Tourism tax revenue in Flagler County is down 6.4 percent in the first six months of the fiscal year–October through March–as vacation rentals and leisure-room occupancy in local hotels has fallen after what Tourism Director Amy Lukasik describes as the “record-breaking years of Covid, when Florida remained an open destination as other states and countries took safer and saner protections for their residents.
Year-over-year declines in tourism tax revenue were especially sharp in November and January, with 11 and 14 percent declines. Tourism tax revenue in those six months totaled $1.68 million, compared to $1.79 million the previous year. That’ll make one of the Flagler County Commission’s current goals–to “Increase visitor spending in all tourism related sectors”–difficult to achieve.
The decline could implications for the local workforce, 18 percent of which is “in the tourism cluster,” Lukasik says. But county unemployment numbers have been flat in the last six months.
“We’re going back to a little bit of normal, those were record-breaking years,” Lukasik said in a summary report to the Tourist Development Council last week. At a recent conference of tourism directors she attended, she heard from other directors and was “relieved that we are actually OK, when you compare. The numbers Florida was seeing post-covid, 2023 and 2022 were record-breaking. The reality is that we may not hit those numbers again, because people have more choices now. It feels like everyone was joking, saying like the whole world has been to Florida. So where are they going to go somewhere else next year. But again, it’s competitive. So that’s why the marketing has to be aggressive, very targeted. And it’s very important that we never stop doing that.”
Florida saw a 1.6 percent decline in visitors in 2023, when it drew 135.02 million visitors, compared to 137.4 million in 2022.
Flagler County levies a 5 percent sales surtax on short-term stays such as in hotels, motels, RV parks, vacation rentals and the like. The tax generated $4.6 million in fiscal 2023, which ended in September. The money is split three ways: 20 percent is appropriated to capital projects that draw tourists (a $739,000 tourism grant helped pay for Palm Coast’s Southern Recreation Center, for example). 20 percent is appropriated to beach restoration (the county has used TDC dollars to help pay for dune reconstruction). Marketing and advertising accounts for the remaining 60 percent of spending.
Other indicators, calculated for the full calendar year of 2023 (ending in December) rather than the fiscal year, point to similar declines: a very slight 2.1 percent drop in the average daily hotel room rate (to $151), with another continued, sharper declines in January and February when compared to a year earlier, a 22 percent decline in rates charged locally by Airbnb and Vrbo, the vacation-rental companies. (There were 652 vacation rentals out of single-family homes in Flagler County, 45 out of homes only partially used for that purpose, 23 are run out of duplexes, and 751 are run out of condos or town houses.) The tax revenue decline is not affecting the county’s five-person tourism bureau and its ongoing initiatives.
The declines were echoed essentially in real times by local hoteliers, some of whom sit on the tourism council. “Everything is trending down,” Lisa Robinson, the general manager at Hampton Inn and Suites said, citing losses of $39,000 last year that were offset by higher gains in January and February.
Stephen Baker, the director of group sales at Hammock Beach Resort, said the hotel is booking about 2,000 more room nights than last year for business groups, but leisure bookings are down. “We’re pretty even flat overall the last year for the first quarter, and cutting back on a few other things to make budget for that [first quarter]. But just looking forward and trying everything we can for the leisure market. There’s just a lot of other avenues for them to go, it seems.” The hotel just hired a new marketing director, and invested into a $30 million clubhouse at the Conservatory, which it hopes to market to local and regional events–seminars, weddings, business events.
Locals are the majority users of Flagler County’s amenities, not visitors. In a study for the tourism office of main beach locations–the River to Sea Preserve, Varn Park, Jungle Hut Road, Old Salt Park and Bay Drive Park–proportions of local users ranged from 54 to 72 percent. Among travelers into Flagler, almost 20 percent were from within 100 miles–Orlando, Daytona Beach, Melbourne. Curiously, a larger proportion was from Atlanta (10.6 percent) than from Jacksonville (8.5 percent).
Dan Mundrean, the general manager at Palm Coast’s Hilton Garden Inn, described economic conditions at the hotel as “pretty much lateral compared to last year. March was a very slow month for us, considering Bike Week fell short for us and in the Volusia Daytona market. It was a little slow.” He has better hopes for the second and third quarters. “My leisure market has been good, Sunday through Thursday, business has been really really good. We are slightly behind on weekends and can’t figure out why,” he said. “Maybe the hammock is stealing all my business,” he quipped.
So it was left to Palm Walker, the veteran travel writer and adviser who’s been on the tourism council longer than anyone there, to be the voice of reassurance and perspective, explaining what’s been going on. “Do not despair,” she said. “Everybody’s going to Europe. Europe is over the top. That’s where people are going. I think when they get tired of going there or they can’t find the space there or it’s too expensive, they’ll be back. So heads up.” (According to Courthouse News Service, hotels in Europe in 2023 “reported visitors spent 1.92 billion nights in Europe, a 1.6% increase from pre-pandemic levels and up 6% from 2022.”
“Also the cruise lines out of Canaveral are killing us because they are so cheap,” Walker said. She’d just been told of a four-day cruise out of Tampa for just $109, all inclusive. “That is incredible. There’s no way that we locally can compete with things like that. So don’t despair. I’m sure it’s coming back in the fall. But right now June, July and August, before school starts again. The whole world is going to Europe.”
It’s not necessarily going to help that Flagler Beach, the leading beach destination in the county, is ramping up as construction ground zero now and for the rest of the year as the Margaritaville Hotel continues its build-up, a seawall construction project starts at the south end of town, the long-awaited beach-renourishment, or dune-rebuilding, project begins in July, and the demolition and reconstruction of the pier takes place later this year. The beach project alone, Flagler Beach Commissioner Eric Cooley said, “is going to have a very significant change to the landscape of the entire county since Flagler Beach is pretty much one of the main destinations.” But for all the construction, “Flagler Beach will actually go back to having a beach.”
pete says
Ever think people just don’t have the money to spend. Look at the cost of everything.
Ray W. says
Thank you for your valid point.
USA Today just published an article about the ramifications of today’s quarterly GDP report.
Consumer spending rose 2.5% for the quarter. But how does that positive number compare to a 12-month average CPI-based inflation rate of 3.5%? How does it compare to that Atlanta Fed’s report that average hourly wages rose 4.7% in March? Many articles suggest that people have exhausted the over one trillion dollars in cash they set aside during the pandemic, arguably due to reduced spending levels during the downturn and the unfunded stimulus funds they received in the government’s bipartisan effort to bolster a faltering economy. That a drop in the rate of expansion in overall consumer spending is to be expected.
An excerpt from the article seems apropos:
“The nation’s gross domestic product, the value of all goods and services produced in the U. S., expanded at a seasonably adjusted rate of 1.6% in the January-to-March period, the Commerce Department said Thursday. That’s down from robust growth of 4.1% in the second half of last year and the lowest reading since spring 2022. It’s also below the 2.5% gain predicted by economists in a Bloomberg survey.
“But the pullback was caused chiefly by businesses that replenished their inventories more slowly and feeble growth in exports – two volatile categories that don’t reflect the economy’s fundamental health. Final sales to private domestic purchasers – which excludes those elements as well as governmental spending – grew a robust 6.1%.
“That ‘illustrates there is still a lot of positive underlying momentum’, economist Paul Ashworth of Capital Economics wrote in a note to clients.”
Is it possible that national discretionary spending is becoming constrained, which affects Flagler County’s revenue collections? Is it a regional phenomena? Is it more of a local downturn in tourist spending? A combination of any two or all three?
One thing remains clear, but less clear than many want. The numbers still do not suggest that we are headed toward recession. A recent survey of economists reflects the belief that a recession later this year or next has dropped from a 60% expectation to a 30% expectation. Yes, a recession may be in our future, particularly given the sizes of the pandemic-induced Trump and Biden stimulus packages and the overly hot economics of their implementation, but since I have lived through 10 recessions in my lifetime, I suppose I would be properly sanguine if I were to expect to see one or more in my future.
Pogo says
@Ray W.
I would add: give Trump some special mention for his trade wars, and his mindless hostility towards neighbors, allies, human decency itself — and disgraceful fawning and praise for monsters and tyrants.
JimboXYZ says
A lot of it might have to do with the pier being closed since the late 2022 hurricanes ? Beachside the construction is everywhere when it includes the new resort & beach dune projects. Add county growth, & inflation.
Ray W. says
Thank you, JimboXYZ.
According to the USA Today article published today regarding the quarterly GDP figures, the value of home construction production rose 13.9% in this year’s first quarter. It is the third straight rise. Nine months of housing growth in spending, which followed 27 months of housing declines in spending.
We all are seeing residential and commercial construction everywhere we go. It seems as if every week a new sizable housing project is proposed for Flagler County. 400 homes here. 250 homes there. We all know some might not be completely built. Others will completely stall. Some will build out faster than expected. Financing might dry up.
Trudenflation hurts. On the other hand, Trudenomics seems to be working rather well.
We all wish OPEC+ would abandon their voluntary production cuts, so we could get back to the $1.49.9 gas prices that we last saw during the second Obama administration (yes, I bought gas at that price at BJ’s once), but that seems to be fantastical thinking. Saudi Arabia, according to numerous reports, has decided to manipulate crude oil prices to keep them above $80 per barrel. According to industry articles, the Saudi government can fully fund its fiscal needs from oil revenues if prices stay above that level, despite their cuts to overall production.
Greg says
Why come here? Is it the movies in the park that draws them? Not too much of a draw here. Sad
Jay tomm says
What Tourism? You have a beach that really isn’t a beach now & trees. That are getting demolished in a hurried pace anyway.
I want to to go somewhere I don’t stay in Flagler. I go north or south. And even west sometimes.
Nephew Of Uncle Sam says
A good chunk of vacationers have said nope to Florida since DUHsantis and the GOP controlled Legislature made a mockery of the State in the past 2 years.
Don Williams says
Your claims are not backed by any data. In fact FL has grown at the fastest pace in 3 years then the last 20. Vacationers have increased by the 10’s of thousands. Please stop watching cnn.
Ray W. says
Yet another great example of a FlaglerLive commenter being both right and wrong at the same time. And he mixes two different ideas, population increase and vacationer increase, into his comment.
Let’s look at population increase.
Don Williams focuses on “pace” of population growth. He is right. Overall population is growing in Florida at a fast rate, but its pace (percentage) of growth is far below Florida’s historical average, even if one were to look to the averages in growth over the last 20 years, as Don Williams did. According to the census figures, Florida’s population grew 1.64% between 2022 and 2023. During the teens, Florida averaged higher percentage growth rates than that. And, in 2000, Florida’s population grew by 6.2%, a multiple of nearly four times the pace of growth in 2023.
Let’s take this one step further. Between 2020 and 2023, the latest year for Florida census figures, Florida added just over 1.1 million people, for an average of 337 thousand per year.
In 1970, Florida’s population was 6.791 million.
In 1980, its population was 9.839 million, an increase of 3.048 million. That comes to an average of just over 300k per year. Its pace of growth was an average of about nearly 5% per year.
In 1990, its population was 13.018 million, an increase of 3.179 million. That, too, comes to an average of just over 300k per year. Its pace of growth was an average of over 3% per year.
In 2000, its population was 16.048 million, an increase of 3.030 million. Like before, an average of just over 300k per year. The pace of growth, as expected, dropped to around 2% per year on average.
In 2010, its population was 18.846 million, an increase of 2.798 million. The average dropped to about 280k each year. Again, the pace of growth dropped, due to the higher starting point.
In 2020, its population was 21.951 million, an increase of 3.105 million.
Are you, Don Williams, beginning to see a pattern here?
Your point was to encourage people to stop watching CNN, as if that has anything to do with the comment you responded to.
Let’s take a quick look at vacationer increase and possible recent decrease.
We both know that people can chose not to vacation in Florida due to its current political climate. If so, the commenter can be right, just as you are right. We both know that vacationers stopped coming here during the pandemic. We both know that federal stimulus money was distributed all across the land and that people placed large sums of money into their savings accounts in 2020 and 2021, with some economic analysts stating that people saved over $1 trillion in the two years of the pandemic. People spent less in the early years of the pandemic due to lockdowns and social distancing and vacationed more in recent years, perhaps to make up for lost vacations. Economists are now arguing that the over $1 trillion cash surplus in savings accounts has by now been spent, that people have less discretionary income now than they had last year and the year before.
Back to population growth.
You raise a valid point, which is that people, on the basis of a small sample size in years, have recently been moving to Florida.
When taken in context, however, people have been moving to Florida for the last 53 years at a rate consistent with that of the last three years, though the rate can change significantly from year to year. Of course, the pace of increase was far higher in the 1970’s than it is now, due to the smaller overall starting population.
Let’s get back to the basics. People have been moving to Florida at a relatively consistent rate for the past 53 years. They come for many reasons. Low taxes. Abundant and relatively cheap land. Better overall weather. Some come for jobs. Win/win/win/win! It has very little to do with Florida’s political climate. Yes, a few people might leave a northern or western state for political reasons, but with remote working opportunities, who regardless of political partisanship wouldn’t consider selling a house in Massachusetts for $600k in order to buy a house in Flagler County for $400k if their employer would let them work from Florida. I have a childhood friend who has worked remotely for years. She and her husband chose Arizona a long time ago and never looked back.
I argue that the pandemic happened. I argue that businesses began allowing more and more people to work remotely. I argue that nothing changed in Florida, other than out-of-state people seeing an opportunity to continue to work for their employers, only now they can do so in a cheaper home, with money left over from the sale of their more expensive northern or western home, with cheaper taxes, with no income tax, with better weather.
I assert that Don Williams is both partially right and significantly wrong at the same time. I submit to FlaglerLive readers that Don Williams has a good argument, but it is a barely good one. Is my argument, being more comprehensive in scope and more accurate in conclusion, significantly better than Don William’s argument? Must a good argument give way to a better argument?
I hope that someone else can come up with an even better argument. Let’s make FlaglerLive a marketplace of plausible and reliable ideas and commentary. Let’s raise the quality of commentary on this site. Please try harder, Don Williams. All it takes is patience, intellectual rigor, the exercise of reason. You can do those things.
My goal is to foster conservative commenters who are worth listening to.
I say, if anyone wants to watch or listen to CNN, do it. Just don’t get caught up in the hyperbole. That goes for any television or radio news source.
Jimmy says
With bidenomics everyone will be broke! It’s hard to afford food let alone take a vacation.
endangered species says
well we will wait for him to hit the global price reduction button since Biden controls prices of goods and commodities. Ignorant maggots. we are just seeing the massive tax cuts trump gave to richest of people now come due.
Kath says
That new walk bridge& new hotel !!! Is your problem! First you see the bridge, it’s like something out of mad max . Then go over the causeway, and what do you see ! Hotel it blocks the view . Anyone that comes here ,does it for slower pace .They come here for that dreamy old little serf town ..That bridge &hotel belongs up in palm coast. 🌴 not our Beautiful flagler beach..you need to try and keep that older vibe . Some where you put down that cell phone & unwind. And walk from store to store, and get something to eat.
RobdaSlob says
Serf town = typo? Or intended?
Serf = an agricultural laborer during the feudal land system.
Typo or not it describes Flagler.
Dave says
Fix the pier and tourism will go up.
dave says
High cost of living will pretty much cut into those fun filled vacations. And then families can ask themselves , do we save up for Disney World or Flagler Beach. That’s a tough one, not.