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Indications are strong that South Texas has begun its economic recovery from the coronavirus pandemic.
Sales tax revenues to cities, based on purchases made two months previously, and payments to the Hotel Occupancy Tax fund contribute data that is judged by municipal governments for an immediate evaluation of the economy.
That economy, according to city staff in Cotulla, is healthy and is supported by more than one vital contributor.
Cotulla city finance consultant Jorge Flores told councilors this month that he has detected improvements in the revenues earned through a surcharge on all local hotel rooms.
Those improvements, he told elected officials, are indicators of a recovery from a depression caused by the coronavirus pandemic.
At local hotels – Cotulla had as many as 25 at the height of the oil and gas boom over the Eagle Ford Shale – room reservations have been stacking up, and several managers have confirmed their buildings are fully booked on weekdays.
At the Wyndham-owned 62-room Baymont Inn & Suites on the IH-35 access road, ownership group representative John Moyer said on Tuesday that bookings have given him a hundred-percent occupancy for several of the past weeks. While many of the rooms are occupied by nursing staff who work at an immigration processing and residency facility in Carrizo Springs, he said, others are occupied by energy industry workers, construction crews, and interstate travelers.
The Hotel Occupancy Tax applied in Cotulla and other cities is a surcharge on every room rented at hotels, motels and boarding houses inside city limits. Under the law, however, revenues from the tax are only to be used by city governments for functions, events or improvements that help boost tourism, thereby encouraging more guests to stay locally. In some cases, so-called HOT funds have been used for upgrades to convention centers, public sites and festival spaces, advertising for events and community festivals, public amenities associated with tourism, signage and attractions.
Records provided by Flores at the May 13 city council meeting indicate Cotulla’s HOT fund revenues declined during the year of the coronavirus pandemic and its related lockdowns, travel restrictions, business closures and festival cancelations, but still remained over $800,000 during 2020.
City officials believe that the ongoing demands of the energy industry over the Eagle Ford Shale despite the pandemic helped support hotel business while other cities whose hotel revenues rely heavily on local attractions suffered.
Tallies for hotel tax revenues of the recent past in Cotulla show that the city experienced a bumper year in 2019, taking in more than $1.1 million in HOT funds. In 2018, the total exceeded $834,000.
Flores said he believes there are strong indicators in the city’s current economy that the HOT fund revenues will return to their previous average.
“So far this year, by April, we have collected $178,000,” Flores told the council. “The hotels are full. Hopefully we will continue to increase this.”
Flores says there are “some stragglers,” referring to hotels that have yet to report their bookings and make their HOT payments to the city, estimating that the tally will reach $200,000 before the end of the month.
“If we can collect that much, then that is definitely an indicator of an uptick,” the finance consultant said on Tuesday.
Cotulla City Hall is reporting that HOT fund payments received during previous quarters were as low as $79,000.
At the Baymont, Moyer smiles at the prospect of a fully booked hotel during a time of recovery from the pandemic, but is quick to acknowledge that fluctuations in the price of oil and changes in the political climate have played a part in the industry’s recovery.
“They’re getting back into business,” Moyer says of the energy industry over the Eagle Ford Shale. “That’s the increase we are seeing. We are going to go on doing what we do.”
Moyer notes that one of the downsides to the current recovery is an apparent lack of job applicants for positions he expects to fill in the immediate future.
“I’m trying to hire some housekeepers, but it seems people don’t want to work,” Moyer said. “The past couple of months, business has been very good. When the nurses came to town, that brought a lot of new occupants to these hotel rooms.”
Room reservations for more than 30 consecutive days are not subject to the Hotel Occupancy Tax. Moyer said a number of his hotel’s reservations have been for extended stays.
At Cotulla City Hall, Flores argues that the occupancy tax must be applied when a room is occupied by different people during the 30-day booking. The finance director says he believes a different room occupant represents a new booking and should be subject to the occupancy tax if the stay is for less than 30 days.
For his part, Moyer says he believes the booking period, paid by the same company or federal agency, is what matters in exemption from the occupancy tax, regardless of who occupies the room or whether the room is used at all.
Both Flores and Moyer agree that an increase in the number of people staying at local hotels means increased business at retail and grocery stores, gas stations, restaurants and cafes.
“These people are all going to shop here and eat here,” Flores said.
Sales tax revenues for Cotulla, based on a two-percent fee that is divided into different funds for economic development, infrastructure and operations, have likewise begun to show improvement in the weeks of a recovery from the coronavirus pandemic, according to the finance director.
Flores described the comparison between sales tax revenues at this time to the same period in 2020, when the region met the full impact of the pandemic and its restrictions on business, as “a noticeable increase.”
Revenues to the city of Cotulla in May, reflecting retail sales in March, have reached $127,000, according to Flores, who adds that revenues in April stood at a mere $89,000.
“Hopefully it is beginning to pick back up,” Flores said. “This new sales tax revenue from business in March coincides with the time that we were noticing that there were more people in town. I believe we should all be very encouraged by these signs of a healthy recovery for our economy.”