CITY OF PEWAUKEE — Tourism groups serving the city could get an advance on room-tax revenues to help them stay afloat for the rest of this year and have enough money to plan events in 2021.
Every year the city, like all municipalities across the state, collects room taxes paid by people staying at hotels and Aibnbs in their communities. Under state law, the City of Pewaukee can only keep about 30 percent of the hotel taxes it collects for general spending. The rest must go to boost tourism in the city. Groups that typically get room-tax revenue have been Positively Pewaukee, the Pewaukee Kiwanis Club, the Waukesha Pewaukee Convention and Visitors Bureau, and now defunct Pewaukee Chamber of Commerce.
But with hotel stays having plummeted over the last six months due to the coronavirus pandemic, those revenues have gone from a healthy flow to a mere trickle.
Hoping to help the groups that rely on that funding, the Tourism Commission this week recommended that the groups receive money from the city’s room-tax reserves and promises of funds in 2021.
‘Blood bath’
The tourism bureau, which according to Mayor Steve Bierce has not received room taxes since April, requested an advance on room taxes of $96,750 to meet its budget obligations for the remainder of 2020. It was a request the commission recommended be honored.
Nearly all of the tourism bureau’s funding comes from Waukesha and Pewaukee room taxes.
If approved next month by the Common Council, the funding will be the only additional money the nonprofit would receive from the city in 2020. The tourism bureau had been budgeted to receive $375,500 in room taxes, but with hotel occupancy well below where it should be, it will be receiving roughly $200,000 this year, Bierce said.
“It was a blood bath,” Bierce said Thursday of the pandemic’s impact on hotel stays.
With events like the Democratic National Convention on the horizon last fall, the city had expected to see $560,00 in room tax revenue in 2020. As of the end of July it has collected less than $172,061.
Frank Dorsey, general manager at the Milwaukee Marriott West — the commission’s hotel representative — said he expects occupancy rates to remain low throughout the end of the year.
“We are running at a little over 20 percent occupancy and forecasting that through the remainder of 2020,” Dorsey said.
He added that the hotels are still seeing some business from social, military, education, religious and fraternal groups (what industry calls SMERF business), but he fully expects the picture to be similarly bleak in 2021.
Prepping for 2021
Although the tourism bureau was the only group to receive funding for 2020, the commission recommended that the council budget room-tax funds in 2021 for all three groups.
The allocations are based on projections for what the city is expected to receive next year in room taxes given the ongoing pandemic and impacts that are expected to reach into 2021.
The tourism bureau, which asked for $265,500, was promised $200,000. Positively Pewaukee which requested $59,000, was promised $25,00. And Kiwanis, which asked for $10,000, was promised $5,000. The commission also recommended that $20,000 be allocated for internal tourism efforts.
A room tax increase?
The commission closed the meeting by suggesting that the city increase its room tax, which now sits at 6 percent. Under state law the city can increase it to 8 percent, and many other communities across the state do charge the full 8 percent.
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