You know the drill by now: another month of record TOT (transit occupancy tax) collection with overall occupancy lagging previous years and ADR (average daily rate) through the roof. May 2022 TOT collection was $984,191 with occupancy at 64% and ADR of $917.
I find it interesting that the Town TOT report states, “It is important to view this fiscal year’s collections as abnormal due to the current climate of the travel industry, and the Town will most likely not continue to see TOT collections of this magnitude year over year.” Abnormal? What does that mean, and what is it based on? Where are the industry reports, and what is happening in the Napa Valley with hotels and hospitality compared to Yountville? Even though the Town states it’s “abnormal,” the TOT revenue budget is $7,500,000 for the fiscal year 2022/2023. Could you show me your work on how you got here? Here is the revenue overview for the fiscal year 2022/2023 (scroll to the middle and bottom for a more straightforward overview).
As of May 2022, the variance to the current fiscal year budget is 171%. How is the Town forecasting this revenue that makes up 59% of our collected revenue to fund our community? Let’s do some math, shall we?
The fiscal year 2018/2019 saw a Town occupancy of 70%. The fiscal year 2019/2020 was 50%. So far, 2021/2022 (with June remaining) is 52%. This is for a total of 455 rooms. (yes, there were room closures in the past, affecting inventory, BUT you get my point here.) That’s only half the rooms occupied. Those guests are paying the rates, and now those guests can pay those rates in Europe and Asia. They can also head up the Valley to newly built properties.
As the Town pats itself on the back for the new budget, I would offer that we can all be better prepared for our community and the future with further research and outreach because although 171% over budget is pretty, it still leaves a lot of questions.
My point here is that this is a very interesting time in hospitality, and how is the Town approaching it? The recent budget meetings were over nine hours, and I would venture to say that the Town spent 15 minutes discussing TOT revenue. That discussion was looking backward and only centered in Yountville. No hospitality forecasting. No talk of the luxury market. No address of increased supply in the Valley.
I have always been a big supporter of Town staff and department heads. They are all doing an excellent job for our community. I believe this is an opportunity to give the finance department data, research, and readily available numbers to better support the projections and budget numbers. Because… get ready for the August Town Council, where the Council and staff will decide what to do with over $4,000,000 in unassigned fund balance.