Indianapolis tourism tax revenues drop 38% in first month of coronavirus pandemic

Tax revenues that boost the Indianapolis tourism industry dropped 38% for the month of March, signaling the beginning of the long-term financial impact that the coronavirus pandemic will continue to have on the city. 

The five major revenues that drive the Capital Improvement Board, which manages the city's sports and convention complexes, dropped to roughly $6.3 million — a nearly $4 million drop from last year. 

Business throughout the city came to a standstill around mid to late March, when major events such as the Big Ten tournament were canceled and the state ultimately issued a stay-at-home order. 

The financial hit currently leaves the board with an April 2020 bottom line of negative $2.5 million, which is roughly $5.8 million lower than last year. 

It's a financial situation that sparks concern for the city's tourism future, and one that is particularly exacerbated by the protests and subsequent curfews that have rocked downtown Indianapolis in the past week.

"As an entity we need to be thinking about some solutions to help our business partners who provide the tax revenues in to the (Capital Improvement Board) to be able to survive, or we're going to be back to the Indianapolis of 1970 — which nobody comes down to," board member Jim Dora, president and CEO of the General Hotels Corporation, said during a meeting on Friday. "I think we're going to lose restaurants, and there's certainly the potential we're going to lose hotels, because we're not going to be able to survive to when people may come back to the city."

Hotel, food taxes shrink

March tax revenues, which are realized in April, have five primary streams: hotels, food and beverage, ticket sales, auto rentals and revenue from the city's professional development sports area.

The biggest hit is revenue from hotels, which dropped from $3 million in February to roughly $1.8 million in March.

Related:Gen Con 2020 canceled

Meanwhile, food and beverage taxes dropped from $2 million to $1.5 million and admissions taxes dropped from about $2 million to $1.3 million. Revenue from those ticket sales are about half of what they were in March of last year, when the city's events brought in about $2.6 million. 

The money reflects revenue collected from the four venues owned by the board: the Indiana Convention Center, Lucas Oil Stadium, Bankers Life Fieldhouse and Victory Field.

Operating revenues for the two facilities that the board both owns and operates — Lucas Oil Stadium and the Indiana Convention Center — also continued to fall.

April operating revenues plummeted by nearly 95%, from $3.3 million last year to $170,299 in April. That's more than the roughly 60% drop those revenues took in March.  

Related: State revenues plunge $1 billion in April  

But expenses for supplies, staffing and other items have also dropped as the venues have gone dark and staff are furloughed. 

Planning for future

The agency has been working to use its cash balance in order to remain whole, borrowing money for capital projects that are usually paid for out of that reserve.

The agency began to spend down its unrestricted cash reserves this month, a pool of money that stood at $144 million at the end of April.

"We have more than enough available to us in our reserves to pay those operational costs," Andy Mallon, the agency's executive director, told board members on Friday. 

The agency also has enough tax revenue to cover its debt, Mallon added.

Still, the pandemic could wreak future financial havoc as the city slowly opens back up into an uncertain second half of 2020. 

"I am extremely concerned with the ability of downtown businesses to survive to be able to support our organization," said Dora, who owns several hotels. "I think after this past weekend and the complete lack of business in the city in the downtown area, if it hasn't been clear in the past it's extremely clear: we all live off the convention center."

Call IndyStar reporter Amelia Pak-Harvey at 317-444-6175 or email her at apakharvey@indystar.com. Follow her on Twitter @AmeliaPakHarvey.