To keep up with downtown’s expansion, the past five years have seen three major hotels projects built in the City of Ithaca.
The downtown Marriott, and the Holiday Inn Express have opened to increase the number of hotel rooms by 138. They were joined last year by the Canopy by Hilton, which added an additional 131 rooms to bring that total to 269 rooms. Combined with the existing 170 rooms from Hotel Ithaca and 104 from the Hilton Garden, there are a total of 543 hotel rooms in downtown Ithaca.
Even so, as companies like Airbnb have grown in popularity, the local hotel industry has taken a hit. Some local hotel owners have called the growing number of non-traditional hotels the “largest hotel in Tompkins County.” Peggy Coleman, executive director of Visit Ithaca, said there has been a decline in the average daily rate of lodging. She said the same pie is being spread across more plates.
“We’re seeing an impact on the traditional bed and breakfasts and innkeepers, where some of the B and Bs have closed,” Coleman said. “They’re definitely not selling out for graduation weekends and at other times throughout the year. That is one of the impacts. One of the other impacts on the larger properties, relating to room tax is, in this county, at two levels. For properties with 11 rooms or more, they collect a 5 percent occupancy tax from the guests. For properties with 10 rooms or less they collect 3 percent. [There is] a voluntary agreement, with AirBnB only, to collect the 3 percent occupancy tax.”
As more Airbnb hosts come into the market, more visitors are starting to use those platforms, according to Coleman. With more people using those platforms, there has been a decrease in the room tax revenue for the hotels at the 5 percent level, which consists of a large inventory of rooms in the county. Specifically, according to the Smith Travel Research Report, hotels at the 5 percent level (11 rooms or more) paid $2,567,747 in 2018 to Tompkins County. In 2019, though, the county saw a decline in revenue from hotels of $76,785 to $2,490,962.
Despite this, there has been a growth in the 3 percent collections, however, which normally impact Airbnb’s, other homesharing services or actual bed-and-breakfasts, indicating that they are cutting into the market. Over the same time period, collections from three-percent establishments rose from $312,890 to $357,782.
For 2019, according to the Smith Travel Research Report, the room tax revenue has slowed despite the addition of the new Canopy by Hilton. In 2018, the total room tax revenue, from both hotels and Airbnbs, was $2,924,581. In 2019, growth slowed to only $2,929,333. That’s a 0.2% increase as compared to a 4 percent jump from 2017-2018.
“One of the things we’re always looking at is ways to drive new business here,” Coleman said. “Weekends are very popular but there are only 52 weekends in a year. Most of those are already full because of big events like graduation. That Sunday through Thursday business is an opportunity for us to focus on. [...] One really big opportunity is for the shared lodging platforms to form an alliance with the traditional bed and breakfasts. There are some people who are looking for that experience and then there are some who want the more anonymous way of staying. I think they can help each other in that the traditional innkeepers need to go through quite a bit of traditional training, as far as raising the hospitality level that the guests experience. [...] There are referral methods they could refer to each other so that if there are Airbnb hosts in a community and they are full, and it’s a busy weekend, it makes more sense to keep them here in Ithaca/Tompkins County than have those very important visitors and their very important visitor dollars leave to Cortland.”
One hope is for the planned new conference center to provide a significant boon for the larger hotels in the area. The center, part of the Green Street Garage redevelopment project, would be 49,000 sq ft. of ballroom space, significantly larger than other venues in the immediate area. With conferences potentially taking place during the week, the center could provide a venue for the Sunday-Thursday boost Coleman referenced. In the past, Coleman said, there has been interest in coming to Ithaca for a conference it dissipates since there is not an appropriate meeting space to hold them.
In Coleman’s mind, a conference center would have a resounding effect in the local economy as it would boost business at restaurants, retailers, rental car companies, banquet staff and would increase use at the airport. Coleman said people should consider the employees of those hotels who could face layoffs if hotel business dries up around the county. If the conference center doesn’t go through, the decline in hotel room tax revenue could continue.
“We’re not seeing new corporate business increasing demand,” Coleman said. “We could—with the new opportunities at the airport with direct flights into Washington, D.C—we’d have the potential to try to look for small meetings. But, again, that challenge if it’s a small meeting, do they need to fly to Ithaca, New York. We are always looking to find those affinity groups that match what our community has to offer as well as the resources from our higher education communities. There really is not anything that could change that demand in the same manner and the same level as a conference center.”