Though hotel occupancy is still much lower than pre-pandemic levels, city officials say the revenue generated by tourism is on its way up again.
In fiscal year 2020, local hospitality businesses generated $52.1 million in hotel occupancy tax (HOT) revenue. The city projected it will collect $57.6 million this year. Although it’s a sharp decrease from the $93.5 million the city collected in fiscal year 2019, it still shows growth, officials said.
Thanks to a few conventions taking place, July saw encouraging numbers for hotels, said Marc Anderson, Visit San Antonio president and CEO. Anderson joined Visit San Antonio, a nonprofit organization dedicated to promoting the city for tourism, in June.
“July’s hotel occupancy alone was nearly 74% in San Antonio — higher than any other major city in the state of Texas, higher than most major US cities, and higher than the national average,” Anderson told city council members at a budget meeting Wednesday.
The city expects another 23 conventions to take place at the Henry B. González Convention Center this year, he said, estimating that those conventions would have an economic impact of $79.1 million. More than 300 conventions have been canceled since 2020.
”I think I’m optimistic for 2022, but I would be disingenuous if I wasn’t worried about the rest of this year, based on what’s happening with the delta variant,” Anderson said. “Luckily, we have only lost two conventions in the past four weeks. … We’re being proactive in our messaging to our clients that it’s safe and secure to have a meeting in San Antonio.”
The city, however, expects it will be years before the tourism industry makes a full recovery, Deputy City Manager María Villágomez said.
“Things are getting better, for sure,” she said. “I would say things are on the right trajectory, and of course Visit San Antonio is doing a great job trying to attract more tourism to our city and bring more visitors. They’re doing everything they can.”
City Manager Erik Walsh said staff continues to keep an eye on tourism and revenue generated from visitors to the city.
“This area of our business has been probably the most impacted,” he said. “It’s the one area of our business that we monitor very frequently, sometimes on a weekly basis.”
Visit San Antonio receives 35% of the net hotel occupancy tax collections to fund its operations, Villágomez said. The agency is proposing a $27.2 million budget for fiscal year 2022, $17.7 million of which will consist of HOT funds.
A city council-approved agreement, first established in 2016, gives Visit San Antonio that percentage of HOT collections each year. As the agreement is set to expire in September, city staff recommended extending the agreement for another five years. They also recommended including one-time funding of $1.3 million for “hosting obligations” in 2022 and 2023, which would be used to incentivize businesses to use the convention center.
“Historically, for every hosting obligation dollar that we spend, it generates about $4 in facility revenues,” said Patricia Muzquiz Cantor, the city’s director of convention and sports facilities.
The Convention and Sports Facilities department is proposing an $88.7 million budget for 2022, $53.9 million of which would go toward operations of the convention center and Alamodome and to hosting obligations. That part of the budget increased by $19.3 million because the city recalled workers back after furloughing them or redeploying them to other departments in 2020.