9/26/2007

Facing Challenges of OC Tourism
By Bob Lassahn

On June 19 the Worcester County Commissioners were approached by the Ocean City (OC) Hotel-Motel-Restaurant Association with news that area tourism was facing serious challenges. They received a second shot of bad news on July 3 from Worcester County Tourism Director Lisa Challenger and Annemarie Dickerson, owner of the Francis Scott Key Resort reinforcing the message.

The bottom line is that OC and Worcester County tourism is not keeping pace with similar destinations such as Myrtle Beach and Virginia Beach in attracting tourists, is experiencing increased competition from cruises and all-inclusive resort destinations and the number of visitors to the area is either static or possibly even shrinking. With an economy that depends heavily on tourist dollars this is not good news.

Tourism interests stressed that one key weapon in the battle to attract visitors is destination marketing and OC falls well below the dollar amounts spent by the competition. Destination marketing dollars are used to promote the offerings of the total area and not specific attractions.

With the county budget recently enacted the commissioners expressed regret that they would be unable to commit additional dollars but were open to the suggestion of increasing the room tax rate and dedicating a percentage specifically for destination marketing. Per Ms. Challenger a combined marketing effort between OC and the county would promote not only the resort, but also other attractions throughout the county to increase total offerings for visitors.

On September 4 the Mayor and City Council of OC passed an ordinance requesting the county commissioners to increase the room tax rate from the current four percent to four and one half percent. Further, the ordinance establishes that beginning with the 2008 budget a percentage of the room tax revenue is dedicated for destination marketing. The starting percentage of 1.4 percent would be increased annually through the year 2012 when it would represent a full two percent of gross revenues derived from the tax. It is expected the revenue will increase OC's advertising budget to about $5 million over the course of five years.

As the first step in enabling the increase the county commissioners considered introduction of a draft bill amending the appropriate section of the county code. Currently the rate is capped at four percent and the general provisions of the code require that a rental tax rate set at greater than three percent must be adopted by the unanimous consent of all county commissioners. If the amendment should fail a majority of the commissioners could then appeal to the state legislature to modify enabling legislation at that level.

Following a brief presentation by OC Mayor Rick Meehan all seven commissioners placed their name on the bill for introduction.  Mayor Meehan assured the commissioners he has contacted the mayors of the other county municipalities and they support the measure. Designated as emergency legislation, bill # 07-02 would take effect immediately upon passage. A public hearing was set for October 16 for the bill. If successful in obtaining unanimous approval for the amendment, the commissioners must also adopt a resolution setting the rate. The resolution would also require a public hearing.

For 2007 OC has budgeted approximately $2.2 million and Worcester County nearly $324,000 to attracting tourism. In 2005 Worcester County and OC benefited to the tune of about $1.2 billion from visitor spending, with OC reaping the largest share at about $1 billion.