MADISON, Wis. — Taxes charged on hotel rooms across Wisconsin took a huge hit when the pandemic began, but they’re starting to recover.

Nearly 300 municipalities across the state charge a room tax. Sometimes there can be multiple taxes, including for a city, county or special district.

These room taxes were among the hardest-hit tax revenues in the Badger State throughout the pandemic, according to the Wisconsin Policy Forum.

In 2019, room taxes generated $121 million statewide. In 2020, that number dropped by 46% to $65 million.

In general, most room taxes across the state have 70% of revenue go toward promoting tourism, and the remaining 30% goes to the municipality that imposed it. Cities and counties have increasingly relied on that 30% to fund projects and services.

Madison had a 69% drop in tax revenue collected in 2020, one of the biggest cuts in the state, according to the Wisconsin Policy Forum report. The city lowered funding for outlets like the Overture Center for the Arts, but it also decided to forego that 30% revenue.

“The city was very kind and very helpful, where they didn’t take their 30% because they knew the importance of keeping tourism healthy,” said Ellie Westman Chin, CEO of Destination Madison. “They knew how tourism could help the city as a whole recover. I’m a true believer that tourism recovery is recovery for the city.”

However, Milwaukee had a different situation. The city treated the 70-30 split in the same way it always had. That left tourism funding in the hole and Visit Milwaukee had to make changes to keep their efforts afloat.

“We made a conscious effort coming into 2022 to operate at a deficit with our budget to make sure that we could promote Milwaukee as much as possible coming out of the pandemic,” said CEO of Visit Milwaukee Peggy Williams-Smith. “I truly believe that that has helped our market to recover.”

That money has been used throughout the past year to continue to promote Milwaukee.

“We’ve done specific ad campaigns with major players like Expedia, ensuring that Milwaukee is top of mind,” Williams-Smith said. “[That] has contributed to the demand, which has also allowed our hotels to offer higher rates.”

Business travel has been especially slow to return to pre-pandemic levels. Concerns about a potential recession haven’t helped, because some companies are already slowing or banning their business trips. Williams-Smith said business travel may not fully recover until 2027.

Still, both tourism entities have seen lots of leisure travel and groups start to return. Some that had to cancel trips are now returning.