Tag Archives: Visit Wichita

Wichita city government

Wichita tourism fee budget

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The Wichita City Council will consider a budget for the city’s tourism fee paid by hotel guests.

If you stay at a hotel in Wichita, you’ll pay sales tax of 7.5 percent, hotel tax (transient guest tax) of 6.00 percent, and since 2015, a tourism fee of 2.75 percent. The tourism fee arises from the city’s creating of a Tourism Business Improvement District (TBID), with boundaries matching those of the city. 1 Funds collected from this fee go to Visit Wichita, the city’s visitor and convention bureau. (Of note, the TBID ordinance specifies that if the tax is itemized on hotel bills, it is to be called the “Tourism Fee.” Everyone pays, even those who are not tourists.) (Also, some hotels are in Community Improvement Districts, charging up to another 2 percent.)

Coming to Wichita for business. (Click for a larger version.)

This week the Wichita City Council will consider the budget for the use of this tourism fee revenue. 2 City documents (the agenda packet) show actual results and goals for economic impact. As can be seen in the nearby excerpt, for leisure travel in 2017, Visit Wichita claims $81,343,227 in economic impact. This figure comes from summing identifiable dollars, which comes to $20,433,737. Then a multiplier is applied to produce the economic impact. All this results in a return of investment of $53 dollars for every dollar of investment (“Media Leisure Investment”), Visit Wichita says. (This is for the “leisure” market segment only. There are separate goals and statistics for group travel, which is meetings, conventions, or sporting events.)

This data represents what is called “incremental” travel, for which Visit Wichita takes credit: “The rate of travel by those who are ‘unaware’ is considered the base rate of travel, which would have been achieved if no advertising were placed. Any travel above this base by ‘aware’ households is considered influenced — or the rate of incremental travel.” 3

As for the performance of the overall Wichita hotel market, growth is slow. Looking at growth in hotel tax collections, only two of the ten largest markets in Kansas have grown slower than Wichita. This is since January 1, 2015, which was when the tourism fee started. (Hotel tax collections collected by the Kansas Department of Revenue do not include local taxes like the city tourism fee.)

Further, if we were expecting a boost in hotel sales from the recent hosting of NCAA basketball tournament games, that didn’t happen. See Effect of NCAA basketball tournament on Wichita hotel tax revenues.

Kansas transient guest tax collections are available in an interactive visualization here.

Example from the visualization. Click for larger.

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Notes

  1. City of Wichita, Ordinance No. 49-677. Available at http://www.wichita.gov/CityClerk/OrdanicesDocuments/49-677%20TBID%20Ordinance%20-%20version%204.pdf. ↩
  2. Wichita city council agenda packet for May 1, 2018. ↩
  3. City council agenda packet. ↩
Economics

Liquor tax and the NCAA basketball tournament in Wichita

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Liquor enforcement tax collections provide insight into the economic impact of hosting NCAA basketball tournament games in Wichita.

In Kansas, a tax is collected at liquor stores, grocery stores, and convenience stores on the sale of alcoholic beverages. The same tax is also collected on sales to clubs, drinking establishments, and caterers by distributors. 1 This tax is called the liquor enforcement tax. The rate has been 8 percent since 1983, when it was raised from 4 percent. 2

This tax provides some insight into the level of sales of alcoholic beverages at bars, clubs, and restaurants. It is not a perfect measurement of that, and perhaps not even a very good measurement, as it also includes sales at retail outlets for consumption offsite.

Nonetheless, it’s data we have. The Kansas Department of Revenue provides this data on a monthly basis for each county. With the touted influx of visitors for the NCAA men’s basketball tournament games in Wichita in May — along with the generalized party atmosphere — we might to expect to see these tax collections rise during March. Here’s what happened.

The liquor tax collections exhibit pronounced seasonality, so it’s useful to compare the same month of the previous year, as follows for Sedgwick County:

March 2017: $1,315,653
March 2018: $1,085,214
Change: -$230,439, a decline of 17.5 percent.

Not only was March 2018 lower than March 2017, it was lower than five of the previous six months of March.

The monthly average for the 12 months prior to March 2018 was $1,243,793. March 2018 didn’t meet that standard.

Kansas liquor enforcement tax collections are available in an interactive visualization here.

Liquor enforcement tax collections in Sedgwick County. Click for larger.

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Notes

  1. “Liquor Enforcement or Sales Tax. The second level of taxation is the enforcement or sales tax, which is imposed on the gross receipts from the sale of liquor or CMB to consumers by retail liquor dealers and grocery and convenience stores; and to clubs, drinking establishments, and caterers by distributors.”
    Also: “Enforcement. Enforcement tax is an in-lieu-of sales tax imposed at the rate of 8 percent on the gross receipts of the sale of liquor to consumers and on the gross receipts from the sale of liquor and CMB to clubs, drinking establishments, and caterers by distributors.
    A consumer purchasing a $10 bottle of wine at a liquor store is going to pay 80 cents in enforcement tax.
    The club owner buying the case of light wine (who already had paid the 30 cents per gallon gallonage tax as part of his acquisition cost) also now would pay the 8 percent enforcement tax.”
    Kansas Legislative Research Department. Kansas Legislator Briefing Book 2017. Available at http://www.kslegresearch.org/KLRD-web/Publications/BriefingBook/2017Briefs/J-4-LiquorTaxes.pdf. ↩
  2. Kansas Wine & Spirits Wholesalers Association. A Brief Review of Alcoholic Beverages in Kansas. Available at http://www.kwswa.org/KSBeverageAlcoholHistory.pdf. ↩
Economics

Effect of NCAA basketball tournament on Wichita hotel tax revenues

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Hotel tax collections provide an indication of the economic impact of hosting a major basketball tournament.

The Kansas Department of Revenue has released transient guest tax collections for March 2018. This is a tax added to hotel bills in addition to sales tax. The rate in Kansas is 6.00 percent, although some localities add additional tax to that.

For the city of Wichita, here are the collections:

March 2017: $538,539
March 2018: $543,844
Increase: $5,305 or 0.99 percent

With the hotel tax at 6.00 percent, that increase implies additional sales of $88,417 for the same month of the prior year. (The 2.75% tourism fee that is also added to Wichita hotel bills is paid directly to the city, so it does not appear in the statistics from the Kansas Department of Revenue.)

While an increase from the same month of the previous year is good, the average monthly hotel tax collections for the year before (March 2017 through February 2018) was $590,770.

So March 2018 didn’t exceed the average month of the previous year. It also didn’t exceed March 2016. Whatever was happening in Wichita during that month, the city generated $665,854 in hotel taxes.

Kansas transient guest tax collections are available in an interactive visualization here.

Wichita hotel tax collections. Click for larger.