Council Supportive Of Room Tax Hike Proposal

OCEAN CITY – With a declining tourism trend evident and competition increasing for the vacation dollar, a local business organization has proposed a room tax increase program that would significantly increase the amount of money the resort can spend annually on advertising.

After several attempts by the Ocean City Hotel-Motel-Restaurant Association (OCHMRA) to obtain further funding for advertising, tourism representatives made another appearance before the Mayor and Council this week, this time with a five-year growth plan proposing a restructuring of the room tax.

The proposal calls for a .5-percent increase from 4 percent to 4.5 percent of gross room revenues, with 2 percent eventually being earmarked annually as the city’s contribution to the advertising budget.

The 2-percent figure dedicated to the advertising budget will be used specifically for “destination marketing,” not for other tourism related expenses such as salaries of tourism-related employees. The remaining 2.5 percent will be dedicated to the general fund.

To create a gradual increase of gross room revenues, the OCHMRA has proposed a five-year growth plan, increasing from 1.4 percent the first year to 2.0 percent the fifth year. The percent of revenues dedicated will increase by about .2 percent each year until it reaches the total 2 percent revenue.

OCHMRA Executive Director Susan Jones, G. Hale Harrison, Susan Cropper, and Greg Shockley presented the proposal to the Mayor and Council on Tuesday, explaining its intentions and its importance to reverse a steady decline in tourism.

Greg Shockley, former president of the OCHMRA and owner of Shenanigans Irish Pub and Grille, stressed the importance of advertising at a time when the numbers of visitors are becoming stagnant in Ocean City.

“We need a push to take Ocean City to the next level,” Shockley said, explaining that the town needs to commit to spending money on advertising to make a difference. “It’s time to realize that an investment needs to be made.”

Susan Cropper, a founding member of the OCHMRA and owner of the Empress Motel, gave her seasoned advice on tourism in Ocean City. Cropper, who said, “I’m here for one reason, because I’m old,” explained the knowledge of tourism and marketing trends that she has acquired after working everyday in Ocean City for 36 years. Cropper commented on the booming eight- to 10-week season that the town used to see.

“I’m not even sure if it’s a four week season anymore,” she said.

Cropper maintained the importance of sustained funding rather than a one-time nourishment of advertising funds.

“If you put it out there, then people will come to Ocean City,” she said.

G. Hale Harrison, representing the Harrison Group properties, outlined the five-year plan to the Mayor and Council, emphasizing the importance of tourism and asking that the council remand the proposal to City Solicitor Guy Ayres to put in to ordinance form.

“I think what you’re proposing is reasonable,” Councilwoman Nancy Howard said.

Despite her support, Howard voiced concerns over the five-year percent increase, asking whether an excess of money could result from the five-year plan.

Harrison explained that the five-year plan was taking into account media inflation as well as providing for a surplus that will go toward the general fund.

Jones explained that the five-year plan was considered a compromise to the OCHMRA members who did not want to see any increase in the room tax. Harrison added that the five-year plan would also help to prevent against the risk of advertising falling by the wayside.

The majority of the council seemed supportive of the general concept of taking room tax dollars and spending them on advertising, but Councilman Jay Hancock questioned the logic.

“I have reservations about taking a large chunk of money and throwing it at the problem,” Hancock said.

Hancock questioned dedicating funds toward advertising if we’re not sure that advertising is the cause of the tourism decline.

“Perhaps it’s not the advertising but the product,” Hancock said.

Howard pointed out that advertising had worked in the past to draw tourists to Ocean City during the shoulder months, feeling confident that advertising could have the same affect on the summer months.

“If we don’t take the step at some point, then we’re going to blow it, and this is the time to step up and do something,” she said.

Councilman Lloyd Martin, who backed the concept but questioned the five-year proposal, agreed advertising could bring tourists back to the resort.

“We need to remind people how great our beaches are,” Martin said.

Mayor Rick Meehan also showed support for the proposal.

“I think it’s vitally important that we take the steps today, that we prepare for the summer of 2008,” he said.

The council voted unanimously to send the proposal to City Solicitor Guy Ayres to put into ordinance form. Once in ordinance form, the ordinance must pass through a first and second reading of the Mayor and Council. Ayres reminded everyone that if passed, the ordinance could still be amended in the future.

If passed, the ordinance will go into effect Jan. 1. The OCHMRA requested the measures be handled quickly due to the room tax cards that will be going into production in September.