Tourism research advances

Tourism research advances

(Dec. 20, 2013) By early 2014, Ocean City just might have selected a consultant to conduct its long-awaited strategic tourism study.

The phrase “opening a whole new can of worms” comes to mind, but in this case, as was discussed at Monday night’s council meeting, the particular can in question goes back for some time.

The City Council agreed to issue  a bid request for consulting services relating to the study, seeking a facilitator for a project that “will encompass interviewing Ocean City tourism stakeholders, evaluating Ocean City tourism assets and conducting a market analysis to incorporate into a strategic plan that will serve as the blueprint for Ocean City’s tourism marketing, identifying target and niche markets and priorities for FY 2015-2020.”

While it might sound dry on paper, what the city is trying to do is reach a consensus among political and business leaders over what the resort actually wants to do with itself, a question that has lingered since the economic downturn of 2008-2009.

“To me, this is way overdue and much needed,” said Councilman Brent Ashley.

“We always discuss which events bring in the most money and which type of people spend the most money,” noted Council Secretary Mary Knight. “I would really like to see something to the effect of the importance of events and some type of measurement [for them].”

The idea of a strategic study has been around for some time, but was most recently pushed at a meeting of the city’s tourism commission by Greg Shockley, who is both a Boardwalk business owner and chair of the state tourism board.

Maryland completed its own state-level study earlier this year, which was well-received. While that study was very broad-based, Shockley noted, the same tactics could be used to approach Ocean City’s big questions when it comes to tourism direction.

In recent years, and especially over the past summer, the major question is what parts of the resort’s economy are doing well. Shockley and other business owners have said that, while some businesses are seeing upswings, many others have remained stagnant. Never before has there been this much disparity and division.

The picture is difficult to ascertain from the top-down. What the city considers to be its major tourism indicators – room and food tax – have posted slight gains throughout the year versus the same months in years past. At the same time, however, the monthly reports from Smith Travel Research – which pulls data from the bookings of major franchise hotels – have posted larger gains in average daily rates and revenue per-room.

This would indicate, as Ashley and others have pressed, that the resort as a whole is making more money off less people, a direction that will likely be questioned during the upcoming study.

“I have doubts about how [those increases] are coming about,” Ashley said. “We’ve been in a holding pattern for several years.”

But the driving force behind the summer economy – whatever its disparity may be – is likely the city’s reliance on special events to draw visitors, as Knight alluded to.

Following the economic downturn, the city began to attract a number of headlining events to target key weekends. This is largely credited with keeping the city running during the lean years. But this past year, city leaders began to question whether that strategy had become counter-productive.

Particularly in June, the town struggled to manage a constant rotation of events with high overhead that put a strain on the police and public works departments, raising the question as to whether or not the events were not attracting more visitors, but just displacing others who would’ve come to the beach anyway if it wasn’t filled with various ancillary activities..

Knight noted that she had reviewed a similar tourism study from Volusia County, FL., where Daytona Beach is the main attraction.

“They compared their private events and which ones did have the biggest return on investment,” she said. “It was sort of counter-intuitive. The Daytona 500, for instance, had a much better demographic and higher income bracket than Bike Week.”

“If we have a new event, we should have a formula [for assessing it].”

Earlier this year, City Manager David Recor began reforming the way the town deals with high-dollar private events, eliminating some of the more difficult profit-sharing schemes and replacing them with flat fees.

Notably, Recor nixed the arrangement with the OC Air Show that saw the town loan $50,000 annually to the show’s organizers on an indefinite line of credit. Given that the town’s cut of the profits only amounted to $20,000, however, this essentially amounted to a $30,000 undeclared subsidy. Instead, the agreement was cancelled and the town simply offered to pay the OC Air Show $30,000 per year for its event.

“We’re continuing to work on standardizing our agreements, to identify the expectations of the promoter and what they can expect from us in return,” Recor said this week.

Further, the city is often inconsistent in what it changes promoters for municipal services, particularly with regards to the set-up and rental of equipment such as barricades, cones, and bleachers.

“There is a new fee structure that’s been drafted and reviewed by staff,” Recor said. “I expect that implementing that will be part of this year’s budget process.”

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