Tourists Flocking to the U.S. West Give Hotel Bed Tax Revenues a Big Boost

Two years after the pandemic, a handful of U.S. tourism boards are reporting soaring lodging tax collections for fiscal year 2021. 

On this comeback list are destinations in the West that are gateways to national and state parks, such as Montana and southwest Utah, where demand spikes began as early as summer 2020. But drive markets that didn’t shut down during Covid also benefited, like Arkansas, along with pockets of rural destinations across the U.S. 

The double-digit growth in bed taxes currently ranges from 20 percent at the overall state level to 73 percent over 2019 levels for rural destinations that have shared data thus far, including Greater Zion, thus establishing new records. Lodging tax collections have also continued to soar into this first quarter of the year. 

It's a remarkable turnaround from March 2020, when destination management organizations (DMO) saw their primary source of revenue, the bed tax, vanish along with tourists. And it all points to three consumer trends that show little sign of slowing: leisure travel, outdoor recreation, and rural road trips.

U.S. Lodging Tax Collections ($ Millions) FY 2019FY 2021Montana$35$39.48Utah$68$66.40Greater Zion$9.00$15.00South Dakota$28.90$33.30Arkansas$17.80$20.90Muskegon, MI$1.19$1.25Nebraska$6.04$5.92

“Between Memorial Day and Labor Day, we have some really big jumps in 2021; we were in the summer 23 percent higher than we would have expected,” said Jeremy Sage, economist and interim director of the institute for tourism and recreation research at the University of Montana. 

The volume of visitors coming into the state as well as hotel average daily rates that were up substantially, contributed to this surge, Sage added. With the Canadian border now open, the drive visitation level is likely to go up.

In Wyoming, Jackson Hole’s lodging tax hit well above historical records for every month since October 2020, according to the Jackson Hole Travel and Tourism Board’s annual report. 

The uptick in visitors is so large it’s spreading the lodging to surrounding towns as a result of the town's proximity to Grand Teton National Park and Yellowstone.

“I think to date, we’ve surpassed by 30 percent the previous high watermark. I certainly think that that is a result of the pandemic, accelerating the collections and also Jackson has an unusua