Number of tourists coming to the county leveling off, indicating need for higher marketing investment, consultant tells Tourist Development Council

Research also shows that more and more people are staying in accommodations rented through online companies, though county has 41% more hotel rooms than in 2016

A graphic shows the changes in the total number of visitors coming to Sarasota County over the past several years. Image courtesy Visit Sarasota County

As the number of tourists coming to Sarasota County leveled off between the 2018 and 2019 fiscal years, a Tallahassee consultant who works with the county’s tourism agency has recommended that the county needs to invest more money in marketing.

During a Jan. 16 presentation to members of the county’s Tourist Development Council (TDC), Phillip Downs of Downs & St. Germain Research pointed out that the number of visitors to Sarasota County in the 2018 fiscal year was 2,767,200. The figure for the 2019 fiscal year, which ended on Sept. 30, 2019, was 2,796,580.

Conversely, from 2014 to 2017, he said, “We were cranking; great increases” in the number of tourists drawn to the county.

The effects of red tide have been cited as the primary reason for slower growth in tourism over the past two fiscal years. News media accounts — along with photographs and video — about tons of dead fish on the county’s shoreline; dead mammals, such as dolphins; and the respiratory irritation linked to red tide’s aerosol kept visitors away from the county in the latter part of the 2018 calendar year, owners of accommodations and tourism-related businesses have asserted.

Along with the leveling off of the number of tourists in the past fiscal year, Downs told the TDC members last week, hotel stays “actually decreased in 2019.”

This graphic shows the percentages of tourists staying in various types of accommodations. Image courtesy Visit Sarasota County

He showed the advisory board members a slide noting that 34% of the visitors in FY19 stayed in hotels or motels; 27% stayed with friends or family members; and 25% stayed in vacation rentals they secured through online platforms such as Airbnb and Vrbo.

Downs & St. Germain bases its Sarasota County statistics on interviews with 2,700 to 3,000 visitors each year, he pointed out. Employees of the firm travel all over the county with iPads and approach tourists to ask them specific questions.

Downs further noted that the inventory of hotel rooms in Sarasota County climbed 41% from the 2016 fiscal year to the current fiscal year, which began on Oct. 1, 2019.

Altogether, according to a slide he showed the TDC members, the county has 7,200 hotel rooms.

This graphic shows the rise in the number of hotel rooms in the county. Image courtesy Visit Sarasota County

The only reasonable way to increase demand for those hotel rooms, Downs continued, is to increase the marketing budget for Visit Sarasota County, the county’s tourism office.

A survey his firm undertook on behalf of Visit Sarasota County showed that two out of three of Visit Sarasota County’s partners “spend no money outside of the county,” Downs said. Typically, those that do market their businesses outside the county spend no more than $10,000 a year, he added.

“The hotels by and large don’t advertise outside of Sarasota County,” he continued. The Hyatt and Hilton corporate offices market their hotels, for example, Downs noted, but they do not market specific properties, such as the ones in Sarasota County.

Downs also pointed out that the revenue for each available hotel room in the county — what tourism agencies call “RevPAR” — dropped from the 2018 fiscal year to the 2019 fiscal year. The FY18 figure was $138.03; for FY19, it was $123.37. He noted that RevPAR “is what hotels live and die on.”

This graphic shows the changes in ‘RevPAR.’ Image courtesy Visit Sarasota County

“Exacerbating this scenario,” he said, is the supply and demand issue. “Airbnb, HomeAway and Vrbo are increasing their inventory vis a vis the hotel industry …”

Another slide he showed the TDC said that the number of visitors staying in hotels fell from 899,970 in FY18 to 876,530 in FY19, based on the latest estimate for the latter fiscal year.

A tightening of the marketing budget

This graphic offers details about the importance of tourism to the county. ‘CY’ stands for calendar year. Image courtesy Visit Sarasota County

In October 2018 — at the same time tourism was leveling off — the County Commission decreased the percentage of promotional money that Visit Sarasota County’s receives from the Tourist Development Tax — or “bed tax.” (The 5% tax is charged on rentals of accommodations for six months or less time.)

The County Commission action was necessary, commissioners stressed, because of their agreement with the Baltimore Orioles, which conduct Spring Training each year at Ed Smith Stadium in Sarasota. The complex needed repairs, and the source county staff identified to cover those costs was part of the promotional money allocated from Tourist Development Tax (TDT) revenue.

Last week, the commission directed staff to explore the potential of another decrease in that promotional fund for Visit Sarasota County, so the commission can provide $20 million to Mote Marine Laboratory for a new $130-million Science Education Aquarium planned on county property at Nathan Benderson Park. The facility would be close to University Parkway and visible from Interstate 75.

On the plus side of the situation, Downs continued during the TDC meeting, “We’ve got tremendous loyalty in repeat visitors.” Moreover, he said, “You have world-class product here.”

His list of “Positives” for county tourism included the beaches, “Great weather,” “Thriving arts & culture” and “Cool downtown vibe.”

On the “Negatives/Unknowns” list, Downs pointed to concerns about water quality, as well as the potential for another recession to begin in the next 12 months. Other tourist destinations have better air service, he cited as a third factor, and “The dollar’s strong, which hurts us in Canada and in Europe.”

“Efforts to increase [tourism] demand fall for the most part on Visit Sarasota County,” Downs stressed.

Three scenarios to consider

Downs then offered three different marketing scenarios for the TDC members to consider.

In the first, his firm had projected what would happen if the Visit Sarasota County (VSC) marketing budget were to be decreased by 8% each year through the 2025 fiscal year. While the Tourist Development Tax (TDT) revenue total has risen each year for a number of years, Downs said, the results of his firm’s analysis showed that in this scenario, the figure would fall gradually each year from 2021 through 2024. Then it would rebound slightly in 2025 — but it would not reach the total expected this year, which is $22,365,280. The 2025 projection was $21,065,273.

Likewise, that scenario indicated a continued decline in the number of visitors staying in hotels — from 828,321 this fiscal year to 715,384 in the 2025 fiscal year.

If the VSC marketing budget were to remain the same over the same time frame, Downs continued, his firm projected total TDT revenue would grow to $25,904,906 in the 2025 fiscal year. The number of hotel visitors, the analysis showed, would climb from 833,580 this fiscal year to 883,100 in FY25.

Finally, his third scenario was based on giving VSC an annual 8% boost in marketing money, starting this fiscal year. That would lead to a rise in TDT collections each year, culminating in a total of $31,045,548 in FY25. The number of visitors staying in hotels would increase from 857,250 this year to 1,074,770 in FY25.

Moreover, Downs told the TDC members, adding 8% a year to VSC’s marketing budget would be expected to net almost $1 billion more in spending by hotel visitors through FY25, compared to what would result with an 8% annual cut.

Additionally, Downs said, the analysis showed that if the marketing budget were to climb 8% each of fiscal year through 2025, the total number of new jobs in the tourism industry in the county would be 76,300, compared to 62,620 with an 8% decrease each year in marketing funds.

This graphic shows the expected results of an 8% decrease in spending on marketing the county over the next several years. Image courtesy Visit Sarasota County
This graphic shows the expected results of no increase in spending on marketing the county over the next several years. Image courtesy Visit Sarasota County
This graphic shows the expected results of an 8% increase in spending on marketing the county over the next several years. Image courtesy Visit Sarasota County

Debating the present and the prospects

In response to a question from a TDC member, Downs acknowledged that people who stay in accommodations rented through online platforms such as Airbnb would be expected to spend the same amount of money in the community as those who stay in hotels.

However, Virginia Haley, president of Visit Sarasota County, pointed out that visitors who use online platforms to find accommodations are drawn by the marketing of Sarasota County, just like those who stay in hotels.

In response to another question, Haley said she would not characterize VSC’s stance as a feeling of being accountable to filling all the new hotel rooms that have been built in the county. Nonetheless, she continued, “You introduced into the marketplace very high-quality hotel product. … I’m looking at the opportunity rather than an obligation.”

Angus Rogers. Photo from the Floridays Development website

TDC member Angus Rogers, president and CEO of Floridays Development, which built the Art Ovation Hotel on Palm Avenue in downtown Sarasota, pointed out that hotels are held to much higher regulatory standards than accommodations rented through online platforms. Further, he said, “It’s left to the individuals” who rent the homes through those platforms to pay the appropriate amount of Tourist Development Tax to the county. Hotel guests, he added, are “shouldering the overwhelming majority of these [TDT] dollars.

“I have an issue with Airbnb and Vrbo,” he added, given hotel developers’ extensive investment in their properties.

However, Sarasota City Commissioner Shelli Freeland Eddie, who also serves on the TDC, pointed out that Downs had noted earlier that the average age of a tourist in Sarasota County is 52. Many people between the ages of 25 and 45, who are in the earlier stages of their careers, she added, “might not be able to afford to lay down $200 to $300 a night to stay in a hotel.” Yet, she said, those younger people may be just as eager to visit Sarasota County.

Considering how best to market to the younger demographic might be an opportunity for the TDC members, Freeland Eddie added.

Three years ago, TDC Vice Chair Norman Schimmel noted, he and his colleagues on the advisory board “were calling for more hotels. … Was there an overbuild?”

Referring again to those who stay in accommodations rented through online platforms, Rogers said, “We need them, no question.” Yet, hoteliers have supported the Tourist Development Tax so the county could provide marketing money to draw people Sarasota, he continued. Over the years, he said, “A lot of that has been winnowed off to other [purposes]. … The last thing we need to do is top advertising and marketing who we are.”

He emphasized that the TDC members must convey that to the county commissioners. “We need the people to come here.”

Downs concurred. “It’s so important to think about not cutting marketing [expenditures], especially in difficult times when inventory is increasing and demand already is tailing off.”

1 thought on “Number of tourists coming to the county leveling off, indicating need for higher marketing investment, consultant tells Tourist Development Council”

  1. Perhaps the tourist count is leveling off because we are at capacity. Tourists come here for a few reasons, including our well-known beaches. The traffic issues to and from the beach communities have been well-documented. You can build as many new lodging units as you want, but when the attractions are full, they’re full. Businesses often talk about “right-sizing” when their period of high growth plateaus. Perhaps it’s time for this area to focus more achieving balance rather than constantly pushing growth. Taking a break to stabilize and assess is not a bad thing. Perhaps then we’ll be ready for the next phase of intelligent planned growth.

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