Powered by Vacation Rentals, Flagler’s Tourism Revenue Is Up Significantly as State’s Drops 30%

The answer is a confluence of factors that ideally positioned Flagler County to buck the Florida trend unleashed by the coronavirus pandemic, to Flagler’s advantage: vacation rentals, beaches, day trips and shorter vacation-travel distances, and the county’s smaller population. The county has always marketed those factors, but they’ve never been at a premium for vacationers as much as they have since the covid’s reordering of leisure and travel habits.

“One of the things that was important to people was not being in a hotel but a home where it was more controlled,” says Amy Lukasik, the county’s tourism director. That accounts for a surge in interest in vacation rentals, where the consumer almost entirely controls the environment, without having to breathe other people’s air. “And two, people were and still are booking, they have that pent up travel urge, and they want to go to places that aren’t heavily populated, so we check that box anyway. People are leery to get on a plane and we’ve always been that market, so check that box.” And people also want the beach, as always, but more so now as a place where social distancing is inherent and Covid has about as much of a chance to stick as snow. “So we were kind of ripe for what people were looking for if they feel comfortable going anywhere.” 

It didn’t start off that way in the early days of the pandemic.

From April to June, the picture was pretty dismal. April was the lock-down month, when Florida joined other states in requiring all but essential workers to stay home, and trips outside the home be limited to essential shopping and work that could not be performed from home. Travel restrictions eventually included border check-points for people driving in from Louisiana and the three Northeast states hardest-hit by the pandemic at the time–New York, New Jersey, Connecticut.

The local economy suffered as seriously as did the national economy, with tourism taking the harshest hit. The local unemployment rate shot up past 15 percent and for a while it looked as if Flagler could be as hard hit as Florida’s worst-off counties. Its unemployment rate was 6th worst in the state. Between April and June, occupancy was down 36 percent in local hotels and motels.

The average daily rate that hotels and motels charged dropped 42 percent, to $105 per night for the quarter. In April and May, hotel occupancy was below 30 percent, and average daily rates were in the $80 to $90 range, compared to $140 or $150 the previous year.

There as nothing abstract about those numbers or their consequences–not just on the local economy, but on local government. The tourism activity in the county is measured through revenue from the 5 percent tourism surtax levied on short-term rental accommodations. Those include hotels, motels, short-term vacation rentals, RV parks. Notably, the overwhelming portion of the tax revenue is generated from visitors, not local residents. If anything, local residents who own or work in tourism-related businesses and restaurants benefit from the influx of visitors, who then circulate their dollars locally and keep businesses going.

The surtax is colloquially known as the bed tax, because it applies to per-night room bookings. The money generated goes into the county’s tourism pot. The pot is divided three ways: 60 percent goes into the tourism marketing fund (advertising the county and paying for its tourism staff), 20 percent goes to capital projects that enhance the county’s appeal to tourists (think Flagler Beach pier, sports fields, the Flagler Auditorium), and 20 percent goes toward beach protection (think dune reconstruction).

Every dollar counts. When revenue falls, the county’s marketing capabilities suffer, less can be spent on capital improvements, and–crucially–the bonds backing the financing of dune reconstruction, backed by tourism tax revenue, must still be paid somehow.

In 2017 and 2018, the bed tax generated just over $2.7 million each of the two years. When Covid-19 hit, revenue started plummeting in March, even before the lock-down. When March revenue figures were tabulated in April, revenue was down 29 percent, compared to a year ago. April revenue was down 80 percent, to a mere $52,000. May revenue was down 58 percent. The crash leveled off in June, with revenue down just 2 percent, which was seen as a relative improvement.

Then in July something odd happened: revenue increased 1 percent, compared to a year ago. But the bed tax had generated a sturdy $353,000, the best total for that month since 2017. In August, revenue shot up 22 percent, and in September it went up 67 percent, though to be sure that’s in part because in October 2019, Hurricane Dorian caused revenue to plummet. But even after accounting for that, Lukasik said September revenue was up 34 percent. (Each month’s revenue is reported the following month in the tourism department’s chart, so July revenue is actually listed under August, August revenue is listed under September, and so on.)

The average daily rate that visitors are paying for their room accommodations is up substantially as well: it was $133 in October, compared to $125 for St. Johns County and $147 for Jacksonville. It was $102 in Daytona Beach.

Another indication that Flagler’s vacation rentals are powering the tourism sector is how other counties that rely on their short-term rentals, such as Walton and counties in the Panhandle, are also bucking the state’s big drop in tourism revenue. (The average daily rate in Walton was $165 in October.) “At the end of the day, where most of the tourism numbers come from, they come from Orlando, Miami, Tampa, those places are hurting,” Lukasik said. “But the Panhandle did very well over the summer because they’re heavily, heavily vacation rental land up there.” 

So far this year, the tourism has in Flagler has generated $2.14 million, 16 percent below last year’s total–with one month to go in the calculations. When the covid crisis began, Lukasik had projected ending the year with a 20 percent revenue decrease. She’s more optimistic now. “I’m hoping if we can keep flat with what we did last year that would be palatable,” she said. Last year’s total was $2.74 million. 

Just as remarkable is the fact that Flagler managed to recover its tourism dollars without a big advertising push. “We’re out there but it’s mainly social media,”  Lukasik said. But Flagler’s tourism office put a priority on its “Pledge to Prevent” program, a voluntary initiative that encourages businesses, especially restaurants, bars, hotels and motels, to follow covid-protection guidelines and earn the office’s “Pledge to Prevent” seal of approval. 

The 30 percent drop in revenue statewide is half what it was in the previous three months, pointing to some encouraging signs. “Although out-of-state visitation was down again in the third quarter of 2020 due to the Covid-19 pandemic, we are encouraged to see some signs of recovery in our visitation estimates, particularly with international travel almost nonexistent,” Young said in a prepared statement. “These positive trends coincide with Visit Florida’s recently launched marketing campaigns that highlight all of the safe vacation opportunities that Florida currently has to offer. While we still have a long way to go, Visit Florida will continue our efforts to expedite tourism’s recovery from the pandemic so Floridians can get back to work.”