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Cumberland County hotel trends in line with national growth

The following appeared in the Cumberland Valley Business Journal, which you can read here.

By Zack Hoopes

Cumberland County is seeing strong demand for hotel rooms, although a slump in prices has tempered tourism growth somewhat.

The county’s room occupancy grew 6.5 percent in March 2018 versus March of last year, according to data from Smith Travel Research, which was presented to the Cumberland Area Economic Development Corporation at a meeting this month.

Overall, 59.7 percent of the county’s available rooms were booked over the course of March’s nights. However, rates dropped slightly, roughly 0.6 percent, with the average room at $88 per night.

This puts revenue per available room – occupied or not – at $63, up 5.9 percent, a strong showing for cash flow in the county’s hotel industry, which took in $86.2 million in March, according to STR.

The county’s strong hotel economy follows national trends.

“We’re continuing a record run,” said Jennifer Foster of STR. “The country as a whole has seen 97 months of revenue-per-room growth since 2010.”

New rooms coming in to the market are also tapering off. Cumberland county currently has seven projects in the pipeline, according to CAEDC data, but only one of these will likely be ready this year – the Home2 Suites on Bent Creek Boulevard in Silver Spring Township.

Nationally, STR data shows the first decline in in-construction rooms since the economic recovery. Roughly 186,000 rooms were in construction nationwide in March, down from 190,000 at the same time last year.

“At this point last year, we were in an overbuilding cycle,” Foster said. “That negative growth is likely a positive overall.”

On the legislative front, tourism industry advocates are still struggling to get bills through Harrisburg that would change the way online booking agents remit taxes, and use the funds for additional tourism promotion.

Pennsylvania, like many states, has struggled to deal with online travel brokers who purchase blocks of rooms at wholesale prices from hotels, and then re-sell them on their websites.

Such bookers typically remit sales tax on the wholesale value of the room – but collect tax from consumers on the retail value, pocketing the difference, according to Shireen Farr, CAEDC’s COO.

IF the full retail value was remitted, some estimates indicate the state could gain $20 million per year, which could help boost Pennsylvania’s current $12 million tourism promotion budget – which is low compared to other like-size states in the U.S.

“The reality is that there is no dedicated source of [tourism] funding and no desire to raise taxes for additional revenue, so you’re stuck betwixt and between,” said Jay Layman, President of Capital Associates, a Harrisburg lobbying firm that works with CAEDC.

Three statehouse bills – House Bills 1511, 1810, and 2051 – would seek to close the tax loophole and boost the state’s tourism budget to a dedicated $30 million, although Layman was optimistic that they would get very far in an election year.

“Some decisions are being postponed…you’re going to see an entirely different approach after November, I suspect,” Layman said.

“We’re constantly being told that we can get more tourism funding if we can find the money – now we have the money on a silver platter, it’s just a matter of the legislature getting its act together,” Farr said.

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