Hospitality business is pretty fair...for now
Pub Date: 2/1/2008
Once in awhile, the owners of tavern and gaming businesses in Montana get a little breather. It allows us a little time to take stock. So let us do so.
Politics and that whole grind are almost a constant for the owners of these most heavily regulated of businesses.
The primary elections are not yet upon us though are not far away, either. Candidate filing has opened so we must keep our eye on who is running and make sure good candidates who will be fair to small businesses are in the race and receiving adequate support.
The Legislature won't meet for another 11 months, but interim committees are meeting and are taking up ideas and issues.
Just recently another tribal delegation appeared before a committee to make their case for significantly expanded gambling opportunities exclusive to reservations.
Liquor sales were up in Montana last year so, hopefully, our on-premise licensees saw some gains on the revenue side of the operation. But costs are up too, especially labor, health and liability insurance, freight, utilities, real estate and real estate taxes. One can never relax in the battle to drive revenue and reign in costs.
Drinking and driving and youth abuse of, and access to, adult beverages the two main focal points on social problems associated with alcohol are trending in an encouraging way and have for years. Both problems continue to abate, but never fast enough for some social activists.
Local agencies and law enforcement in Montana just received $9 million in federal money to combat these problems. Let's hope they attack the real root of these issues: repeat and high-BAC DUI offenders'; and adults who knowingly provide alcohol to the under-aged.
From past experience, we almost expect some of those millions to be used to attack your businesses and products in general, rather than to educate the public about responsible consumption.
The pressure to dismantle Montana's proven and socially responsible limits on alcohol licensure and, hence, availability, have hopefully eased somewhat with the success of the new "cabaret" license issuance. Over 120 restaurants that were clamoring for more affordable licenses now have them or will shortly. A number of communities even have extras for future growth.
It seems by now it has been amply demonstrated that the 15 percent tax on gross gaming revenues is set at an optimal rate. For the last several years the tax has produced a substantial revenue stream over $60 million last year to fund local and state government that has shown healthy growth of around 6.5 percent every year.
The state treasury is literally awash with money, mostly due to high energy and metals prices, great jobs in exploration and extraction, continually rising property values, a construction boom with associated high wages and unprecedented agricultural commodity prices.
So hopefully those who are always seeking tax money to fund their various programs and causes will seek their largesse where there is the most money and least resistance, rather than come after Montana's small licensed businesses.
For sure, there are some who will never understand your business and why your customers will pay for your products, and they will always regard owners and their trade as evil. These folks can be counted on to continue to try to kill hospitality businesses through punitive taxation, no matter the state of the economy or state treasury.
We think Governor Brian Schweitzer was right when he warned at last September's Montana Tavern Association Convention that these good times would not last forever. Already we see the edges of the national economy crumbling into recession and where goes the nation, eventually so goes Montana. So it would be wise to put away some money and hang onto your wallets.
The business remains a difficult one: the 25 percent annual turnover in liquor licenses speaks loudly of the challenges of the business, especially its burn-out toll.
And in just one-and-a-half years, licensees will have to make the adjustments necessary to weather a ban on indoor smoking. Revamping some folks' traditional business models will take creativity and fortitude.
All in all, the times are relatively good for hospitality businesses. Their business associations remain strong, effective, and ahead of the curve when it comes to anticipating trouble. Let's hope it lasts a long while. And it may, as long as we remain vigilant.
These lulls are hard won. Have you done anything to help? If not, pitch in now before the next flood comes, by which time it may be too late.
As is often said in these business circles, "We best keep our powder dry."
Source: The Montana Tavern Times, February, 2008, published monthly by Continental Communications, 125 W. Granite St., Suite 102, Butte, MT 59701.