Here’s our Conexión Florida Tourism column for April.
Last month we discussed how tourism developed and how it contributes to local economies. Over the past few weeks there have been some developments to tourism here on the Northern Gulf Coast that I thought you’d find interesting.
Tourist Development Tax (TDT), commonly known as Bed Tax, was set up to be paid only by tourists and to fund the promotion of tourism in the areas where it’s collected. Now, you may think that that just means it can only be spent on advertising a destination, but that’s far from the case. Bed tax, certainly in Florida, can be used for a whole range of projects. This ranges from providing life guards on beaches, creating museums, running convention centers, developing artificial reefs, building beach access, repairing beaches where weather or tides have caused erosion, through, of course, marketing a destination.
As TDT can generate substantial amounts of revenue, it has attracted the attention of some legislators who would like to use it for non-tourist related uses, for example paving roads in non-tourist areas for example. Consequently, proposals have been put forward in the Florida Legislature to change the rules.
I received a comment recently from a visitor who was asking if there was a ‘coalition of local Hotel/Motels that controlled prices during the summer season’.The gentleman thought that as rates were as low as $120 in the winter season and as high as $600 in the summer it must be a plot to rip off tourists.His suggestion was that such summer prices were beyond the resources of less affluent travelers and that such rates would discourage visitors from out of state.
Naturally I told him that such collusion was illegal and was very much discouraged within the industry. The Florida Restaurant & Lodging Association actually read out an anti-collusion statement before each meeting just to make sure that everyone is aware.
Not only that but to actively jointly raise prices would take away the element of competition that drives the tourism industry. I’m not saying such practices haven’t happened, but it doesn’t seem logical.
In fact I think there is a case here in Northwest Florida, and in other very seasonal destinations, where the low rates of winter are actually subsidized by the higher summer rates.Accommodation providers suffer from a difficulty in employing enough staff for the summer peaks. They don’t want to loose good year round employees by laying them off during the winter so in many cases use the profits generated in the summer to keep everything running during the winter. I think that applies to many restaurants too.
Basic economics would indicate that the law of supply and demand is working well.Winter rates are low to encourage whatever business can be attracted.Summer rates are high because there is a finite amount of stock and a limited amount of time when the majority of tourists can be here – essentially Memorial Day to Labor Day, although with schools breaking later and returning earlier that window is getting shorter.
Ideally our tourist season would be spread out allowing for a greater spread of rates. That would also encourage year round employment and less of a scramble for high season staffing.
All of us in the industry know this.If there is any collusion it’s to try and encourage tourists during the periods outside of the peak summer months. Various attempts have been made to rename this as ‘the best season’. That’s fine as a customer facing branding exercise but within the industry we must call the seasons what they are: low, shoulder, peak and (July 4th week) Super Peak.
Of course by attracting tourists in April, May, September and October we’re in danger of alienating our locals who consider these periods of perfect weather and low traffic as ‘their own’ and reward for putting up with gridlock traffic and no restaurant space in June, July and August. Not to mention Spring Break – so I won’t mention it.
A similar situation exists in Europe where school holidays (vacations) govern package holiday and flight prices.Another case of supply and demand.Airlines and tour companies have been accused of artificially raising prices during the vacations making travel for families beyond affordable.Some parents in the UK have been taking their kids out of school in term time to get lower prices.They are fined by the schools, but just factor the cost of the fines into their vacation costs.
The solution? Many little things I fear, each of which would have a small result but the culmination would be sizable.
Encourage the school systems to stagger their break periods.Some do this, but not enough.
Work with school systems to stop shortening summer breaks.
Go after markets that have different school vacation periods – Canada and Europe for example.UK Schools don’t break until July and don’t go back until September. They also have longer ‘half-term’ breaks in October and November and around Easter.Our weather in those times is perfect for the Northern Europeans.
Expand our marketing to those sectors that aren’t governed by school timetables.Millennials, younger boomers, empty nesters, the list is almost endless.
Actively promote lower rates outside summer. Many do this already.
Strengthen weekend break and short break marketing, out of high season, to places like Atlanta, Birmingham, Tallahassee and new markets thrown up by the likes of Allegiant Air and Southwest.
We also need to have some regional agreement on marketing.Continuing to market as just South Alabama, Escambia, Santa Rosa, Okaloosa, Walton, Bay, etc., etc., and ignoring the fact that for some marketing a regional approach is more effective can be counter productive.Some work is being done in this direction and should be applauded and encouraged.
Of course we also have to get the message out to our visitors, like the gentleman who contacted me, that the reason the prices are high in the summer is exactly because we attract so many tourists at those times. Far from being put off they come anyway, and that lets us put up prices, subsidizing the less busy seasons.
As I say, basic economics. …..or perhaps there is a conspiracy that I haven’t been told about!
Don’t you just love tourists? Well, we probably should as not only do they provide income directly for many of us here along the northern Gulf Coast, but also contribute a huge amount in taxes to our areas. More than that, whenever we travel to a new area either on vacation or to visit friends and family, we take the role of tourists ourselves.
The first real tourists (as opposed to explorers, adventurers and other less desirable world wanderers!) were the children of wealthy families in Europe in the 1700s. To keep them out of trouble and hopefully provide them with some classical education, they were sent off on what was termed The Grand Tour………….
This article appeared in the Northwest Florida Daily News on Sunday, June 19, 2017
By this time of the year, we are usually in a good position to know what sort of success the tourism industry is having not only locally, but nationally and internationally, as well. At the midpoint of 2017, the state of the tourism market is throwing up all sorts of conflicting results.
Here in Northwest Florida, where only 1 percent of our tourism is currently of international origin, we think that our domestic, drive-in visitors make us immune from trends in other sectors. Strangely what happens in one market does have an effect on the other areas.
First, the good news. Our local hospitality professionals are reporting excellent advance bookings for the summer season and bed tax collections have been up for the first quarter of the year. Important also is that bookings for attractions and experiences have been very strong in the first quarter and advance bookings are ahead of last year.
Visitors to Florida were up by 2.5 percent for the first quarter of the year over 2016 with 3.1 million visitors arriving. Visitors from Canada and UK were down but an increase in domestic visitors more than filled the gap.
Statistics from credit card companies for Northwest Florida show an increase in spending from cards with Canadian, UK and German addresses. Okaloosa County’s DMO (Destination Marketing Organization) feels this can be put down to Canadians preferring our area to central and south Florida, and that new flights into New Orleans from London and Germany may be bringing visitors here.
On the other side of the coin, the strength of the dollar against overseas currencies and other factors may discourage Europeans from heading to U.S. destinations. Some areas of Florida are seeing drops in online inquiries from the UK by as much as 60 percent. Foursquare, a location technology company, says that America’s market share of international leisure tourism declined an average of 11 percent between October 2016 and March 2017. However, the financial attractiveness of traveling to Europe has seen a huge increase in Americans heading east across the Pond with an 80 percent jump in U.S. to UK bookings reported by Expedia, an on-line travel agent.
So, nothing really conclusive, but the trend is currently good for Northwest Florida, which relies on domestic tourists. But with fewer internationals coming to the U.S. and more Americans traveling to Europe, the U.S. destinations that usually welcome overseas guests may start looking at attracting “our” domestic visitors. That’s not a good portent for 2018.
If the proposal to close Brand USA and the cut to Visit Florida’s budget from $100 million to $25 million goes ahead, then the Sunshine State will loose out to California and other domestic and foreign places. Areas like Orlando and south Florida may use their budgets and publicity to try to steal “our” visitors. It’s a distinct possibility.
It’s essential that the Gulf Coast destinations redouble their efforts to keep our exiting visitors and develop new markets as soon as possible. Nothing is definite, and we look set to have a really good 2017, but 2018 … who knows?
Martin Owen is an independent consultant to the tourism industry and owner of Owen Organization in Shalimar. Readers can email questions to firstname.lastname@example.org.
It should be noted that since this piece was written, the Florida Legislature have authorized a $75million budget for Visit Florida, albeit with severe restrictions on their ability to operate effectively.
This article first appeared in the Northwest Florida Daily News on Sunday, April 16, 2017.
I’ve discussed recently the many changes that are coming to our local tourist business — generational changes, increases in fly-in visitors, a demand for better level of service and value, etc. I think we’re all surprised by the speed of these changes, thinking that it will take years for them to actually affect our daily lives. However, look how fast Uber, Airbnb and similar new products have altered the landscape.
Back at the end of March, British Airways started to fly non-stop to New Orleans from London, bringing four flights a week. Later in May, Condor, the German airline, will have two flights a week from Frankfurt. While British Airways is banking on a mix of business and leisure travelers, Condor is aimed squarely at the vacation market. These two new routes add to the already existent Toronto flights, routing vacationers into the northern Gulf of Mexico region. There may be no immediate effect on Northwest Florida, apparently giving plenty of planning time.
This column was published in the Northwest Florida Daily News on Sunday March 2, 2017.
I’ve been asked a number of times to explain how bed tax, or Tourist Development Tax, is used. There also have been some letters suggesting that it be used for items or services that aren’t currently covered, so I thought a brief explanation might be useful. Please bear in mind that I’m not a lawyer, but it would appear that even some lawyers can’t agree on the interpretation of some bed tax clauses, so I’ve gone with what the TDCs, tax collectors and others usually use.
You may remember that bed tax was set up to be charged on short-term rentals in designated tax areas. Some counties implement across the whole county (Escambia for example) while others have specified tax areas (e.g. Okaloosa and Walton). The tax is collected by the rental companies and hotels, and paid to the tax-collecting body of the county. Owners can pay direct to the county, too.
We just spent a long weekend in New Orleans, which is one of my favorite cities. It’s totally unique. I was first introduced to NOLA in 1972 as a young travel agent on a U.S. tour (seven cities in 10 days!). Being taken to Bourbon Street as a 20-year-old was quite an eye-opener. Luckily my wife lived in New Orleans for quite awhile and really is “local,” so we’re not exactly tourists when we visit at least four times a year.
The city is a real case study for tourism, joining an historic center with a mix of cultures plus being a living, thriving business hub. It has nearly year-round tourism, although the local businesses are only too aware when they have fewer tourists. The Crescent City is known world over for Mardi Gras (or Carnival, as the locals term it) which is both a blessing and a curse as it attracts enormous numbers of tourists. Those tourists tend to consider partying an Olympic sport, which adds a whole new level to tourist management. Natural events like Hurricane Katrina also have put an added strain on the city, and its recovery from a tourism point of view has been nothing short of remarkable.
The great thing about NOLA ………