TDA anticipates 33% drop in occupancy tax revenues for FY25

GRADUAL RECOVERY: The sharpest declines in occupancy tax revenues year-over-year came in October — a 74% plummet — and November, a 60% drop. Revenue is expected to inch back up to a 25% decrease expected in June compared with June 2024. Graphic courtesy of the BCTDA

If the prediction for tourism in Buncombe County this year was a weather forecast, it would call for partly cloudy skies.

During the Jan. 29 meeting of the Buncombe County Tourism Development Authority (BCTDA), board members and Treasurer HP Patel and  Jennifer Kass-Green, Explore Asheville vice president of culture and business affairs, presented the board’s projections for fiscal year 2025, which runs from July 2024 through June. The forecast for the second half of the fiscal year — January-June — showed a slow but steady recovery in the wake of Tropical Storm Helene, which ground tourism to a halt last fall.

The projection for FY25 made in May pegged net occupancy tax revenues at roughly $34.3 million. Instead, board members voted unanimously to cut that figure to $22.8 million — a drop of 33%. Comparatively, there was $20.5 million in occupancy taxes in FY20, the height of the COVID-19 pandemic. 

The sharpest declines year-over-year came in October — a 74% plummet — and November, a 60% drop. Revenue is expected to inch back up to a 25% decrease expected in June compared to last June.  

Unlike during the pandemic, which saw a boost in the short-term rentals sector, hotels and motels fared better in the wake of the storm. Filled with emergency responders and displaced residents, hotel stays increased 6% in December compared with December 2023, said Vic Isley, president and CEO for Explore Asheville. Vacation rentals dropped  23% during the same period. 

“[The vacation rental market in 2024] was already experiencing lagging performance due to the market saturation. That was followed by the negative impacts of Helene, which is accelerating removal of inventory in Buncombe County,” Isley explained. “And [as] we’re talking to vacation rental management companies throughout our county, we’re going to anticipate the continued removal of inventory out of vacation rentals in 2025.” 

Seventy-five percent of net occupancy tax earnings go to the BCTDA’s operating budget, which funds tourism advertising, salaries and other expenses, while the remaining 25% is split equally between the Tourism Product Development Fund and the Legacy Investment from Tourism Fund, which pays for tourism-related capital projects.

Patel said that given the economic impact of tourism on area businesses, he and other board members and BCTDA staff recommended drawing an additional $1.7 million from the BCTDA’s fund balance to bolster tourism advertising as the region recovers. 

“Thanks to several years of building up our fund balance to a very healthy amount, the authority now finds itself in a strong financial position to invest in marketing and messaging supporting the revival of Asheville and Buncombe County’s economy,” said Patel.

“Now more than ever, we have to be marketing. We have to be putting everything here toward that category,” added board Chair Brenda Durden.

Even with the fund balance boost, marketing expenses are still expected to be about $100,000 lower than previously forecast for the year, according to the presentation. Explore Asheville’s newest marketing campaign, “Be Part of the Comeback,” launched in mid-January.

SHARE

Thanks for reading through to the end…

We share your inclination to get the whole story. For the past 25 years, Xpress has been committed to in-depth, balanced reporting about the greater Asheville area. We want everyone to have access to our stories. That’s a big part of why we've never charged for the paper or put up a paywall.

We’re pretty sure that you know journalism faces big challenges these days. Advertising no longer pays the whole cost. Media outlets around the country are asking their readers to chip in. Xpress needs help, too. We hope you’ll consider signing up to be a member of Xpress. For as little as $5 a month — the cost of a craft beer or kombucha — you can help keep local journalism strong. It only takes a moment.

Before you comment

The comments section is here to provide a platform for civil dialogue on the issues we face together as a local community. Xpress is committed to offering this platform for all voices, but when the tone of the discussion gets nasty or strays off topic, we believe many people choose not to participate. Xpress editors are determined to moderate comments to ensure a constructive interchange is maintained. All comments judged not to be in keeping with the spirit of civil discourse will be removed and repeat violators will be banned. See here for our terms of service. Thank you for being part of this effort to promote respectful discussion.

One thought on “TDA anticipates 33% drop in occupancy tax revenues for FY25

  1. Voirdire

    the problem is that there is no off button for these folks at the Buncombe County Tourism Development Authority ..so the Helene imposed pause is probably not such a bad thing for the majority of the inhabitants of Asheville and its surrounding communities. And although the BCTDA is completely oblivious to it… the everyday inhabitants of towns and cities seasonally/ annually inundated by mass tourism around the globe have had enough of it. Personally, if I never witness downtown Asheville completely overwhelmed by hordes of tourists spilling off the sidewalks like I did one Saturday evening a couple of summers ago, I’ll have a much better remainder of the rest of my life. just saying.

Leave a Reply

To leave a reply you may Login with your Mountain Xpress account, connect socially or enter your name and e-mail. Your e-mail address will not be published. All fields are required.