TOT: Less Travel Means Less Taxes; 80% Less

I was struck by the anecdotes in this SF Chronicle piece about hotel occupancy in the city.  It got me thinking about B'game finances since we are a major hotel host city as well.

To see the sorry state of San Francisco’s once dynamic hospitality industry right now, just pay a visit to the lobby of the Hotel Nikko near Union Square — you’ll need to ring a bell to get in, and when you step into the lobby, it’s empty.

A year ago, the lobby would have been buzzing with tourists, business travelers and conventioneers. Today, the 530-room hotel is lucky to have 30 guests. A year ago, the hotel hallways bustled with 35 to 55 housekeepers cleaning rooms. Today, there are two.  Downstairs in the hotel’s kitchen, where 100 cooks and workers once served up meals for guests and banquets, a single cook waits for room service orders.

Back in 2014, I noted

The Transient Occupany Tax (known as the 'TOT') is a major source of revenue for B'game given our proximity to SFO and the number of hotels we have on the Bayfront.  Our rate is 12%.  Think $18 million in 2013 per page 37 of the CAFR found here -- higher than either property or sales taxes.  So I checked with the city on how it's going in Covid 2020:

TOT returns are due the last day of the month following the month being reported on, so this information is more timely.  We have received all the returns through September.  TOT revenues were $423,310 for July, $571,218 for August, and $445,744 for September – about 20% of 2019 receipts.  Average occupancy is about a third, meaning that the less expensive hotels are faring better in terms of occupancy.

For the 2018/19 fiscal year, TOT was about $29M out of a total budget of about $87M - one third of the total.  80% of a third is about a quarter of our total budget that will disappear this year if things continue as they are now.

Comments

[JP]

Has the city done any layoffs yet? I just saw Caltrain is FINALLY doing some.

[Wunderkind]

What’s happening in the library all this time?

[Joe]

It's been radio silence on B'game layoffs, furloughs, reduced hours, etc. Here is the DJ on the Caltrain furloughs:

Caltrain plans to furlough around 40 positions starting in January to meet costs for its recently approved operating and capital budgets for 2021, according to officials from the transit agency that is suffering from dropped ridership and decreased revenue.

Caltrain originally had plans to furlough around 90 people, around 20% of its workforce, Bouchard said. Caltrain instituted a hiring freeze over the past few months to decrease the proposed furlough numbers. Caltrain said retirements and workers leaving also reduced the number of people it will need to furlough. Caltrain has more than 450 workers who provide operations and maintenance services. Some of the positions expected to be furloughed are vacant.

https://www.smdailyjournal.com/news/local/caltrain-to-furlough-40-positions-starting-in-january/article_466a2bda-35ef-11eb-a9da-eb0aea033b9f.html#utm_source=smdailyjournal.com&utm_campaign=%2Fnewsletters%2Fheadlines%2F%3F-dc%3D1607094018&utm_medium=email&utm_content=headline

Closing open positions isn't a "furlough" in the private sector. Been there, done it.

[resident]

Don't hold your breath for layoffs. You will pass out.