Super Bowl 50 San Francisco Hotel Tax Revenue Alone Pays For Service Costs
“Super Bowl 50 To Cost San Francisco $4.1 Million in service costs” the news headlines have reported.
Well, what the news organizations failed to tell you was those costs would be paid for by the city and county’s Hotel Tax Revenue, alone.
While the San Francisco Super Bowl 50 Host Committee has said that enough money would be raised to pay for the expense that got the attention of Board of Supervisors members Jane Kim and Aaron Peskin, the specific way this was done wasn’t identified by the Office of San Francisco Mayor Ed Lee, and so the Host Committee was left alone to deal with the PR problem.
As it turns out, doing a little simple math reveals the revenue that can be anticipated. It’s important to pay attention here, because all too often media people quote one person or another rather than doing their own homework. This is where traditional media has contaminated blogging and Internet news: in the past, bloggers wrote posts that either confirmed or rejected the entries of other blogs on a subject, and presented their methodology, even if that included math.
Today, people who to love to toss the term “journalist” around flood the Internet with wrongheaded quotes from whomever, always serving some agenda, and seldom bother to use the Internet to do their own homework in the action of fact-checking.
That’s called bad blogging, but I digress.
When I saw the Super Bowl revenue news, I immediately wondered what the impact of hotel occupancy and room rates would be on this to start (thinking of sales tax revenue and other monies later), and so went to use this basic formula as the basis for a spreadsheet to look at the problem:
Hotel Tax Revenue = Number Of Rooms times Avg Room Rate, times Occupancy Rate, times Room Stay Days, times Hotel Room Price Increase, times Hotel Tax Rate.
I then believed the best evaluation of potential Super Bowl revenue from the Hotel Tax was to establish a baseline of money expectations during the Super Bowl Hotel Period, but without the game, and then compare that to what’s expected with Super Bowl 50 in San Francisco.
The baseline condition is as follows:
Number of Hotel Rooms: 33,462 according to Visit SF data from 2013 (which could be higher, but that’s the best number I could find).
San Francisco Hotel Tax Rate: 14 Percent
Average San Francisco Room Rate Per Day: $397 according to a Bloomberg 2015 report and survey with CheapHotels.com – the Price Increase Factor plays a role in the Super Bowl comparison here.
Room Stay Days: 7 – which includes the four day Super Bowl Period minimum, and three days to the Monday of Super Bowl week, as Super Bowl Media Day is the next day, Tuesday, and much of the media will have arrived and already booked into their hotel rooms, as well as many people connected with the NFL, and Super Bowl fans – some with tickets, some looking for tickets, others just in town for the parties.
Super Bowl Price Increase Factor: It’s widely noted that hotel prices are already jacked up in many cases throughout the Bay Area and in San Francisco. The average increase is said to be 124 percent – but I use a very conservative rate of 30 percent over the norm.
SF Hotel Occupancy Rate: The normal hotel occupancy rate for this time of year January 30th to February 7th in the City of San Francisco is about 75 percent according to data online. A Super Bowl will increase that substantially, but I use 90 percent, which is about equal to the normal demand levels in San Francisco during the Summer – a 15 percent increase in the occupancy rate for that period. You have to remember that a Super Bowl commonly attracts double the number of people who have tickets who want hotel rooms, so that’s a base of 140,000 people looking for rooms (there will be far more than that), in a city that has just 33,462 of them. Yes, there are rooms throughout the SF Bay Area, but the demand is focused on San Francisco because that’s where most of the rooms are concentrated and where the party and event action is.
With this, the baseline revenue would be $9.764 million. For the Super Bowl, the Price Increase Factor brings the room rate per day to an average of $516 from the already high average of $397 per day. That, combined with the 15 percent occupancy rate increase, will yield $15.231 million – that’s a difference of about $5.467 million for the Super Bowl period, or about $1.367 million more than is needed to pay for the service costs the Super Bowl will reportedly cost San Francisco.