No Choice But To Look At Room Tax

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After weeks of not getting anywhere with presentations before Ocean City and Worcester County governments and even Governor Martin O’Malley, the Ocean City Hotel-Motel-Restaurant Association took a creative approach to an obvious solution.

Officials came before the Ocean City Mayor and Council this week to proposed increasing the 4-percent room tax rate to 4.5 percent and using a portion of the revenue from the increase to bolster the town’s marketing and advertising effort. Although it will not be a popular proposal among some folks, there really is no better way to raise immediate funds to increase advertising and marketing for Ocean City. The time is now to address next summer and the situation needs immediate focus and attention.

Under the Proposed Restructuring of Ocean City Room Tax, a five-year growth plan was thrown on the table. The .5-percent increase would go into effect in January of 2008 with 1.4 percent of gross room revenues dedicated to advertising the first year; 1.6 percent in year two; 1.8 percent in year three; 1.9 percent in year four and 2 percent year five and beyond. The remaining room tax money will go to the General Fund. Any additional tourism grants from the county and state would be used in the advertising budget. Based on a $250 million figure, which was reportedly slightly lower than gross room revenues in fiscal year 2006, the first-year ad commitment from the city would consist of $3.5 million. Under the proposed plan, the city’s advertising allocation, based on room revenues, would flatten out at $5 million by 2013.

The plan is reasonable because the facts are grim here. Tourism is not what it once was in Ocean City. It’s not where it needs to be. It’s not a reason for panic, but a declining trend is evident in the summer months. Sure, there is some more business in the shoulder months than there once was, but those sales in hotels, golf courses, restaurants, bars and retail stores do not make up for the shortening peak season. Too much business is being lost in the traditional summer window.

Longtime Ocean City motelier Susan Cropper said it well this week when she said, “I’m not even sure if it’s a four-week season anymore.” Cropper is most likely referring to the two weeks at the end of July and the first two weeks of August. She said the peak season used to be eight to 10 weeks (late-June through August) and it’s now shrunk to less than a month and that’s bad news for Ocean City business people. It will not cut it.

Ocean City essentially needs to re-invent its brand and re-introduce it far and wide. To do that, money is needed and a lot of it.

Ocean City’s general strength and attraction lies in the fact that it’s a safe and clean beach town, one that is fun for families. While cultivating that fresh image, there needs to be a reason to come here besides that. All that “destination marketing” needs to focus on that, but it also needs to touch on events and attractions to get people here throughout the year. The marketing needs to have a broad appeal.

Ocean City’s crown jewels are the beach, the Boardwalk, the ocean and bays, the amusements and the convention center. Supporting all those general concepts are the unique and quality businesses in the area and the services that town provides. All that combines to make Ocean City a fun place to vacation. Add into that special events that attract new visitors to Ocean City, and we are getting somewhere.

On the surface, the increase in the room tax means the cost to vacation in Ocean City just got a little more expensive for visitors. Detractors will certainly have an issue with that. Increasing the cost of a vacation is never a good thing in a competitive vacation-dollar market, but not recognizing the writing on the wall and understanding the consequences is far worse.

There will be plenty of eyebrows raised over the increased room tax proposal, and we understand why, but more marketing money is needed to promote Ocean City far and wide, and so far this is the best proposal with the most immediate results.

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