Bed Tax Collections are UP, Business Numbers DOWN

by August 18, 2008 • 5 comments

Who said the Summer White Sale wouldn’t work? Well, although I was quite critical of the PCB Summer White Sale, I don’t think I ever said, verbatim, that it flat out would not work. But did it? Well, the answer is actually quite a bit more complex than a simple yes or no. Of course, that’s what makes the answer so much fun.

In a recent article, the News Herald reported that so far this year, compared to the same period last year, the bed tax collections are up 3.5%. This is true, additionally I found from October 2006 to June 2007, the bed tax collections were up to $3,953,245.77 or 11.77%. The 2006 number of $3,537,045.14 is up 3.04% from October 2004 to June 2005, and the 2004 numbers were up 5.94%. And because I always hate reading stuff like this in a paragraph, I’m gonna put it all in a nifty table:

Year 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008
Total $3,240,159.90 $3,432,562.45 $3,537,045.14 $3,953,245.77 $4,091,590.98
% Increase 5.94% 3.04% 11.77% 3.5%

So, the total bed tax dollars are indeed up, but what does that really mean? Well, simply, more money has been generated this year than last year. Maybe it means more bodies visited our beach, maybe it means that some marketing campaigns worked or maybe on average the rental room rates went up enough to garnish the 3.5% increase.

Lets throw another element into the equation. 3,144 new condos came into the rental pool in the last 12 months. Now, I need to be specific and note that the term “last 12 months” wasn’t defined in the information I received. In addition, at least one condo that I know of was described as new but wasn’t – Grand Surf Club – and several others were listed as zero “rentable” that I know for a fact have some rentals, including, but not limited to: Origin, Aqua, Ocean Reef/Ritz/Villas, Laketown Wharf, Seychelles, Splash, Sterling Breeze, and Tidewater. So, using the fantastic SWAG as best I could, I was able to determine approximately a 24% increase in inventory this year over last year.

An interesting analogy was told to me over the weekend:

If you take a tasty swath of Country Crock and spread it over two pieces of Wonder Bread, you have a pretty delicious snack. But if you take that same swath and spread it over three pieces of Wonder Bread, the taste is a lot more bready and a lot less buttery.

What does this mean? This means that we are spreading 3.5% more money across 24% more inventory – i.e. everyone’s numbers are way down.

I talked to a buddy at a local condo (names have not been used to protect the blah blah blah) that said his numbers were down 38% over last year. I was told that Captain Anderson’s was down 20 something % (could not verify, please chime in and correct me!). Talking to another rental agency today, “We’re way down from last year, I don’t know the numbers, but we are much slower than we’ve been in a couple of years.”

So, lets talk about the pcbwhitesale campaign. Cost: $495,000. Cooperating funds contributed: $22,500 (what’s up with that?). We don’t know how much revenue was generated as a direct result of the summer white sale campaign (don’t know that we could ever figure that out anyway), but we do know that this year’s bed tax number is up 3.5% so far from last year, which is an 8.27% decrease from the increase during the same period last year. Following me?

According to YPartnership, the summer white sale campaign generated 68,121 total user sessions and 80,062 total pageviews. That would be at a cost of $7.27 and $6.18 per, respectively. Seems like a lot, since this is basically 7 bucks a click-through, but I guess I don’t know the industry standard, and we are in perilous times.

According to the report, there were a total 19,945 coupon downloads between May 5th to August 7th. Did we get ripped? I wouldn’t be so bold as to say.

It sure is a shame that we can’t figure out the direct revenue generated from the white sale campaign. It would be very interesting to see how much worse we would have fared had we not shelled out $1/2 million for cheap creative, modest discounts and almost no co-op funds.

For you number junkies, and you know who you are, here are some digits to schplatz over:

  • 16,013 – approximate number of rentable “beds” on the market right now.
  • 3,144 – approximate number of rentable “beds” new for this fiscal year.
Year 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008
Total $5,123,895.32 $5,237,010.27 $5,542,306.01 $6,272,005.64 tbd
% Increase 2.21% 5.83% 13.17% tbd
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1 Steve File August 19, 2008 at 9:36 am

One interesting element which many “marketers” seem to miss is that when one does a promotion with a large giveaway (such as the Beach White Sale)during peak market demand (June and July) is how many dollars from the promotion were needlessly given away and how many rooms could have been sold anyway without the give away and reduction in rates? This market traditionally gives the seventh night free and June/July is its peak demand period. It is likely that Bay Tourism needlessly lowered local room rates and gave away the fourth night during a time of peak demand when visitors would have come regardless. This became a double whammy on local tourism dollars.

Also, one needs to take a look at South Walton. Granted, their market appeal seems to be more oriented towards beach homes (versus condos) but their census rates always appear to be larger than Bay’s during August as well as in the Fall–which is when Bay needs “heads in beds”. Marketing efforts need to be directed to August in the Midwest and other regions in the country where school does not start in early August. Walton has wisely (and fairly sucessfully) directed their promotional and advertising dollars towards the off season periods.


2 John Shook August 19, 2008 at 11:14 am

If I read the charts & analysis correctly, the summary report should say, “All private enterprise is showing lower dollars received, but the government revenues are up.”

That’s just what we need is a bloating beauracracy trying to help our struggling businesses. If the taxing authority is getting an increase in revenue at the same time the business is experiencing declining sales this problem won’t go of for long before there won’t be a business to collect the revenue for the “authority”.