DAYTONA BEACH — Tourism in Volusia County is expected to roar in March, just like the Harley-Davidsons that rumble along Main Street during the month’s world famous Bike Week, a signature event that attracts thousands of visitors annually.
So it was surprising when officials reported that bed-tax collections for the Halifax Area Advertising Authority that includes Daytona Beach were down 3.4 percent in March, compared with the same month a year ago.
That decline was in sharp contrast to collections that jumped 14 percent for the same period in West Volusia County, and 10 percent in Southeast Volusia, an area that includes New Smyrna Beach. Additional robust gains were reported beyond the county line, with bed-tax collections up between 9 and 18 percent in neighboring Orange, Seminole, Brevard, Lake and St. Johns counties.
What's happening in Daytona Beach?
Tourism leaders point optimistically to overall hotel occupancy that was up by 6 percent in March, although the average daily rate declined by 4 percent. On a less encouraging note, they believe that an increasing percentage of nontraditional accommodations, ranging from rentals offered by condominium owners and management companies to peer-to-peer options such as Airbnb, is yielding lower collections or potentially none at all.
For March, bed-tax collections from those nontraditional sources reached roughly 20 percent of the county’s total, said Evelyn Fine, president of Mid-Florida Marketing & Research, the company that compiles tourism data for the Daytona Beach Area Convention & Visitors Bureau. Even when bed taxes, also known as tourist development taxes, are collected from condominium owners, single-family residences/apartments or condominium management companies, such entities tend to charge lower rates than traditional hotels, yielding less bed-tax money, Fine said.
“That segment has been growing,” Fine said. “As that has happened the impact of the rates that they charge on the (bed-tax) collections becomes more and more obvious.”
In a comparison of collections by the county’s three tourism advertising authorities, the Halifax area declined by 3.4 percent to $1,082,875 for March, compared with $1,120,608 for the same month a year ago.
In Southeast Volusia, collections increased by 10 percent to $294,797, compared with $267,710 in March 2017. In West Volusia, collections jumped 14 percent to $74,803, compared with $65,806 in March 2017.
Bed-tax collections are seen as an important health indicator for the tourism industry.
The county collects a 6 percent tourism tax on hotels and lodges with half of the revenues going to fund the county-run beachside Ocean Center convention complex in Daytona Beach.
The other half goes to the county’s three tourism ad authorities to market their respective areas — the Daytona Beach/Halifax area, Southeast Volusia and West Volusia — as destinations for tourists and special events.
One veteran hotelier acknowledges the impact of peer-to-peer rentals, but doesn't see that as the primary factor in the March decline, though he has no hard numbers to support his observation.
"We were slightly up in March, but we should have been much farther up," said Gary Brown, longtime owner of the 91-room Sun Viking Lodge in Daytona Beach Shores. "The Airbnbs and the private rentals that are taking place on those platforms, I’m sure they are hurting some, but I don’t think that’s the major reason. But there’s no way to quantify that. At least I don’t know how to quantify it."
'Occupancy went up, rates didn't'
Nontraditional sources that pay bed-taxes are vastly outnumbered by those who don’t in the era of peer-to-peer rentals such as Airbnb, Fine said. “I would say it’s a drop in the bucket compared with all the others that are under the radar,” she said.
“Peer-to-peer rentals are a huge unknown, especially near the core area," Lori Campbell Baker, executive director of the Daytona Beach Area Convention & Visitors Bureau, said by email. "We know that hundreds of properties are listed on various rental sites prior to major events, but we don’t get to know if they sold, for how much, and whether or not the properties collected and remitted sales and/or bed taxes. Their bookings and potentially lower rates are likely affecting our overall numbers, but we have no way of knowing how much."
In West Volusia, the impact of peer-to-peer short-term rentals surfaces mainly during peak periods, said Georgia Turner, executive director of the West Volusia Tourism Advertising Authority.
"I know that sometimes on extremely busy weekends — for example when we have Crappie Masters (fishing tournament) at the same time as the 24-hour race (in Daytona Beach) — our visitors surveys tell us that VRBO and Airbnb are all that is available over here," Turner said.
In Southeast Volusia, there are many condominium owners and management companies that offer short-term rentals, said Debbie Meihls, executive director of the Southeast Volusia Advertising Authority.
"I don’t have an exact number of Airbnbs in our area," Meihls said. "Most of our condos have a lodging license, but I'm not sure about the homes."
Airbnb now has bed tax agreements in place in 39 of 63 Florida counties that assess such a tax, said Ben Breit, Airbnb spokesman. Among those 39 counties, Airbnb delivered a combined $12.7 million in local bed tax revenue in 2017, he said.
Volusia County has declined to enter such an agreement with Airbnb, Baker has said, citing the company’s lack of transparency about its rate and occupancy data. County spokeswoman Joanne Magley added that the county has declined to sign an agreement because of contract language that "makes it nearly impossible to audit."
"Because of that, it puts our other lodging facilities at a disadvantage because the Airbnb facilities are not held to the same standards," Magley said by email. "Traditional lodging facilities must register with the county, provide reports and are subject to selective audits. So it’s not just about getting the revenue, it’s about having a fair playing field."
Fine said that the declining numbers aren’t a reflection of the attendance or interest in Bike Week, an event that has worked hard to attract new, younger visitors in recent years. For Bike Week, the 77th motorcycle rally that unfolded countywide March 9-18, hotel occupancy increased by 2 percent countywide over the 2017 event, Fine said.
Official visitor counts for Bike Week, sponsored by the Daytona Regional Chamber of Commerce, aren't conducted because the event is an unticketed festival with activities spread across the county and even into neighboring counties, Fine said.
“Occupancy went up; it’s the rates that didn’t,” Fine said. “We seem to be growing in visitors and our research is telling us our image is improving, that what people are hearing about the destination is resonating with them. It’s now a question of getting the rate up as well.
“I also think it had to do with rates in the shared economy,” Fine said. “They (nontraditional accommodations) tend to be significantly lower and they cram a lot of people into those apartments or houses.”
At the 744-room Hilton Daytona Beach Oceanfront Resort, the area's largest hotel, occupancy and average daily rate both increased year-over-year in March, said Jim Berkley, the hotel's general manager.
"I did hear that some hotels were having some challenges selling out on the final weekend of Bike Week this year, and those may have done some room rate discounting or specials to try and sell out," Berkley said by email. "That may have been one key factor in a decline. Additionally, an early Easter (April 1) this year may have impeded some of the leisure and spring break visitor counts to our area the final weekend of March, with many departing a few days earlier than normal in order to be home for Easter."
Main Street fixture Johnny Sanchez, longtime owner of John’s Rock N Ride memorabilia shop, echoed the observation that Bike Week crowds were plentiful this year.
"It was fantastic," Sanchez said. "By the first weekend, you could see that the numbers were good. Not like 10 or 15 years ago, because it's never going to be like that again, but I had a really good Bike Week."
Brown, of the Sun Viking Lodge, was less enthusiastic, adding that the overlap of Bike Week and spring break created a feast-or-famine scenario that ultimately hurt hotel business.
"I believe that the events were a little lighter than normal," Brown said. "Bike Week was relatively strong, but not as strong as it was in years past. The overlapping of spring break and Bike Week is what hurt us. They all came at same time and you can only take care of so many people and then you’re full. So it’s overflowing one week and the next week they're all gone. I'm sure there were bikers that called that couldn’t find an accommodation. And I’m sure there were spring breakers that called and couldn’t find one."
'A good question'
For March, the Halifax area was the lone tourism advertising authority in Central Florida to report a year-over-year decline in tourist development tax collections, according to News-Journal research.
In neighboring Brevard County, bed-tax collections for the month were $1,968,737, up 10 percent from the $1,784,907 in March 2017, according to the Brevard County Tax Collector’s Office. In Orange County, bed-tax collections rose 12 percent year-over year in March to $30,807,600, compared with $27,527,400 for the same month in 2017, according to Orange County Comptroller Phil Diamond.
In Seminole County, collections were $625,272.31 in March, a 9 percent increase from $572,831.41 for the same month a year ago, according to the Seminole County Tax Collector’s Office. In Lake County, bed-tax collections were $366,834.10 in March, compared with $310,780.44 for the same month last year, an 18 percent increase.
In St. Johns County, bed-tax collections were up 13 percent year-over-year in March to $1,281,678.12, compared with $1,136,554.92 for March 2017. In Flagler County, where the state collects data rather than the county, figures weren’t yet available for March. In February, Flagler reported a jump of 28 percent to $239,636, compared with $186,424 for February 2017.
Those areas presumably face similar pressures from peer-to-peer rentals.
“That’s a good question,” Fine said. “I don’t study other counties, so I can’t really comment. I would be attempting to figure something out without enough details.”
Brown, of the Sun Viking Lodge, said that the opening of new hotels has increased the area's room inventory, potentially causing some hoteliers to lower rates to compete. In Daytona Beach Shores, Brown has been facing a unique marketing problem since online travel giant TripAdvisor started excluding hotels in that city from its Daytona Beach listings in recent months.
"If you’re looking (on TripAdvisor) for a hotel in Daytona Beach, you no longer see hotels in Daytona Beach Shores," Brown said. "Obviously, the majority of travelers don’t even know Daytona Beach Shores exists. I’ve seen a definite decline in business from TripAdvisor, which is significant for my property. I saw a pretty heavy impact."
Baker, meanwhile, suggested that at least some of those rooms in nearby counties might have been booked by motorcycle fans headed to Daytona Beach.
"We’ve heard over the years that Bike Week fills rooms in Central Florida, Brevard, Flagler, St. Augustine and other areas," Baker said. "In fact, years ago, my colleague in Key West thanked us for the business. Bikers are more than happy to ride long distances with their peers."
Over a longer period, Volusia County increased its tourist tax collections by 41 percent over the past five years, according to News-Journal research. Overall, the county collections rose from $15,164,313 for fiscal 2012-2013 to $21,316,863 in fiscal 2016-2017, according to the Florida Department of Revenue.
That places the county in the bottom third in a comparison of 30 coastal counties collecting at least $500,000 in tourist development taxes annually. By comparison, Hernando County, home of Weeki Wachee Springs State Park, topped the list with growth of 158 percent from $360,549 in 2013 to $929,449 in 2017. Five-year growth was 53 percent in Brevard; 40 percent in St. Johns; 28 percent in Flagler; and 21 percent in Miami-Dade counties.
“Daytona Beach, and our tourism area, is among the biggest in the state,” Fine said. “There was a time when we started studying this that we were No. 1 for the drive market. We’re still well up there in terms of our collections, but we have slipped some for sure.”
The March slump unfolded amid the celebration of a record number of more than 10 million visitors to Volusia County in 2017 and other encouraging stories such as the grand opening of the new $40 million beachside Hard Rock Hotel and the continued development of the One Daytona shopping and entertainment complex across from Daytona International Speedway.
The annual visitor total is compiled through a combination of monthly hotel occupancy reports and responses by overnight visitors to monthly profile surveys conducted by Mid-Florida Marketing & Research, questionnaires that inquire about length of stay, size of party, number of children, among other topics. The total from the raw data is then doubled to account for overnight visitors who might be staying with relatives, in privately owned condos or homes or other accommodations, a methodology that has been used consistently since the late 1970s, Fine said.
The dip in March numbers won’t undo Volusia County's momentum, Fine said.
“I’m excited about hitting the 10 million visitor mark,” Fine said. “That’s the biggest we’ve ever had. Now, we have to collect more money from them.”