Missoula hotel fee increased to $4 per nightly stay
Martin Kidston
(Missoula Current) While occupancy rates across Missoula's network of hotels has fallen, the revenue generated by hotel nights still injects nearly $80 million into the local economy each year.
On Monday night, the Missoula City Council voted 8-1 to bump up the fee on those hotel stays from $2 per night to $4, saying the resulting revenue helps bolster the city's tourism industry through marketing and events.
The fee is added to the cost of a nightly room stay and is the first increase since 2013.
“All of our costs we use these dollars for have increased,” said Dan Monahan, president of the Missoula Tourism Business Improvement District's board of directors. “This is something we did a lot of research on before bringing this recommendation to the board.”
The Tourism Business Improvement District (TBID) was established in 2010 and included just 10 hotels at the time. In 2019, however, the district was expanded citywide, bringing dozens of new hotels into fee boundary.
Since 2017, more than 62,000 hotel rooms have been added to the local market, according to TBID. Of the $489 million generated annually from tourism in Missoula, hotels account for $76 million – second only to fuel, which generates $112 million.
“The impact of tourism in Missoula is just massive,” said Barb Neilan, executive director of Destination Missoula and the TBID. “We're looking at trying to create year-round demand.”
Members of City Council largely backed the fee increase. The revenue generated by the fee supports a wide range of activities ranging from promotion to travel. The fees helped recruit the state Class A basketball tournament to Missoula and have aided in expanding air service at Missoula Montana Airport through a revenue guarantee.
The tourism that results supports a wide range of local businesses.
“It's very rare when there's any ability to collect revenue that's not straight from taxpayers,” said council member Mike Nugent. “This is one of the rare instances in state law that allows for this kind of thing to be created – to allow the tourism board to collect a fee from tourists staying in hotels that supports certain functions related to business and tourism.”
While tourism remains a significant piece of the local economy, the vacancy rate at Missoula's hotels has been soft. The vacancy rate in 2017 was more than 64%, but it has since fallen to roughly 53%.
“There's a lot of factors to that. The economy is one of them. The hoteliers and business people are very, very concerned,” said Neilan. “We've also seen in the last few months a significant loss in our meetings and conferences. We're concerned about what this year is going to turn out like. We just don't know what to expect.”
The tourism industry has established a plan intended to address the decline in room stays. But not all council members supported the fee increase.
“This is not just going to increase the fee for out-of-state folks,” said council member Sandra Vasecka. “A lot of instate families and residents do use these hotels. It's going to make Missoula overly priced.”
Billings and Kalispell have already raised their nightly room fee to $4 while other cities, including Helena, Bozeman and Great Falls are discussing it, according to TBID.