WI Hotel Tax Revenue Could Grow As Occupancy Rates Lag: Report

WISCONSIN — The hotel business in Wisconsin is getting closer to pre-pandemic levels as state and local governments are on track to receive record hotel tax revenues, according to a new industry report.

The expected increase in tax revenue comes despite hotel occupancy rates in Wisconsin remaining below 2019 levels. Nationally, hotel tax revenue is expected to increase to a record $46.71 billion, according to “A New Era for U.S. Hotels,” a state-of-the-industry report released Tuesday by the American Hotel & Lodging Association and Oxford Economics.

More than three quarters of U.S. hotel rooms were empty in April 2020 as stay-at-home orders and social distancing took hold across the country to control the spread of COVID-19.

Despite the industry’s projected bounce back to near pre-pandemic levels — average U.S. occupancy is projected at 64 percent, coming close to the 2019 occupancy rate of 66 percent — finding enough people to fill hotel and other hospitality jobs remains a challenge, according to the report.

In Wisconsin:

• Hotel-generated state and local tax revenue for 2023 is projected to be $532,523,587, up 13.2 percent from $470,498,255 in 2019.

• Hotel occupancy is expected to rebound as well, though likely not quite to 2019 levels, according to the projections for an average of 54.2 percent of rooms to be filled in 2023, compared to 56.4 percent in four years ago.

Also, hiring is a challenge as the Wisconsin hospitality industry returns to normal.

• The number of people directly employed by hotels — housekeepers, front-desk clerks and other staff — is projected to be 39,757 in 2023, down 6.8 percent from 42,650 in 2019.

• Hotel-supported businesses — restaurants, retail shops, entertainment and transportation vendors, small businesses and hotel suppliers, among others — are also having problems finding enough help. These related businesses are expected to employ 114,059 people in 2023, 6.8 percent fewer than the 122,357 people employed in 2019.

At the lowest point in the pandemic, occupancy averaged 44 percent at U.S. hotels. In 2022 as the industry began to come back, occupancy neared 63 percent, a 9 percent increase from 2021.

Hotels across the country are on a hiring spree to fill jobs lost in the pandemic. Nationally, hotel wages average $23 an hour, a historic high, according to Labor Department data.

The employment website Indeed lists nearly 100,000 hotel job openings. Greater Milwaukee has over 500 open positions in multiple categories related to hotel listings.

To help fill positions, the American Hotel & Lodging Association has launched an advertising blitz in 14 metropolitan cities to raise awareness of 200 career pathways in the hotel industry. The campaign, “A Place to Stay,” is currently active in Atlanta, Baltimore, Chicago, Dallas, Denver, Houston, Los Angeles, Miami, Nashville, New York, Orlando, Phoenix, San Diego and Tampa.

The group’s Hospitality Is Working affiliate recently launched a Workforce & Immigration Initiative aimed at convincing Congress to address the labor shortage through immigration reform.

Nationally, according to the projections, every direct hotel job supports another 2.6 jobs in the community.

The Washington, D.C.-based American Hotel & Lodging Association’s members represent 80 percent of all franchised hotels and the 16 largest hotel companies in the United States.