OCEAN CITY – Discussions on convention center parking and advertising highlighted a recent budget work session.
Last week, the Mayor and Council continued its review of the proposed budget for fiscal year 2024, meeting with department staff to review their submitted spending plans.
Under the convention center budget, officials have proposed increases to both revenues and expenditures, as well as facility improvements. Tourism and Business Development Director Tom Perlozzo said increased use also highlighted a parking issue at the convention center. He pointed to a cheerleading event last month, which caused parking problems in the area.
“The lack of parking space, and parking all over, was evident,” he said.
When asked if it was an ongoing problem, Convention Center Executive Director Larry Noccolino said it was an issue roughly seven or eight times each year. Perlozzo said that number could increase as staff look to maximize revenues at the convention center.
“The convention center has been programmed for a single use of the building, predominantly …,” he said. “So what’s going to happen when, in the future, we try to bring in all those groups together and maximize revenue, the seven or eight events might turn into 15, 16, 17 events.”
Councilman John Gehrig said the lack of parking was a major concern. He noted that officials had explored a parking garage for the third phase of construction at the convention center, but instead had opted for an expansion.
“It’s not unforeseen,” he said. “We debated up here whether phase three should be the parking garage or the current phase three, and it was determined that parking doesn’t really matter, let’s just add more people. Could we use a parking garage there?”
Noccolino said they could.
“But not a garage, a parking deck, which we can utilize more than a parking garage,” he said.
Gehrig questioned why it was not included in the town’s capital improvement plan (CIP). City Manager Terry McGean said department heads had never discussed parking when submitting their CIP requests. When asked if the town could secure funding through the Maryland Stadium Authority, McGean said it was unlikely.
“In order for the Stadium Authority to fund it, you have to show the economic benefit of it,” he said. “They are not going to be able to show the economic benefit of a parking garage.”
Mayor Rick Meehan suggested officials could consider a parking project for the fourth phase of improvements at the convention center.
“I think it’s a fair request to look at that and have it put on the CIP and begin to have some discussions with the Stadium Authority on what criteria has to be met in order for that to qualify for state assistance,” he said.
The Mayor and Council last week also reviewed budgets for special events and tourism. Under the tourism department, Communications and Marketing Director Jessica Waters said estimated room tax revenue totaled more than $25 million in fiscal year 2024.
“We know that is an increase, and we wanted to suggest what some of that increase might be from,” she said. “Of course, it’s from the half-percent increase in the room tax, increased ADR from the collection of short-term rentals, from larger and more events, and year-round segmented marketing.”
She noted that room tax revenues funded advertising, special events and marketing and general fund contributions, among other things. She noted that advertising for fiscal year 2024 is funded at $9.25 million. Officials added that the town also anticipates advertising grant revenue from both the state and county.
“The state grant is basically a reward,” Gehrig said, noting that the more advertising dollars the resort spent, the more money it received from the state.
Councilwoman Carol Proctor, however, questioned the advertising budget, and if it had resulted in additional revenues for the town. She noted that while the town’s advertising budget had increased to $11.6 million in fiscal year 2023, the return in room tax revenue had increased just 3%. She added that parking and special event revenues, among other things, had increased by $20,000.
“I’m looking at the return the city is getting,” she said. “And that’s a tremendous amount to spend on marketing when I’m seeing room tax and other revenues aren’t coinciding with that.”
Perlozzo noted that the town had yet to launch its new advertising campaign.
“The answer to your question is it’s just not going to happen overnight …,” Perlozzo said. “I think we haven’t had a year of branding. We don’t know what the impact is going to be.”
Gehrig added that while the town had already spent $6.7 million in advertising, $2.6 million is unrealized. He also highlighted the realized increase in room tax revenue.
“Actual realized room tax revenue increased 35.4% in two years, which Jennie [Knapp, budget manager] said is the largest revenue increase in the budget …,” he said. “We need to be celebrating the fact that it continues to increase.”
