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Business: Downtown room tax revenue takes a hit from decreased visitation, hotel closure

By Bob Conrad
Reno Business Weekly

Downtown room tax revenue is not what it used to be. Room surcharges – $2 per room, per night – have been reduced by the closure of Harrah’s, as well as a reduction in visitation to downtown.

That means the city of Reno is not getting the revenue from downtown properties it used to receive.

Harrah’s, prior to closing, had 928 rooms, rooms that are no longer generating the same surcharges from visitors. Other hotels undergoing renovations have also contributed to reduced revenue.

That prompted Reno City Manager Doug Thornley in July to ask the Reno-Sparks Convention and Visitors Authority’s board for more money. He wants to use it for improvements to the downtown bowling stadium. That includes a new scoreboard.

“I do need to implore you to perhaps take a look at helping out a little bit at the bowling stadium,” he said to the board.

The pandemic and declining tourism were to blame, he said.

“The $2 surcharge account that traditionally maintains the bowling stadium and provides for the [capital expenditures] that we put into that facility, with Covid and the decrease in tourism … that you’re all aware of, it hasn’t really kept up as much as we’d like with the room tax…” Thornley added.

RSCVA’s Ben McDonald confirmed room nights are down overall in downtown Reno and the “bed base” has been reduced with the loss of Harrah’s. But county-wide tourism revenue is up.

The last full non-COVID year before Harrah’s shutdown was the fiscal year of 2018-2019, McDonald said. “During that year, the downtown district had 2,125,292 available room nights, and 794,122 cash room nights. That just includes the hotels with unrestricted gaming licenses, which are the downtown properties included in the $2 surcharge.”

During the last fiscal year – 2021-22 – there were fewer than 1.7 million available room nights and about 600,000 cash room nights.

“In the downtown area, room tax collections were down 2.3% compared to fiscal year 2018-2019,” McDonald added. “Overall throughout the county, however, room tax collections were up 9.2%.”

Thornley requested “a little bit of help” because of needed improvements to the bowling stadium.

“We do need to make some capital investments in that facility, and we need to make those capital investments now,” he said. “We need to do it before March of ‘23.”

The RSCVA board agreed to split the cost for a new scoreboard with the city. Other stadium improvements are expected to be discussed at future meetings.

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