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Yountville braces for sharp drop in hotel revenues caused by coronavirus
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Yountville braces for sharp drop in hotel revenues caused by coronavirus

Yountville desolate

A tourist-free scene in the commercial center of Yountville on March 25.

As the Napa Valley town most reliant on hotel revenue, Yountville is planning to lean on millions in reserves to absorb the blow of the shuttered tourism economy.

Hotel room tax funds, which account for nearly two-thirds of general-fund revenue in the town of about 2,800 people, are expected to come in $1.8 million to $2.5 million below Yountville’s forecast of $7 million for the fiscal year ending June 30, Town Manager Steve Rogers said Monday.

The shortfall opened up as local hotels emptied amid a spike in COVID-19 infections in the Bay Area and across the U.S., leading California to impose a sweeping stay-home directive to slow the virus’ spread.

How steep the revenue slide becomes largely depends on how soon the pandemic abates enough to allow Napa County to relax its social distancing requirements for businesses to reopen, officials said.

“The variable is, do we see any activity in June?” said Rogers, pointing to the loss of about half the town’s projected room tax money in March and the expected elimination of that revenue source through May. Yountville has banked about $4.8 million in room tax since the fiscal year began in July 2019.

Of the county’s five cities, Yountville draws the largest share of its budget from hotel guests, with the majority of its $11.2 million general fund paid for by the 14% transient occupancy tax collected by hotel and bed-and-breakfast operators.

Rogers said such extreme reliance on tourist dollars has led Yountville to accumulate funds as a backstop against recession, natural disasters and other events that can abruptly put a stop to leisure travel. The town holds $2 million in an emergency reserve, another $2 million in a revenue stabilization fund, and also holds $2.8 million in unassigned fund balances elsewhere in the town budget.

“We will do budget adjustments to get through this fiscal year and build a budget for next,” he said, adding that town departments also will look for cost-saving measures for the rest of this fiscal year. “We’re fortunate we’ve had the discipline to put the money aside.”

Rogers said Yountville will advocate for an increase in direct aid to local governments as a part of future federal stimulus packages designed to soften the pandemic’s economic blow. While the federal $2 trillion package approved by Congress last week includes $339.8 billion in aid to state and local governments, only $5 billion is in the form of block grants that cities can use for a wide range of purposes, according to National Public Radio.

With hotels left idle by the pandemic and the resulting shelter-at-home orders, much of Yountville’s remaining business revenue is coming from restaurants offering carryout and delivery service while table service remains banned. Seventeen local eateries have stayed open through the shutdown, including establishments like Brix and Mustards Grill north of town, according to Whitney Diver McEvoy, president and chief executive of the Yountville Chamber of Commerce.

Editor’s Note: Because of the health implications of the COVID-19 virus, this article is being made available free to all online readers. If you’d like to join us in supporting the mission of local journalism, please visit napavalleyregister.com/members/join/.

You can reach Howard Yune at 707-256-2214 or hyune@napanews.com

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Public Safety Reporter

Howard Yune covers public safety for the Napa Valley Register. He has been a reporter and photographer for the Register since 2011, and previously wrote for the Marysville Appeal-Democrat, Anaheim Bulletin and Coos Bay (Oregon) World.

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