Sagging tourism numbers force higher advertising budgets

Sagging tourism numbers force higher advertising budgets

BY PRU SOWERS

KONK LIFE STAFF WRITER

And the hits just keep on coming.

As Key West and the rest of the Florida Keys slowly recover from Hurricane Irma, the ripple effect of the damaging storm continues to spread. Thanks to still-closed hotels and tourists scared away from a Keys vacation because of the on-going recovery efforts, the so-called “bed tax” revenue – the 12.5 percent tax on hotel rooms and vacation rentals – collected as of the end of January is down significantly. That, in turn, is forcing local and county officials to look for new sources of revenue to increase tourism advertising budgets.

From October 1, when the Monroe County 2018 fiscal year began, to January 31, the county bed tax revenue was down approximately 20 percent from the same period the year before, according to Stacey Mitchell, marketing director for the Monroe County Tourism Development Council (TDC). That translates into a $2.5 million shortfall in the $9.2 million in bed tax revenue collected during those four months. In Fiscal Year 2017, a total of $36.3 million was collected.

In Key West, bed tax collection is down 14.1 percent from the same four months in FY ’17, Mitchell said. That has caused a $570,000 deficit in expected revenue.

“We’re looking at some serious business shortfalls here. People are scared,” she said.

Virginia Panico, executive vice president of the Key West Chamber of Commerce, said some local businesses have told her their revenues are down 30 percent so far in the winter season. Others are down 20-25 percent, she told members of the Key West City Commission at their recent meeting. And she is worried about the upcoming summer season. While it normally doesn’t draw as many visitors to Key West as the winter does, it still is busy enough for local businesses to keep their doors open and employees working, despite hurricane season officially beginning June 1.

“Once June 1st hits, they’re all going to pound on it’s hurricane season. People might have some memories [of Hurricane Irma]. We’re really concerned about the future of the summer,” she said.

As a result, Panico went before city commissioners March 20 asking that $570,000 in bed tax revenue set aside to help fund capital projects in Key West be transferred to the TDC advertising budget. Commissioners had been planning to vote on a resolution asking Monroe County Commissioners not to do that, keeping intact approximately $4 million in the “brick and mortar” fund that is also funded by bed tax revenue as a set-aside pot of money available for local capital improvement projects. But after hearing Panico make her plea for advertising help, city commissioners agreed to recommend to county commissioners that they allow $570,000, the amount of the bed tax revenue shortfall this winter in Key West, to be transferred out of the local brick and mortar fund.

“This advertising is not only good for Key West,” said city Commissioner Margaret Romero, “it’s also good for the entire chain of Florida Keys. Let’s face it folks, the people up in the norther Keys are hurting a lot more than we are. Their boats can’t go out because there are no hotel rooms for people to stay in.”

The $570,000 transfer would go only towards advertising Key West, not the rest of the Keys, beginning Oct. 1, the beginning of the 2019 fiscal year. The total TDC advertising budget set aside for Key West in the current fiscal year is $5.8 million.

The TDC’s Mitchell said she has been to each of the five districts in Monroe County (Key West is District 1) asking that a portion of bed tax revenue that would normally go into the district brick and mortar funds be given over to boost advertising budgets in FY 2019. In District 4, which covers Islamorada, bed tax revenue as of Jan. 31 was down 63 percent. The TDC has asked that $700,000 be transferred out of that district’s brick and mortar fund into advertising.

“All of the revenue streams are down. The [tourism] industry is very concerned,” Mitchell said.

Key West Mayor Craig Cates was the lone vote against using brick and mortar money for increased advertising.

“You’re going to advertise more and you’ve got half the hotels open. Key West could use this money in the future as it builds up and do great projects for the city of Key West,” he said, adding that potential capital projects could include repairing public marinas and renourishing sand on local beaches.

Of the total 12.5 percent bed tax, the TDC gets four percent of every dollar collected. Of that four percent, half goes into advertising for the Keys tourism industry and the other half goes towards district-specific advertising as well as capital projects in each district’s brick and mortar fund.

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