inflation-adjusted fiscal 2022 revenue marking a 4% bump over fiscal 2019, according the report.
“Newport experienced the rebound of ‘revenge travel’ in the leisure markets early post-pandemic and the growth has sustained,” Evan Smith, president and CEO of Discover Newport, said in an emailed response. “With the opening of three new hotels, the revenue reflects the demand and the growth of additional rooms. Newport and the state have embraced the silver linings from the pandemic such as expanded outdoor programming, dining, events and more. This has only heightened its success in addition to all the cultural, culinary, and scenic attractions we’ve always been known for. We are thrilled to see the analysis validates what we’ve been seeing and that the state is experiencing steady growth as well.”
However, Rhode Island’s second hotel hotspot, Providence, did not fare so well.
The capital city continues to see local hotel tax revenue lag, with the $1.1 million in inflation-adjusted fiscal 2022 revenue trailing its pre-pandemic level by 20%, the report stated. The report attributed the slower recovery to a decline in business travel, which has not seen the same recovery as seasonal tourism.
“While leisure visitation is strong and meetings business is back to pre-pandemic levels, corporate travel continues to lag, both here and in cities nationwide,” Providence Warwick Convention & Visitors Bureau President & CEO Kristen Adamo said in an email on Monday.
“Future years look strong, as our sales team just finished the fiscal year and booked meetings and sports business worth about $100 million in direct spend revenue for the state.”
Another pandemic travel trend that has reversed course: the preference for alternative lodging options like Airbnb Inc. and VRBO. While the share of local hotel tax revenue from these options spiked during the pandemic, rising to a high of 25.4% in fiscal 2021, it fell back to 18,2% in fiscal 2022, according to the report. At the same time, the share of hotel tax revenue from traditional hotel stays rebounded in fiscal 2022 to 81.9%, just below the 82.8% in fiscal 2019, the report stated.
Another bright spot for state tourism revenue: money spent on restaurant drinks and dining. The $34.8 million in inflation-adjusted fiscal 2022 revenue from the state meal and beverage taxes across the state marked a 3.3% bump over fiscal 2019 revenue.
And unlike local hotel tax revenue, income collected through the state’s 1% meal and beverage tax showed a more even recovery between Providence and Newport. Providence’s fiscal 2022 meal and beverage tax revenue was 4.9% below pre-pandemic levels, while Newport bested its pre-pandemic revenue by .5%, the report stated.
When it comes to jobs, Rhode Island has lagged behind most other states in reaching pre-pandemic job numbers. Not so in accommodation and food services, where the 94% of jobs recovered in Rhode Island as of fiscal 2022 bests the recovery in Massachusetts and Connecticut, which reported 88% and 92% industry jobs recovery, the report stated.
Updated to include comments from Evan Smith.
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