The Napa Valley’s most tourist-dependent town expects a decline in hotel tax revenue in the wake of the North Bay wildfires – but not as much as may have been feared.
Yountville’s steady upward march in room tax funds – the source of two-thirds of its general-fund budget – is forecast to end in the 2017-18 fiscal year. Estimated proceeds from the 12.5 percent tax charged to overnight guests should total $6.8 million in the year ending July 1, down from the $7.1 million tally of 2016-17, town staff said during a budget preview to the Town Council on Tuesday.
A growing number of high-end resorts and lodgings charging hundreds of dollars per night have bolstered Yountville’s reputation as a luxurious wine-country hideaway while pushing the town’s share of hotel-driven revenue to one of the highest levels in California. But the risks of such a dependence on overnight guests were laid bare after the Oct. 8 eruption of wildfires across Napa and Sonoma counties, where the immediate threats of death and destruction were followed by the lingering economic threat of aborted vacations and travel.
In the first three months after the fires, lodgings across Napa County totaled $17 million in lost revenue, leaving revenue for all of 2017 virtually flat compared to the year before, Visit Napa Valley reported in late January. The impact was heaviest immediately after the disaster, as year-over-year revenue for October plunged 36 percent, average room rates 19 percent and occupancy 22 percent, according to figures from the STR Inc. research firm.
In Yountville, the aftermath of the wildfires – as well as some hotel rooms being closed for renovations during the winter off-peak season – will hold down bed tax funds, but such transient occupancy taxes still should reach levels similar to those in 2015-16, according to the memo for council members.
Despite the apparent post-fire business recovery of local hotels, Town Manager Steve Rogers urged caution in forecasting when tax revenues fully bounce back – particularly with many rooms unavailable during winter renovations.
“We have the fire, but we also have the issue of what if Villagio takes two months longer to reopen? Because Villagio is 112 rooms of our 450,” he told council members. “As we go into March and April and May, if they’re not back online, we could start having a different scenario.”
Meanwhile, Yountville staff also forecast a slight increase from $1.27 million to $1.29 million in another tourism-driven funding source – sales taxes – with opening or renovation of several eateries and wine tasting rooms. Most prominent among them is the reopening of The French Laundry, which temporarily suspended lunch service during a renovation and is expected to build back its visitor count with a return to its full menu.
Recent openings in town include Platform 8, Southside Café, and Ottimo. Also under development in Yountville is an expansion of the Ma(i)sonry tasting room, whose owner, the Restoration Hardware home furnishings company, will pair it with a new three-meal-a-day restaurant, RH Gallery.
Taxes on hotel rooms, sales and property together supply 86 percent of Yountville’s general fund, which covers the town’s everyday expenses.