Hospitality industry hit hard

Nowhere have the effects of COVID-19 dealt more of an economic blow than perhaps that of the hospitality industry.

Hotel owner Vic Patel, CEO and director of operations for Haven Management Services based in San Marcos, said he's more than concerned.

"A lot of people don't understand we're a service-industry city," Patel said. "Forty-three percent of revenues to the city comes from service, we're a tourism town, whether you like it or not."

The City of San Marcos has numbers to back up Patel's concerns.

Melissa Neel, assistant director of finance for the city, said the average sales tax revenue for the outlet malls, April-June, is approximately $770K a month, and that historical shopping trends show a spike during Easter.

"This is above average revenue that has been lost," Neel said. "Hotel occupancy has been forecasted between 2-5%. This is approximately $220K lost revenue per month April-June."

Neel said both revenue losses will affect the General Fund Budget (Outlet Malls) and Hotel Occupancy Tax funded budget (Hotels) for the current fiscal year

The city council passed an ordinance to help mitigate the pressure placed on the hotels on April 7 to waive late charges and interest charges that would otherwise be accrued under Section 78.103 of the San Marcos City Code.

But Patel, in a letter to the city, said that's not enough.

"The City of San Marcos, CVB and city council's response to the coronavirus outbreak for the hospitality industry is barely adequate," the letter read. "Waiving late fees for 3 months during this pandemic with historic 10% occupancy rates is just not enough. We understand the city faces many challenges and is trying to be helpful but does not go nearly far enough to support the vast majority of hospitality businesses who are in the eye of the storm."

Mayor Jane Hughson sympathized with Patel saying staff and council are working together to review the information provided to determine what additional opportunities may be feasible for small businesses.

"We appreciate the benefits of our local small businesses and the entrepreneurship that is a basic Texas principle," Hughson said. "The city has been working with both the San Marcos Chamber of Commerce and the Greater San Marcos Partnership assisting with resource opportunities, contacting businesses, and providing information on our websites detailing financial resources available to them, as well as what services they continue to offer to the community during this difficult time."

Patel, however, suggested the implementation of a plan the City of Buda has taken which is a Hotel Occupancy Tax Emergency Payment Deferral Forgiveness Program.

"The Buda City Council took measures at the March 20 city council meeting to defer hotel occupancy tax payments for March 20, and April 20, for 60 days with an effort to support all hotels in good standing with the City of Buda Hotel Occupancy Tax Fund," he said in his letter. "On April 7, the council voted to offer up to $5,000 in forgiveness for deferred hotel occupancy tax payments. This program has an aggregate of $45,000 available for hotel occupancy tax forgiveness."

Patel's request is as follows:

1. The City of San Marcos to enact a Hotel Occupancy Tax Emergency Payment Deferral and Forgiveness Program similar to the City of Buda. City of San Marcos to consider deferring all hotel occupancy tax payments for March 20, April 20, 2020, and May 20 for 90 days. The City of San Marcos should agree to revisit the hospitality Industries situation in late June to see if any additional extensions are needed.

2. City of San Marcos to consider decreasing energy per usage rates for 90 days. The City of San Marcos's utility rates is very high on average. Maybe there is a short-term solution for 90 days to help our hotels retain staff and stay in operation.

3. City of San Marcos to change the late penalty for City Hotel Occupancy tax payment to what the City of New Braunfels has enacted in January of 2020 permanently. (Haven Management Services) believes the City of New Braunfels is charging a $50. fee for late payment past the 21st of each month.

4. City of San Marcos to work with Hays County to keep 2020 Property tax rates 60% lower than 2019 on all hotel and accommodation establishments. (Haven Management Services) anticipates that the hotel and accommodation establishments will see a drop in revenue of 60% at a minimum due to the coronavirus outbreak. (Haven Management Services) understands that it will have to reassess the evaluations 6 months after the COVID-19 outbreak is over when it sees total damage compared to 2019. 5. City council to consider a moratorium for all new hotels or permits for 2-years on any new hotel development within the City of San Marcos city limits until Industry stabilizes.

But imposing a moratorium on new hotel permits, due to financial difficulties experienced in the industry, would not appear to be a justification allowed by the Texas Local Government Code.

The Texas Local Government Code is specific in the justifications for moratoriums on development. This usually requires evidence that the new development would cause overcapacity of municipal infrastructure (water, wastewater, etc.) or would be detrimental to the public health, safety and welfare in the affected geographical area.

San Marcos Area Chamber of Commerce President and CEO Jason Mock says his office is providing resources to the business community and is eager to help.

"These past few weeks haven't been the typical spring for San Marcos, the state of Texas, or our country. Our days are overwhelmed with new regulations, statistics and predictions from the local, state and federal government,” Mock said. “This pandemic has changed everything about the way we do business, interact with people and see the future. It also changed the way we, as a Chamber, communicate with our local business owners.

"We are in constant contact with our community, updating our website with new resources and are working to determine additional ways we can be supportive to our member businesses and organizations in this ever-evolving situation."