07/25/2007

Ocean City Business is a Mixed Bag
By Don Klein

For most businesses in the Ocean City area the 2007 tourist season is not all they hoped it would be and for the most part they blame the slowdown on the high cost of fuel. Some businesses, however, say they are not feeling the pinch but even for them this summer is not going to be a memorable season.

Frank Condeloro, owner of Ocean Terrace Family Apartments in the 1200 block of Baltimore Avenue, summed it up succinctly: "It's not that it costs so much more to drive here this year, but rather it's the additional costs the rest of the year at home, spiked by high gasoline prices, which has depleted funds normally put aside for vacations."

People have not stopped coming to the resort, but they are more frugal. And surprisingly the better known large hotels are doing fairly well. "Hoteliers I have spoken to all have had a very good June," Michael James, managing partner of the Carousel Hotel claimed.
"I don't think the price of fuel is really that large a factor," Mr. James said. "Most people come out here on 10-gallons of gas. Even at an extra dollar a gallon, the cost only goes up by $10. I don't think that is a big impact."

The Carousel, like so many other destinations in the area, have established long-standing relationships with customers over the years which usually keeps them in good stead during difficult times, especially in tight economic circumstances. Return business is the core to their success.

Donna Abbott, Ocean City spokeswoman, believes the season is "fairly healthy" so far. "The May room tax was up 11.1 percent from last year," she said, "and the demoflush count is running ahead of last year." There is a contradiction, she admitted. While boardwalk businesses are booming "we see fewer 'no vacancy' signs at hotels."

It is operators of small family hotels and the charter boatmen who are suffering. Mr. Condeloro, who has been in business at the same place for 30 years, has regular customers who return every year during the summer months. "The spring and fall seasons are down," he said. "We had more cancellations than ever this year," he added.

Danelle Amos, owner of the Beach Walk Hotel at 10th Street off the Boardwalk, "Taxes have gone up this year and we had to adjust rates. Business seems a little slower this year, but I don't know if it is the fault of gas prices," she said, adding, "I think it is higher prices for everything that's at fault."

She said rentals are down and there is not as much walk-in business as in the past. Some patrons are staying just two days instead of a week to make ends meet. The week after July Fourth, always a slow period Ms. Amos noted, "And only half the rooms were taken." That was a 25 percent drop from last year.

Bill Duncan, who runs a sports fishing business in West Ocean City, noted that business is slow this year. His charter vessel, The Islander, has been hit by high fuel costs "but I'm not starving yet," he said.

Mr. Duncan, 63, has been in the business for 30 years and his vessel is paid for, so his overhead is not as high as those newer boat operators who still have a lien on their vessels. "Those big, fast boats popular a few years ago now cost about $2,300 to charter per day," and prices are continuing to escalate, he predicted.

"I can't see a family spending up to $3,000 just to charter a boat for a day," he concluded. "I used to be considerably busier in the past. Maybe it's time to slow down," he said, "blame it on fuel costs."

At the Hotel, Motel and Restaurant Association, Susan Jones, its executive director, says that business so far this summer is a "mixed bag." She said, "Some say it is awful, others are holding their own."  According to her, restaurants in general are doing well and hotels overall are doing not so well. The trouble with condominiums, she concluded, was "an over supply."

Ms. Jones remembers when she first took this job in 1995 everyone did well. "We were so crowded there were times we had to find hotel space for visitors in Salisbury," she recalled. Not so anymore, "not during the last five years," she added.

In addition to higher prices every year an ongoing problem that needs adjustment, Ms. Jones said, is the promotion of Ocean City. "Room taxes bring in $10 million a year which gets put into the general budget." Less than $2 million is set aside for advertising. "At the same time Virginia Beach has an $8 million advertising budget and Myrtle Beach, SC spends $5 million." she claimed. "We need to do more than we are doing to bring people out here," she said, "We just can't be a condo-haven."

Marie-Noelle Sayan, owner of the 22-unit King Charles Hotel, Baltimore and 12th Street, said there were a variety of reasons for the resort slowdown this year in addition to high prices caused by the cost of gasoline. "The overall economy has something to do with it. Families are unsure of the future and do not want to spend the money in many instances."
She also claimed that there has been a downhill trend of vacationers in this area since 2003 which may be attributed to the reaction to the tragedy of 9/11 and the subsequent domestic upheaval in the wake of the conflict in Iraq.

"Another reason is that the Internet makes a lot of different places available to patrons who once automatically planned their vacations in Ocean City. A whole new vista has been open to them," Ms. Sayan explained.

She said the locals have to work harder to attract visitors. "We have to find new ways to appeal to people. We just can't blame it on high prices and leave it at that."