State hotel and meal tax collection suggests industry on the rebound 

PROVIDENCE – After years of middling performance compared to pre-pandemic numbers, state revenue officials on Thursday said tax collections on hospitality-related services have mostly rebounded from pandemic lows, evidence of the industry’s ongoing recovery.

A report issued Aug. 10 by the R.I. Department of Revenue’s Office of Revenue Analysis shows spending in the hospitality sector on a statewide basis has bounced back and that Rhode Island has now recovered 94% of jobs that was lost during the pandemic in hotel and food services, amounting to more than 49,000 workers and placing it in line with neighboring Massachusetts and Connecticut, which recovered 88% and 92%, respectively.

According to the U.S. Bureau of Labor Statistics, Rhode Island had about 52,000 private sector employees working in the accommodations and food services sector in 2018, dipping to a low of 39,000 in 2020.

Titled “How Have Rhode Island Hotels and Restaurants Performed Post-Pandemic?” the report used monthly inflation-adjusted data between July 2018 and April 2023. The analysis states that while the pandemic brought Rhode Island’s tourism sector to “a standstill in 2020, hotels, restaurants, and bars have since clawed back revenue as people became more comfortable with attending public events and patronizing local businesses.” 

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The state collected $28.3 million in meal and beverage tax revenue in fiscal 2019, while tax revenue for fiscal 2022 totaled $32.5 million. Hotel tax collections from the state’s 1% local hotel tax reached $5.8 million in fiscal 2022, up from $5.1 million in fiscal 2019. 

Statewide inflation-adjusted fiscal 2022 hotel tax revenue exceeded pre-pandemic revenue by 4% and jumped 32% in Newport during that time. 

However, Providence still trails fiscal 2019 hotel tax revenue levels by 20%, according to the report, which cited the decline in business travel that has yet to fully rebound. The city accounted for approximately $1 million in local hotel tax revenue in fiscal 2022, down from $1.3 million in 2019.

The analysis said a short-term revenue spike between 2021 and 2022, when many consumers shifted from traditional hotels to online platforms, “does not appear to be a trend but simply a recovery period from the restrictions of the pandemic.”

While online hosting platforms such as Airbnb have gained more traction in recent years, they constitute less than 20% of all hotel revenue across the state. 

Christopher Allen is a PBN staff writer. You may contact him at Allen@PBN.com.