New research shows coronavirus continues to devastate restaurant industry
New research from the National Restaurant Association indicates that the restaurant industry has lost $120 billion in sales during the last three months due to the impact of coronavirus in the United States. State mandated stay-at-home policies and forced closures of restaurant dining rooms resulted in losses of $30 billion in March, $50 billion in April, and another $40 billion in May.
The latest operator survey conducted by the NRA drew more than 3,800 responses, illustrating the extensive damage to restaurant businesses since the outbreak began. It found that the restaurant industry, which experienced the most significant sales and job losses of any industry in the country in the first quarter of 2020, expects to lose $240 billion by the year-end.
New report by Oxford Economics with state-by-state TLT revenue breakdown
As a result of the sharp drop in travel demand from COVID-19, state and local tax revenue from hotel operations will drop by $16.8 billion in 2020, according to a new report by Oxford Economics released today by the American Hotel & Lodging Association (AHLA).
Hotels have long served as an economic engine for communities of all sizes, from major cities, to beach resorts, to small towns off the interstate—supporting job creation, small business opportunities and economic activity in states and localities where they operate. Hotels also generate significant tax revenue for states and local governments to fund a wide array of government services. In 2018, the hotel industry directly generated nearly $40 billion in state and local tax revenue across the country.
Oregon is expected to see a total state and local tax revenue loss of $171.7 million. Download the AHLA/Oxford Economic Report of the state-by-state breakdown for tax revenue impact and revenue loss. These tax impacts represent the direct tax revenue decrease from the severe drop in hotel occupancy, including occupancy, sales, and gaming taxes. These figures do not include the potential, significant, knock-on effects on property taxes supported by hotels (nearly $9B).
At their most recent meeting, the Oregon Restaurant & Lodging Association (ORLA) Board of Directors voted unanimously (with 1 abstention) to support a legislative bill which will originate from Governor Brown’s office in support of a permanent 1.8% statewide lodging tax rate during the 2020 Oregon Legislative Session. Revenue raised by the statewide lodging tax is invested in Travel Oregon’s efforts to strengthen the economic impact of our state’s tourism industry. Oregon’s statewide lodging tax is currently collected at a rate of 1.8% with a reduction in the rate scheduled to take effect as of July 1, 2020 to a permanent rate of 1.5%.
“We appreciate Governor Brown’s proactive outreach to meet with ORLA and some of our key lodging stakeholders in person to discuss the merits of keeping the statewide lodging tax rate at 1.8% permanently,” said Jason Brandt, President & CEO of ORLA. “Our goals for lodging tax rate structures in Oregon are two-fold – protecting all statewide lodging tax resources to create return on investment for the industry through the efforts of Travel Oregon and protecting local lodging tax reforms passed in the 2003 Legislative Session.”
Oregon continues to experience healthy growth in tourism spending logging our ninth consecutive year of industry growth in 2018. Compared to 2017, visitor spending was up 4.2% reaching a record $12.3 billion. Industry employment was also up year over year by 2.9% to approximately 115,400. Year over year, hotel room revenue increased by 4.4% as well.
“We have seen firsthand what strategic investments in tourism promotion can do when industry tax dollars are put to their most effective use,” said Brandt. “With many other competing priorities in the Capitol, it is essential the association protects the appropriate use of these dollars at both the local and state levels. The economic impacts we are seeing are significant not just for our industry but for our public sector partners as well.”
The U.S. Travel Association tracks statewide economic impact throughout the country and assists states in quantifying the value of year over year tourism growth. The most recently available data notates Oregon’s tourism growth at 5.3% when comparing 2016 to 2017, further substantiating the value of healthy tourism growth for Oregon’s public sector. From 2016 to 2017, Oregon experienced visitor spending growth of $652 million. That increase in spending and associated payroll income tax increases equates to as many as 410 firefighter positions, 380 police officer positions, or 380 teacher positions.
ORLA continues to focus on the protection of local lodging tax dollars for tourism promotion and tourism related facilities in addition to support given to Governor Brown’s upcoming legislative bill for the statewide resource. Oregon’s local lodging tax structure can be complicated with over 110 different city and county jurisdictions collecting a transient lodging tax outside of the 1.8% statewide tax. Important guidelines have been in place for the past 16 years for how local lodging tax dollars can be spent. To clarify those parameters, ORLA recently produced a new instructional video to assist all stakeholders and the general public in better understanding the rules which govern local lodging tax resources.
The new video specific to local lodging taxes (not to be confused with Oregon’s 1.8% statewide lodging tax) can be viewed here:
For more information about the Oregon Restaurant & Lodging Association’s policies on transient lodging taxes, please reach out to Greg Astley, ORLA’s Director of Government Affairs, at email@example.com via email.
On June 30, the Oregon Legislature officially came to a close. The 2019 session was marked by hyper-partisanship, two walkouts by Senate Republicans and dozens of new laws affecting the hospitality industry. Several key bills will affect how restaurants and lodging properties conduct business in the near future. Watch for ORLA's full recap of the session coming soon to the Advocacy page.
Here are a few quick updates:
HB 2005 – Paid Family and Medical Leave
SB 90 – Plastic Straws on request
Plastic straws in restaurants are now only available “on request” unless a customer is using the drive through and then employees may ask the customer if they would like a straw. Effective as of June 13, 2019.
HB 2509 – Plastic Bag Ban
Single use disposable plastic bags are banned from restaurants and grocery stores. Retailers may charge for paper bags. Effective date is January 1, 2020. Read HB 2509 Enrolled.
HB 3137 – Collection of local lodging taxes by Oregon Department of Revenue
Provides that transient lodging tax becomes due when occupancy of transient lodging with respect to which tax is imposed ends. This bill will help eliminate the issue of properties collecting and remitting the lodging tax to the state and then if a customer cancels, having to go back and recover the lodging tax paid in order to refund the customer the tax. Effective date January 1, 2020.
SB 248 – Increase in certain fees charged by OLCC
Fees for OLCC licenses will double effective July 1, 2019. Negotiated separately from this bill is the option to renew an OLCC alcohol license every two years instead of annually.
Oregon’s lodging tax investments could be drastically reduced if Senate Bill 595 passes.
If successful, SB 595 would eradicate the critical lodging tax reforms of 2003 by taking 30% of our industry’s 70% of any new or increased lodging tax implemented since July 2, 2003, and allowing local governments to redirect those funds for “affordable workforce housing” projects. The result would allow only 40% of new or increased local lodging taxes to be protected for tourism promotion and tourism-related facilities.
ORLA was at the table in November supporting Measure 102, giving communities across Oregon greater flexibility to create the workforce housing they need. ORLA continues to be willing and ready to engage in productive conversations about alternative solutions that can benefit communities and foster economic development without targeting one industry.
The Senate Committee on Housing held a public hearing for SB 595 on February 18. We need lodging industry members to take action now!
Email members of the Senate Committee on Housing and tell them how important the 70% protections are to growing Oregon’s tourism economy. Urge them to consider alternatives to workforce housing initiatives.
• Senator Shemia Fagan, Chair: firstname.lastname@example.org
• Senator Dallas Heard, Vice-Chair: email@example.com
• Senator Jeff Golden, Member: firstname.lastname@example.org
• Senator Tim Knopp, Member: email@example.com
• Senator Laurie Monnes Anderson, Member: firstname.lastname@example.org
Read more about the bills ORLA is engaged and/or tracking this session at OregonRLA.org/billtracking.
If you have any questions on this bill, please reach out to me via email at JBrandt@OregonRLA.org or call me directly at 503.302.5060.
Protecting Our Industry
During this session ORLA will be tracking several bills and engaging on those particularly to the hospitality industry. Members are encouraged to stay informed and engaged on the issues by subscribing to ORLA communications. If you have any questions, contact Greg Astley, Director of Government Affairs, at Astley@OregonRLA.org.
ORLA Advocacy: Promoting and Advocating for Tourism Investment Plans
[updated 12.9.19] ORLA continues to help protect lodging tax revenues by opposing legislative bills that would have allowed cities to use these revenues for purposes other than intended. Read the latest here:
HB 2267, from Oregon’s 2003 Legislative Session, was designed to raise revenue for the promotion of tourism in Oregon. First, the bill instituted a 1 percent statewide lodging tax on all lodging properties in Oregon. This money was dedicated to the promotion of tourism through Travel Oregon, acting as Oregon’s tourism department. Second, the bill required any local governments with a lodging tax in place to determine what percentage was currently being used for tourism promotion and maintain at least that level in the future. The percentage is not allowed to decrease. The bill also required any local government that institutes a local lodging tax in the future to use at least 70 percent of the new revenue for tourism promotion. No more than 30 percent of the new revenue can be used for general funds or other non-tourism functions.
The Oregon Restaurant & Lodging Association has worked with Local governments to clarify collection laws around Online Travel Companies. This should bring in millions of dollars more annually for tourism promotion.
ORLA is also involved in efforts to attract events to Oregon that bring visitors and promote the state. Some examples in recent history were helping to pass legislation that added money to improve college athletic programs and allowing for NCAA March Madness games to be played in Oregon, and protecting tax credit programs that bring film and video production to Oregon.
ORLA must ensure that these state statutes remain in place. Any lodging taxes, state or local, need to bring travelers and businesses to Oregon. All retail businesses profit from increased travel; additionally, local government must be encouraged to keep promotional dollars directed to these efforts. Finally, there are always opportunities to attract more events like feature films, major sporting events, concert venues, and wine tours that benefit the industry as a whole. ORLA will work to enhance these efforts, which bring people to Oregon and encourage Oregonians to travel more in and around the state.
Oregon Restaurant & Lodging Association supports current laws that protect lodging tax dollars going to tourism promotion and tax credits that encourage film and video attraction to Oregon. ORLA believes in protecting the dedicated tourism funds to ensure they continue to be allocated to tourism promotion at the state and local levels. This effort will benefit all retail businesses and local economies throughout our state.
79th Legislative Assembly Garnered Real Outcomes
The “short” Oregon Legislative session officially ended March 3, 2018. The Government Affairs team at ORLA worked diligently to pass several pieces of good legislation and prevent more damaging laws from passing. Working collaboratively with other groups and organizations, some of whom we have not partnered with before, ORLA finished up a very successful short session on behalf of our industry partners.
Here is an update on a few of the bills ORLA was working on and tracking:
HB 4120A – Relating To Short-Term Intermediary Lodging Tax Payments
In 2003, the Tourism Investment Program (HB 2267) was adopted, establishing the statutory framework for the transient lodging tax program. Third-party intermediaries have always played a role in short-term lodging and that role has increased as new short-term lodging models emerged in the marketplace and consumers more frequently turned to multiple online platforms to compare prices and make their vacation plans.
In 2013, we believe the Legislature passed bills intending to treat short-term rental intermediaries the same as traditional hotels, motels and other lodging establishments who pay the transient lodging tax to the state, counties and cities.
Unfortunately, some of these third-party short-term rental intermediaries have refused to pay taxes unless a voluntary collection agreement is signed and even then, the agreement stipulates no sharing of data between the short-term rental intermediary and the city or county. Cannon Beach recently rejected a voluntary collection agreement due to a lack of transparency and the inability to properly audit, thereby ensuring they were receiving the correct amount of transient lodging tax.
The need to statutorily clarify that short-term rental intermediaries are responsible for collecting and remitting the transient lodging taxes was reinforced in 2016 by the HB 4146 Work Group and as a result, HB 2049 was introduced in the 2017 session.
This session, ORLA worked with the League of Oregon Cities and State Representative Pam Marsh (D–Ashland) to help introduce HB 4120A, which requires short-term intermediaries like Airbnb to collect lodging taxes when they’re already collecting the lodging stay payment. After passing out of committee, HB 4120A was supported widely through a bipartisan vote (52-8) in the State House of Representatives. The bill then moved over to the Senate and to the Senate Finance and Revenue Committee where State Senator Mark Hass (D-Beaverton) led the committee in support of a 5-0 vote recommending passage to the rest of the Senate. Another member of the Senate Committee, State Senator Alan DeBoer (R-Ashland), carried the bill on the Senate floor to a 26-1 vote for a major hospitality win. The bill is now headed to the Governor’s desk for signing.
HB 4088 – Relating To Music Licensing
ORLA, working in partnership with the Oregon Winegrowers and with the support of music licensing company BMI, introduced HB 4088 to help regulate how music licensing companies can engage lodging and restaurant operators about the playing and/or performing of copyrighted music.
The bill prohibits certain activities by, and specifies additional duties for, performing rights societies in notifying business proprietors concerning proprietors' duties with respect to performing copyrighted musical works and in negotiating contracts for paying royalties for performing copyrighted musical works.
Essentially, the bill states:
A performing rights society may not enter into, or offer to enter into, a contract under the terms of which a proprietor must pay royalties unless the performing rights society, at least 72 hours before entering into the contract, provides to the proprietor or an employee of the proprietor:
(a) Information, at the proprietor’s request, as to whether specific copyrighted musical works are in the repertoire of the performing rights society;
(b) An opportunity to review, electronically and free of charge, the most current available list of the performing rights society’s members or affiliates, and the most current available list of the musical works that the performing rights society licenses, in a format that the proprietor can search by title, publisher and performing artist; and
(c) A schedule of rates and terms under which the performing rights society will collect royalties under the contract, including the terms of any sliding scale or schedule for any increase or decrease of the rates for the duration of the contract.
Further, a performing rights society or any agent or employee of a performing rights society may not:
(1) Enter onto the premises of a proprietor’s business to discuss or inquire about a contract under which the proprietor will pay royalties without first:
(a) Providing identification to the proprietor or the proprietor’s employees; and
(b) Specifying the purpose of the entry;
(2) Use abusive, profane or obscene language when communicating with a proprietor or the proprietor’s employees;
(3) Communicate with a proprietor or the proprietor’s employees in person or by telephone in locations or at times other than in the proprietor’s place of business during regular business hours unless the proprietor’s place of business is not open to the public and the proprietor or an employee, agent or representative of the proprietor agrees to communicate in a different location or at a different time;
(4) Communicate with a proprietor or the proprietor’s employees after receiving notice from the proprietor’s attorney that the performing rights society or an agent or employee of the performing rights society must address communications to the proprietor’s attorney, except that a performing rights society or an agent or employee of the performing rights society may communicate directly with the proprietor or the proprietor’s employees if the attorney fails to respond to communications for a period of 60 days or more;
(5) Engage in any coercive conduct, act or practice that is substantially disruptive to a proprietor’s
(6) Use or attempt to use any unfair or deceptive act or practice in negotiating with a proprietor
The bill was passed out of the House Business and Labor Committee and was carried on the House floor by State Representative Denyc Boles (R-Salem), passing 59-0 with one excused. On the Senate side, after passing out of the Senate Business and Transportation Committee, it was carried by State Senator Rod Monroe (D-Portland). It then passed the Senate 29-0 with one excused. The bill is now awaiting a signature by the Governor.
HB 4054 A – Relating to the Removal of Personal Property (i.e., homeless camps)
Although not a partner on this bill, ORLA was supportive of its passage.
The bill which specifically allows the Department of Transportation to enter into an intergovernmental agreement with cities with a population of 500,000 or greater (i.e., Portland) creates an avenue for the city to continue their important work in cleaning up homeless camps regardless of whether the land is owned by the city or state.
The bill cuts down the number of days from 22 to 2 for notification purposes.
This bill passed 58-0 in the House with two excused and 27-0 in the Senate with three excused. It is now headed to the Governor’s desk for signing.