March Madness Strikes Aspen’s Retail Economy

The month of March was more of a slam dunk than a rebound for Aspen retailers, which combined to produce a record-setting $150.1 million in taxable sales, according to data released Thursday.

The month also punctuated a strong first quarter that finished with $393 million in taxable sales produced within Aspen city limits. That figure outpaced the pandemic-riddled first quarter of 2021 by 65.1%, according to the March 2022 Consumption Tax Report released by the city of Aspen Finance Department. March alone also posted a double-digit increase over March 2021, wrote Finance Department Director Pete Strecker in comments accompanying the report.

“For 2022, this month was exceedingly strong and produced taxable sales that established a new record level of economic activity for the City, increasing 42% over the same period a year ago and topping $150 million for the month,” Strecker noted.

The city also realized a 34% uptick in actual sales tax collections in March over March 2021.

“This growth can be tied back to a strong return in tourism that has occurred following the red‐level restrictions that had still some lagging influence in March 2021,” Strecker reported. “This increased visitation, plus inflationary pressures caused by supply chain disruptions and higher wages, have resulted in greater taxable sales within the Aspen economy.”

A significant portion of March business was drummed up in the accommodations industry, which generated $52.6 million in taxable sales and dwarfed March 2021 by 80.9%, the report said. Short-term rentals, or STRs, made up $17.8 million, or just over one-third of accommodations-produced sales in March. Hotels accounted for $33.4 million of the haul, and real estate made up for $1.5 million.

STR designation is for rentals of 30 days or fewer. Aspen’s STR industry cannot grow for the time being; the City Council’s emergency moratorium temporarily bans applications for 2022 STR licenses through the end of September. The City Council also has informally agreed to attempt to place an STR tax proposal in front of voters in the November election.

The concern among city officials has been that STRs are gobbling up housing opportunities for Aspen workers, straining services and infrastructure, disrupting neighborhoods and not on a level playing field with hotels that pay commercial property taxes.

STR revenue, however, also has helped pay the bills for full-time residents who rent out their places during parts of the year, opponents of the moratorium have argued. Another argument supporting STRs is they allow people to visit overnight in the Aspen area who otherwise could not afford staying at a hotel or lodge.

“While there is no defined rate at this time, the Council did identify that affordable housing and other community capital infrastructure and environmental impacts could be addressed with this new tax revenue,” Strecker wrote.

A second work session on the proposed STR tax is scheduled June 7.

While Aspen’s retailer and lodging economy limped into 2021 under public-health orders restricting business levels, the year still went on to ring up just over $1 billion in taxable sales, the first time that mark had been topped. December closed 2021 with $147.7 million in taxable sales, falling slightly off the record-setting March.

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Here’s a look at how the city’s 14 retail segments performed in March 2022 versus March 2021:

Accommodations — $52,633,250, 80.9% over March 2021

Restaurants/bars — $24,266,015, up 143.2%

Sports equipment/clothing — $10,643,974, down 14.3%

Fashion clothing — $16,486,310, up 46.1%

Construction — $9,609,755, down 3.7%

Food/drug — $6,672,862, up 11.1%

Liquor — $1,355,846, down 0.2%

Miscellaneous — $9,156,195, down 7.6%

Jewelry/gallery — $8,170,388, up 100.4%

Utilities — $5,375,254, down 8.9%

Automobile — $3,712,075, up 24.3%

Cannabis — $1,073,802, down 15.6%

Bank/finance — $597,800, up 12.1%

Health/beauty — $341,668, down 46.9%

Total — $150,095,194, up 42.3%

By: Rick Carroll I  The Aspen Times I May 2022