La Plata County saw a significant increase in revenue from a tax on hotels and vacation rentals in 2020, a likely result of more tourists visiting Southwest Colorado amid the COVID-19 pandemic.
La Plata County spokeswoman Megan Graham said the county had budgeted for an estimated $370,000 in revenues from the lodgers tax, based on revenue from the past few years.
Although the onset of the COVID-19 pandemic in March caused a screeching halt in travel in early spring, tourism picked up beyond expectations through the summer.
As a result, La Plata County received nearly $574,000 in revenue from the lodgers tax, a 55% increase from projections.
“The lodgers tax was a huge anomaly last year because of COVID,” Graham said. “We were 55% ahead of projections, which is crazy.”
La Plata County receives lodgers tax from hotels and vacation rentals both within city limits and out in the county, though at a lower tax rate than collected by the city of Durango. The county’s rate is 1.9%, and the city’s rate is 2%.
Graham said the county hired a contractor a few years ago to help track down all the vacation rentals in the county, such as Airbnbs, and conduct outreach to inform property owners about tax obligations.
About 700 units were identified, Graham said.
Though vacation rentals are required to pay the lodgers tax, as well as the sales tax, currently there is no mechanism in place to ensure compliance, Graham said.
The Colorado Legislature last year passed a new law that allows counties to license rentals.
All of the lodgers tax collected by La Plata County is required to go to the Durango Area Tourism Office to help promote tourism in the area, according to state law.
The city of Durango actually saw a decrease in lodgers tax revenue in 2020, according to a city report. Annually since 2016, the lodgers tax had collected more than $1 million in revenue for the city.
In 2020, however, the city collected around $730,800 – about 30% less than 2019.
Rachel Brown, executive director of DATO, speculated the city’s drop in lodgers tax revenue, and the county’s bump, may have also been COVID-19 driven as more people sought remote vacation stays, rather than ones downtown.
Still, DATO’s budget was on track despite the pandemic, Brown said, as both the city of Durango and La Plata County pledged to deliver amounts promised before the COVID-19 outbreak.
“It goes to show they realize tourism would be a tool for economic recovery,” she said. “I think it definitely has been and continues to be.”
Brown said Southwest Colorado was uniquely positioned to attract tourists amid the pandemic, mostly because of its remote, rural setting away from urban areas, and the plentiful options for activities outdoors that allow for social distancing.
In 2020, the tourism office took a “soft approach” to attracting visitors. Instead of messaging for people to book their stay now, Brown said the office put out ads that said, “Keep dreaming about Durango” or “Plan your trip.”
DATO plans the same sort of messaging for 2021, which encourages tourists to come to the area from Memorial Day onward, Brown said.
“A lot of the advertising in the last year, which will continue this year, is all about responsible tourism,” she said. “So if people do come here, we want them to be cautious, respectful and keep our community safe and healthy.”
DATO mostly targets areas within a 5½-hour drive, Brown said. But because the pandemic is causing more people to take longer road trips, that radius has now expanded to a 10-hour drive.
Whereas all lodgers tax money collected by La Plata County is required by state law to go to DATO, the city of Durango has a bit more wiggle room to spend that money on things such as transportation and community events.
Of the $730,800 collected by the city, about $683,000 went to DATO, Brown said.
A proposed new lodgers tax for Durango would increase the rate from 2% to 5.25%, and would require local governments to allocate at least 55% of that revenue to tourism efforts.
The proposed increase has made the city’s April ballot.
Brown said DATO also receives about $100,000 a year in funding from advertising and other revenue sources. The majority of funding, however, comes from the lodgers tax, she said.