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.
This column appeared in the Northwest Florida Daily News on Sunday March 25, 2017
A few weeks ago I wrote about the challenges to Visit Florida that are taking place in the Florida House of Representatives. Here’s an update.
Rep. Paul Renner (R – Palm Coast) sponsored the bill, initially proposing to abolish Visit Florida. After massive protests from the tourism industry, supported by Gov. Rick Scott, the bill was changed for the continuance of Visit Florida but with a much reduced budget (down from $76 million to $25 million) and the imposition of very strict rules that in effect would stop Visit Florida competing against other U.S. states or foreign countries.
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Navarre Beach.
Last month, we discussed how some politicians in Tallahassee, the Florida State capital, were playing politics with the future of Visit Florida, the State’s destination marketing organization. That fight isn’t over as we’ll report.
This month other politicians both here in the USA and in other parts of the world are having influences on tourism in ways they cannot predict.
Good news however is that Culinary Tourism is booming. Read on….
Political shenanigans
The move by Speaker Corcoran to de-fund Visit Florida continues, although he has indicated that he no longer wants to close the organization down, merely to limit its ability to operate and drastically reduce its budget. Governor Scott is fiercely fighting this along with the Tourism Industry and it would appear, members of the Senate. The fight is not over and if you’re involved in the industry in Florida, I urge you to a) contact your representatives to support Visit Florida and b) attend Tourism Day in Tallahassee this month to lobby in person. Please contact me if you need details of how to attend Tourism Day.
In what promises to be a difficult year for international tourism, further obstacles are being dreamt up by politicians on either side of the Atlantic.
The strong US dollar has the potential for discouraging European tourists in particular from visiting the USA this year. Some of those European economies are not strong currently and the USA could be expensive for them.
We now have the three year-old dispute between the EU and the USA over visas. The EU parliament consider that the countries of the community should be considered as one (that has resulted in the UK wanting ‘out’ with their Brexit vote), although the US still recognizes individual states. The US has refused to allow some EU states access to the Visa Waiver Program which allows visa free travel into the US. Poland, Croatia, Bulgaria, Romania and Cyprus don’t meet the US security requirements. The EU has said that either the US accept these countries or all US Citizens will require visas to visit any EU country.
This is an old dispute and has now reached the ‘Who blinks first’ stage. Despite the strong dollar which makes overseas travel attractive, American tourists would be very discouraged if they were required to get a visa. Europe needs those US dollars after a lackluster 2016 tourist season following terrorist attacks, and although advance demand has been strong, it wouldn’t take much to scupper that.
Traveling the other way – east to west – is also potentially threatened. I mentioned the strength of the dollar being a hazard, but what has been called the ‘Trump Effect’ is apparently causing a softening of travel demand. I’m not making any political points, just reporting on figures coming from sources in the tourism industry.
It appears that first announcements of a travel ban had a detrimental effect on European tourists plans to visit the US. I’ve been asked why, say, a German tourist would feel threatened by a ban on travelers from certain middle east countries. I can’t answer that easily, but believe me they are worried. Even the UK tourists who believe they are part of a ‘special relationship’ with the US, are as a group being cautious. Suffice to say that enquiries for flights to the US are down an average of 22%. Tourism research firms are projecting a loss of 6.3 million visitors ($10.8 billion in lost revenue). The tourism board of New York City has predicted that 300,000 fewer tourists will visit than did in 2016. Previously New York was predicting an increase of 400,000. Philadelphia has already lost one conference worth an estimated $7m as a result of the proposed travel ban.
Even the Canadian market is seeing a drop in the number of tourists intending to travel below the 49th.
That’s International tourism of course and it’s been suggested that it won’t affect US destinations that don’t cater for Internationals (like Northwest Florida, where only 1% of tourists are from outside the US). That may be true, but of course the markets that attract overseas travelers are hardly likely to sit and do nothing. They will want to find domestic tourists to replace the foreigners and they are not averse to creating marketing campaigns and making offers to lure those domestic guests away from places like the Northern Gulf Coast.
As the old Chinese curse says “May you live in interesting times”.
It’s not all bad news though…..
95% of travelers have said that they engage in unique and memorable food or beverage experiences while traveling, according to the World Food Travel Association ( I guess that they would say that!). Another research organization, Destination Analysts, claim that 50.7% of Millennials won’t visit a destination that doesn’t have good restaurants – although they don’t define what makes a good restaurant.
Before you state that Millennials are just children, remember that the first Millennials turn 35 this year! Also important is that the Centennial Generation (Generation Z or ‘Post Millennials’) are now just beginning to enter the workforce, so are beginning to effect the market.
Certainly the younger generations are having a strong influence on their parents and grandparents when it comes to food. A recent report by the HAAS Center (part of the University of West Florida) was created to examine tourism trends in Okaloosa County (home to Destin, Fort Walton Beach and Okaloosa Island). They found that although tourist spending in restaurants in the county increased in 2015 more than 15% over 2011, its revenue per seat had grown only 12%, where peer and competing counties had grown by 28%. The competing counties are where most (but certainly not all) of the new and more creative restaurants are found. Interestingly, the area has seen an increase in the number of up-scale grocery stores (Whole Food Market, Fresh Market and Publix). Whereas in 2011 tourists spent twice as much in restaurants as they did in grocery stores, it’s likely that 2016 will see tourists spend more in grocery stores than in restaurants for the first time.
The take away (sorry!) is that those tourists are seeking culinary experiences, and finding them.
Which brings me to the really good news for my home area. I recently attended the Florida Restaurant and Lodging Association’s annual awards ceremony for the North West Florida region. The display of talent at that event was stunning. The quality of the areas chefs, wait staff and managers was exceptional and their depth of knowledge, experience and creativity was at least a match for more recognized tourist areas. A similar level of expertise was evident in the hotel, resort and accommodation sector.
That Culinary Tourism is growing makes really good news for the industry as a whole. It’s also great for The Northern Gulf Coast of Florida. The Tourism Industry worldwide is going for Culinary Tourism in a big way from the traditional destinations of Europe to the New World and areas like Australasia. Even Costa Rica getting in on the act. Don’t underestimate the Cruise lines either.
This article appeared in The Northwest Florida Daily News Talking Tourism Column on Sunday, February 26.
There is trouble in Tallahassee. Some lawmakers wish to defund and close Visit Florida, the state’s Destination Marketing Organization (DMO) and tourism promoter. There are a large number of people who are opposed to this — to be honest, the whole of the tourism industry. I don’t wish to be political, but you know I’m unashamedly pro-tourism, and I thought you may like to know what the two sides are presenting.
In one corner is Speaker of the House Richard Corcoran, R-Land O’Lakes, who feels that state tourism neither works nor is necessary. Not only is Corcoran proposing to defund Visit Florida, he’s proposing that local DMOs also be wound up. The argument is that tourists came before the state started marketing, and will continue to come regardless.
Opposing is the tourism industry — hoteliers, restaurants, theme parks, charter boat captains, attractions, guides, housekeepers, waiters and waitresses, taxi and Uber drivers — and anyone who does business with the tourism industry (in total, there are 1.4 million tourism job holders in Florida). This group believes that in the competitive tourism marketplace today (where Florida not only competes with New York, California and other states, but with the countries of the Caribbean, Europe, Australasia, the Middle East, India, Asia and South America) a public/private funding partnership is essential for continued growth and, indeed, just to maintain position.
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This month’s newsletter is unashamedly aimed at my tourism colleagues in Florida. I’m not usually given to being political (This is not political on party lines) but recent proposals to discontinue State support for Visit Florida and local Destination Marketing Organizations is a major concern for anyone even remotely connected to the industry.
The proposals, by Speaker of the Florida House, go further than removing funding from Visit Florida but wish to dismantle and abolish the organization totally.
For those of you in other US States, and indeed in other countries, you should be aware of this issue as it could be coming to your area too. Many politicians, world wide, fail to recognize the benefits of tourism to both their economies and to the benefit of mankind generally. Not only does travel “broaden the mind” but tourism promotes understanding of cultures and enables peoples to just get on with each other.
But back to Florida.
In 2015 Florida welcomed 106.6 million out of state and international visitors. The international travelers came from 190 different countries. This means that one in five international visitors to the whole USA come to Florida.
Those visitor’s sending supported 1.4 million jobs in the state and every 76 visitors supports 1 job. They spent an average of $300 million per day in 2015 – a total of $108.8 billion, which in turn generated $11.3 billion in sales tax.
We have had six straight years of record tourism spending.
For every $1 that the state of Florida invests in tourism, $3.20 in tax revenue is generated. That’s a 320% return on investment. Where else could you legally generate that sort of return?
If the proposals to defund Visit Florida go ahead, then tourism figures will suffer. Just a 5% drop in visitors would mean a loss of $5.5 billion in revenue, $563 million in taxes and a loss of 70,000 jobs.
Local fishing and tourist related industries (which is virtually every business in Northwest Florida – Remember the effects of the Oil Spill?) would all suffer. The Destin fishing fleet alone brings in $173 million in after value dollars to Okaloosa and Walton counties and the city of Destin. 90% of those dollars come from out of state tourists.
Colorado tried this and they lost 40% of their leisure traveler market over three years and revenues declined by $134 million.
Without the state and local taxes generated by tourism, each Florida household would have to pay $1,535 just to maintain the current level of government services.
We would also have to have State Income Tax, which we avoid currently. Tourists pay over 24% of sales tax, which is the sole reason we don’t have a state income tax.
Pennsylvania cut their budget in 2009 from $30 million to $7 million. Every $1 cut from the tourism budget cost $3.60 in lost tax revenue. From 2009 to 2014 Pennsylvania lost more than $600 million.
Washington State cut their budget from $7 million to $0 in 2011. Their competing state, Montana grew their tourists 70% faster than Washington.
Colorado cut their $12 million budget to $0 in 1993 and lost $1.4 billion in traveler spending within one year. Tax receipts declined by $134 million from ’93 to ’97. 18 years later Colorado still hasn’t recovered their market share.
Increasing the tourism budget has increased travel spending in many states, for example –
California increased their budget $50.1 million and travel spending increased $32.4 billion.
Florida increased the budget $43.3 million and travel spending increased $30 billion.
Minnesota increased their budget $10.5 million and travel spending increased $3.5 billion.
New Mexico increased budget $4.6 million and travel spending increased $933 million.
(Figures from Roger Dow, Head of U.S. travel)
It is essential that the tourism industry in Florida – all members and all levels – get behind the action to save Visit Florida and indeed all the Destination Marketing Organizations. Failure to do so will result in critical loss of jobs, drastic loss of tax revenue, and severe hardship for tax payers in the State.
To cut funding to Visit Florida and other DMOs is bordering on insanity. No business person in their right mind would take this sort of action.
As a consultant to the tourism industry my advice – given free, gratis and for nothing – is to resist this move strenuously.
A tourist was driving through the beautiful Irish countryside and obviously lost. He he saw a local sitting by the side of the road and stopped to ask directions. ‘Excuse me’ said the tourist. ‘Can you give me directions of how to get to Dublin?’. The local considered for a while, and said ‘Well, I wouldn’t start from here’.
That probably is exactly the situation many destination marketing organizations (DMOs) find themselves in today.
In the USA and probably many other countries, DMOs grew out of the the local chamber of commerce – the result of concerned local businesses wanting to grow tourist visitation. Eventually, they decided that the skills needed were beyond the chamber and local government were persuaded to take over the role and formed a Convention and Visitor’s Bureau or local tourist board. To fund this they either committed an element of their budget derived from local taxation, or they collected a tourist or bed tax from visitors. Either way, the DMO is now normally administered by a group of interested and knowledgable local citizens, and ultimately controlled by local politicians – City Councilors, County Commissioners or a whole host of other titles, depending on where you’re located.
In an ideal world, you’d set up this organization before any tourists arrived, and before any infrastructure had been built. Your group of advisors and Councilors would all have significant knowledge of tourism, marketing, commercial and environmental issues – and common sense (the least common element in the Universe!) Then you could influence decisions like ‘no buildings to exceed the height of a palm tree’, ‘visitors must not leave items on the beach overnight’, ‘create sufficient car parking to anticipate demand in 20 years’ – you know the sort of thing.
But it’s not an ideal world.
For a start the infrastructure wasn’t planned. Like Topsy it just ‘grewed’. No one really planned much further ahead than next season. The one big hotel in town became the dominant commercial interest and was then bought out by a Chain.
In the ski resort, the lift system was already 30 years old.
To cap it all, the city elected representatives are all retired hydraulic engineers (I have nothing but admiration for hydraulic engineers, the occupation just randomly flew into my mind!) or lawyers. No knowledge of tourism, commercial imperatives, associated technology or marketing, no matter what their other undoubted qualifications may be.
Add to this toxic mix the speed of change in travel technology, emergence of social media, the rise of peer reviews, changing tourist demographics and worldwide political changes and you have, to over cliché this particular pudding, a perfect storm.
In our part of the world (Northwest Florida) this has been highlighted by a couple of recent events.
One is the emergence of Airbnb which has put a strain on how and if Tourist Development Tax (Bed Tax for want of a better name) is collected. This article (http://ow.ly/7QMp302ESAv) demonstrates how Santa Rosa and Escambia Counties are trying to cope. It’s almost as if the Airbnb concept has suddenly appeared. Uber has had the same effect on taxi regulation around the world.
The other issue revolved around the running of a country music event in Okaloosa County. The idea was suggested that the county should run the event as a trial to provide business for the local convention center. If nothing else, they would break-even and learn lessons for future events.
The lessons learned were that the county were hamstrung by their (possibly understandable) complex and long winded purchasing and contract writing system; that having to refer everything to two committees including the Board of County Commissioners slowed the whole system to a snails pace; and that really they should leave such things to people who knew what they were doing.
Oh, and they made a staggering loss on the event.
The latter example resulted in the sensible decision that in future, such events should be outsourced to the private sector. A good lesson learned and kudos to the people involved for acknowledging this.
So, how do we move forward?
Speed and agility are the watchwords for tourism today. DMOs must be able to turn on a dime (or sixpence, depending on your location) to react to changes, developments and opportunities.
The nature of government is that it’s unlikely (though not impossible) to have the knowledge, awareness and nimbleness to recognize and react in a timely manner.
A local government agency that I know has taken a year to create a new website, and it hasn’t been implemented yet. They’re in tourism and have lost a whole season, possibly two. At the same time a private company has created a state of the art website, with different versions for smartphones and tablets; included video, web cams and on-line booking; acquired partners; and all in two months from pulling the trigger. The site will go live on schedule and on budget.
True, some private companies are as slow as government (An accommodation provider has taken 4 years to change a website and no mobile version. Hello?), and not all local government is unresponsive. But you get my point.
The suggestion is that government run DMOs should at least partner with private companies if not outsource the whole business. Visit Florida is a great example of a public/private partnership, although some politicians do want to be more involved which is a questionable move.
It’s a conversation well worth having between the politicos and private enterprise. Locals need to get involved too.
We probably shouldn’t have started the journey here, but that’s the where we are. We just need to get our directions, decide on our route and follow it – fast.
