Tourism funding down

Last Updated on Wednesday, 25 January 2012 11:03 Written by Ann Richardson Wednesday, 25 January 2012 00:00

Drop in mercantile licenses may be to blame

OCEAN CITY — Working through an extremely tough economy means cutbacks in many areas, including the city’s tourism commission.

Gearing up for the 2012 campaign, tourism officials will have to absorb a $130,000 loss as revenue from funding sources, including mercantile licenses for businesses, mercantile fees for landlords and fees from contractors, is down.

The tourism commission will work within a $750,000 budget to fund a wide variety of initiatives.

“This affects us greatly,” said Nick Marotta, chairman of the city’s tourism commission. “The city has done a fantastic job. They are doing the best they can to collect the fees, but we do have to look into this.”

At a Jan. 12 City Council meeting, Council President Michael Allegretto said he was surprised.

“The number of rental units isn’t down,” he said at the meeting. “If anything, the number of units should be up.”

A tough economy means more second homeowners are renting units in the past. Some may be renting for a few weeks or a month or more to help cover the mortgage and expenses of owning a seashore getaway. Whether it’s a week or the whole summer, these owners are supposed to pay a $175 mercantile fee, and some are not.

“Enforcement is difficult,” Marotta said last week. “If homeowners aren’t renting through one of the local real estate offices, it’s harder to find them.”

Some, he said, may be going underground, renting privately or on websites like Vacation Rentals By Owner.

Allegretto said he hopes city officials will begin perusing such sites to find wayward owners. The fee, he said, helps to support the mission of the tourism commission, which is to bring visitors over the bridge. When some homeowners pay the fee and others don’t, there is not an even playing field.

James Mallon, the city’s director of community services, said some of the problem can be attributed to local businesses closing, causing a drop in mercantile fees. Contractor fees are flat, and revenue from rental units is down. The city promises to work with local Realtors to crack down on owners who don’t pay the fee.

“We’re flushing them out,” Mallon said, adding that city officials would like to work with the Ocean City Board of Realtors and find out who is renting and who is not, then start going through online rental sites.

The city wants to take a friendly approach, he said, through an educational campaign. When new buyers become landlords, they will be provided with information about paying the fee.

“We’re going to learn from last year and be more proactive about 2012,” he said. “We’re going to develop a methodology. We’re looking at 2011 and trying to find out what happened. We’re looking at what the city can do. Maybe some of these people are not renting through a Realtor, but that does not mean that they don’t have to pay a mercantile fee. Our job is to find these folks.”

Allegretto said the 4,800 reported rental units should be much higher.

The tourism commission, Marotta noted, has been on a roll since the city started collecting the fee a few years ago, offering a larger bounty to lure visitors to “America’s Greatest Family Resort.”

By spending more on the outer markets, the tourism commission, he noted, was able to expand the market.

“We spend 75 percent of our budget in the outer markets, and 25 percent locally,” he said. “We raised the fee in 2008 and again in 2009 and 2010, but last year we did not. We talked about raising it again, but in this economy, maybe that’s not the answer.”

The $130,000 reduction in revenue means the advertising budget has to be cut back, Marotta said.

“We have no more additional money, we have a lot less money to spend,” he said. “We bring the people over the bridge, once they get here the Chamber of Commerce takes over, and that works out really well. We’ve been working well together. This is not easy news for us.”

Marotta said the tourism commission and the chamber worked jointly on a rental contest. The online bonanza lured people to the chamber’s website, where they signed up to win a chance at one of eight free weekly rentals in Ocean City and over $1,500 in goodies.

“It was so popular,” Marotta said.

So popular, in fact, that officials are extending it into the shoulder seasons.

“We’re starting three weeks earlier, on June 23 and we’re going past Labor Day,” he said. “This contest is the best thing we have going for us. People want to win that and that means they start thinking about Ocean City every day until the end of the summer. The winners tell a whole bunch of people how wonderful Ocean City is, people are talking about Ocean City. I can’t even begin to explain how wonderful this contest has been, so we’re not cutting back on that.”

This drives traffic to the site, and we’re hoping maybe we get a few people to want to buy a second home or move here year round, maybe do something more than a weekly rental,” he said.

Competition for tourists is “tough,” Marotta noted.

“We can’t just assume they are going to come here, its not like it used to be,” he said. “The Internet helps us, but it also opens up a big world to people. We want to keep the cycle going, where they come for a weekend, a week, a month, buy a second home, but we can’t take it for granted.”

“We have to stay ahead of the curve,” he said.

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