Something remarkable is happening to Flagler County’s tourism industry, at least by some measures. It’s doing better than last year: tourism-tax revenue has gone up three successive months between July and September, substantially so in August and September, in contrast with statewide tourism revenue, which plummeted 30 percent in the third quarter.
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.”
E, ROBOT says
“Vacation” rentals aka short-term rentals means renting rooms in residential areas and has traditionally been a no-no for oh so many reasons. On our short Flagler Beach street there were five cars parked all over the front yard of a three bedroom house. Small children were playing in the street — normally a sight I find charming, however, there are no children at all living here, so drivers were not expecting to find them. I cautioned the people about the danger and they moved the children to the backyard to play.
The renters were polite and well mannered as were their kids and it only happened that one time, but I would find very problematic if we had new “neighbors” every week or so.
Very bad idea.
Well have at least a portion of rhe reason why C19 keeps chugging along in FPC. Out of Town folks on Vacation out and about perhaps maskless/ distancing or not . Makes some sense to me but I’m usually wrong so.
Denise Calderwood says
It’s funny tourism is up yet the staff took the position of not funding the last quarters of the local groups that receive funding from them…the Palm Coast Historical Society did not receive their final quarter’s grant allotment…totally unfair a due to COVId but staff took a hard line and withheld the dollars for failure to comply with their grant obligations and that organizations total budget is only $13,000. How unfair the system is…and accountability of these dollars and COVID dollars in general in the hands of county staff just stink. Where’s the accountability.
Jane Gentile-Youd says
Denise, you are sooooooooooo right. Flagler County ‘Staff’ rules mandate you MUST be ‘home based’ in Florida ( unless you are Joe Mullins).. Also you MUST have paid your BTR ( Business Tax Receipt) BEFORE March 1st.. unless of course you are one of the restaurants where the gang hangs out – Tor tugas, Oceanside, Beachfront Grille – these guys got $50,000 each but BTRS paid just days before their checks were cut in July and August. Then we have friends of some who don’t even have BTR got some of those juicy federal funds.
GOD BLESS PUBLIC RECORD. I found more than a dozen so far who had no BTRS until July-August who got these big bucks while long time small business owners get the shaft.. I thought Miami-Dade County was incompetent and corrupt – they ain’t seen Flagler County yet…………..
This proves my theory. Money over public health. Vacation rentals need to be locally zoned just like bed and breakfast transient public lodging establishments. These dwellings should only be allowed to operate outside our local neighborhoods.
The county is more interested in tourism dollars then their own constituents. Keep them coming in to Flagler and watch the COVID – 19 numbers increase. What a complete fabrication of the truth. Just walk into your local Publix. Large groups not wearing proper face protection exposing our residents.
“60 percent goes into the tourism marketing fund (advertising the county and paying for its tourism staff)”
What business spends 60% of it’s revenue on advertising/marketing? Very few if any I imagine. Is there any measure of Return on Investment of all that money spent to promote tourism? I suspect if the county spent $0 on advertising/promoting tourism that tourism wouldn’t drop 60% thus giving the county a net gain in money to be spent on capital projects and beach restoration. Lukasik basically admitted it herself. “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”. With the tens of millions Flagler county is going to need in the future on beach restoration maybe they should reconsider pissing away 60% of bed tax revenue on marketing and use more of it to filling the coffers for future expenditures of beach restoration and cleanup after storms.
David Jennings says
It’s great that someone is making money on vacation rentals, but it comes at the expense of those who are next door to them. I feel that our neighborhood has been destroyed by having the house next door rented to random people, at least one of which was a felon.
Stephen Ross says
Short term vacation rentals are what the public wants –ask vacationers! STRs have fueled tourism, improved delapidated dwellings, and added tremendous revenue to the city. STR rental owners absolutely agree to sensible regulations, but the heavyhanded duration of stay, fee, and unrealistic parking requirements are stifling the industry and city revenue. The over-regulation of STRs will ultimately cost the city $50M in legal fees. While the rest of the world modernizes to accommodate STRs, St.
Augustine city planners stick their heads in the sand to do the bidding of some rich cats who have ulterior motives. Wake up! Failure to adapt to what the public wants is detrimental to the city. In my family, we don’t want only a hotel/motel or BnB choice–too costly, not enough space/freedom, and just doesn’t suit our needs; we want a place to call home with freedom and amenities that STRs provide. Give us what we want, or we’ll vacation elsewhere. This article clearly validates the value of STRs.