Source: Lake Geneva Regional News

Room occupancy increases at Abbey
Village collects $24,000 more in room tax revenue

by Rob Ireland

February 17, 2011

Fontana — It could be a sign the economy is improving, or the result of good marketing and sales techniques. Or maybe it is a combination of the two.

But, anyway you look at it, the Abbey Resort saw an increase in room occupancy in 2010, collecting more than $5 million in room rental revenue alone.

The increase means the municipality collected more money in room taxes, which eases the tax burden on property owners.

Village Administrator Kelly Hayden said a 5-percent room tax is added to the cost of each rented room. In 2010, the village collected $271,555 in the tax, which is a $24,530 increase from the previous year. Although the room tax revenue increased, it hasn’t reached pre-recession levels of 2007 and 2008.

Why did the Abbey Resort see an increase in room tax revenues and occupancy from 2009 to 2010?

Abbey Resort Marketing Director Allen Anderson said part of the increase can be attributed to improvements in the economy. However, he said the resort has implemented aggressive marketing and sales techniques to attract more customers. It also has worked with the Lake Geneva Area Convention and Visitors Bureau to bring more clients to the resort.

Anderson pointed out that revenues collected by room rentals is only a portion of the Abbey’s revenue stream, which includes a “destination spa” and restaurants.

However, without occupied rooms the Abbey won’t earn as much money from its other amenities.

Part of the resorts struggles in 2009 could be attributed to a drop in corporate outings, which was experienced nationwide.

“Group corporate outings have fallen pray to what we call in the industry the AIG syndrome,” Anderson said. After the federal government bailed out AIG in 2008, the insurance company was criticized for sending employees to a California resort for spa treatments, banquets and golf outings.

Anderson said the resort has seen a resurgence of corporate outings in the previous five to six months, but in the past year it has focused on other groups and individuals, who visit the resort.

As the corporate outings declined, Anderson said the resorts targeted SMERF cliental. SMERFs an industry term for Social, Military, Educational, Religious or Fraternal groups, are groups that don’t typically spend as much as corporate customers.

However, the Abbey made efforts to attract SMERF groups to the resort.

To increase individual stays the resort offered more midweek discounts. I also offered incentives to stay at the Abbey longer. Anderson said the average stay for a visitor to Lake Geneva is 1.6 to 1.8 days.

“Lake Geneva is more of a getaway than a destination vacation,” he said. “Offering attractive midweek rates is a way to encourage longer stays.”

The Abbey Resort joined the Lake Geneva Area Convention and Visitors Bureau, which Anderson said helps promote the resort.

By working with the CVB, the Abbey received a marketing boost and is listed as a place to stay in Lake Geneva, although the resort is located in Fontana.

At the end of 2010, Lake Lawn Resort in Delavan, which was a competitor with the Abbey, closed its doors. Anderson said that didn’t have a major impact on the Abbey’s 2010 revenues.

“It could have a positive impact, although not a windfall,” he said.

Even with one major resort closing its doors, the Abbey still faces competition from resorts locally and regionally.

“We recognize that there are other great resorts in the area. We make no bones about it,” he said.

Anderson said based on booking for events, the resort is anticipating more growth in 2011.

“Our prognosis for 2011 is a tremendous improvement,” he said.

Room taxes

A successful Abbey Resort could trickle in additional revenue for other area restaurants and businesses, but it also could save property owners money by bringing in the extra room tax revenues.

In 2010, Hayden said the village budgeted $290,000 for room tax revenues. Hayden said the Abbey Resort isn’t the only entity to pay room tax revenue, but is by far the largest contributor to it.

Although there was an increase in the Abbey’s room tax revenue, Hayden said the village still fell about $2,000 short of what it budgeted for.

The room tax revenue is an important part of the village’s annual budget. In fact, it is the second largest non-levy revenue the village collects. The largest non-levy revenue the village collects is about $378,000 in State Transportation Aide.

In 2011, Hayden said the village projects collecting a $273,000 in room-tax revenue, which she said is a conservative estimate.

“We try to operate a little more like a business, we try to offset the levy, with non-levy revenue,” Hayden said. “We operate as efficiently as possible and bring in as much revenue as possible.”