Another View On Room Tax Increase

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A lot of opinions have been heard in recent weeks over a proposed increase in the Worcester County room tax. In the end, the County Commissioners in Snow Hill have the ultimate say on whether Ocean City can spend some of the revenue raised through the increase on advertising the resort as a destination.

We have already weighed in on the matter and support the increase to help bring Ocean City’s advertising dollars in line with its coastal competition.

Here’s some other thoughts from an editorial published in The Baltimore Sun on Monday.

By most measures, Ocean City had a respectable summer for tourism. Tax collections were up slightly and so was sewage discharge (the so-called demoflush measurement of residential outflow being one of the more reliable barometers). Thanks to a strong August, town officials estimate that 4 million people visited the resort between Memorial Day and Labor Day.

But Ocean City business leaders tell a different story. The number of summer visitors has stayed mostly static over the past decade and is down in the long term, having peaked at about 4.5 million in the early 1990s. Development has been on the rise in recent years, but it has primarily been redevelopment – tearing down older hotels and apartment buildings to create luxury condominiums for more-affluent buyers.

Most troubling is a rise in travelers who aren’t sticking around for a week or two or three. Weekend and three- or four-day "mini-week" vacationers have become the norm. It’s increasingly rare to find an Ocean City hotel with a no-vacancy sign illuminated on a summer weekday. A lot of working parents and overscheduled kids just can’t find the uninterrupted vacation time.

That’s why the Ocean City Council last week approved increasing the tax on hotel room stays from 4 percent to 4.5 percent to more than double the town’s advertising budget. Under the proposal, which still must be approved by the Worcester County commissioners, the Ocean City ad campaign would gradually increase from the current $1.7 million to $5 million annually.

It’s a sensible idea. Ocean City can’t compete with popular Atlantic Ocean resorts such as Myrtle Beach, S.C., and Virginia Beach, Va., without advertising, yet the town’s ad budget has remained unchanged for the past decade. The room tax is the most readily available means to raise the money without affecting property taxes, which are already regarded as too high, particularly in a faltering real estate market.

Visitors might not appreciate the higher tax (although 0.5 percent of a $100 room bill amounts to all of 50 cents), but no business can survive without reaching out to potential customers. The town is also taking a slight risk by dedicating a portion of its room tax collections to a single purpose, but the investment makes sense. Ocean City was built on the wallets of tourists, and they shouldn’t be taken for granted.

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