Sunday, January 11, 2009

Apenny for your thoughts" has new meaning in the Florida Keys. The potential levying of a fifth penny "bed tax" on lodging accommodations has a lot of folks either thinking about ways to spend it or wondering if it should even be levied.

Currently the bed tax is four pennies -- or 4 percent. When combined with the sales tax, the total tax on Florida Keys lodging would increase from 11.5 percent to 12.5 percent.

Harold Wheeler, executive director of the Monroe County Tourist Development Council, is currently lobbying for the fifth penny. He believes the added tax could generate $4.5 million more a year needed for marketing the Florida Keys, a position gaining a favorable response from the lodging industry.

No surprises here. Under Wheeler's proposal, the lodging industry would be the primary beneficiary of the tax expenditure. Skeptics perceive this as a self-engineered bailout using taxpayer money to offset years of inflated pricing that drove away tourists.

Monroe County already spends three out of four pennies levied on each lodging dollar for marketing and promotion, though some of the third penny can include bricks-and-mortar spending and beach cleaning. The fourth penny is split between the county's general fund and its land authority, which buys land for environmental preservation and affordable housing.

The TDC has not increased its tax in more than 20 years, primarily because there wasn't a clear need to do so. During this period, dramatic increases in room rates and the addition of new lodging simply grew the percentage-based tax revenue.

Wheeler argues the combination of the prohibition on building new transient hotel rooms, recently lowered room rates, increased competition, reduction in tourists and the higher cost of European advertising heighten the need for the fifth penny.

Wheeler makes some valid points, however, we don't believe he makes strong enough a case.

For example, redevelopment has steadily increased the number of rooms throughout the Keys. Transient single hotel rooms have morphed into multibedroom transient town homes, and trailer parks transformed into resorts.

We further question the wisdom of raising lodging prices through increased taxation during a recession. This approach not only sounds counterintuitive -- it is counterintuitive. After all, the lodging industry now is lowering prices in an attempt to be more competitive during these tough economic times.

Another concern we have is the promise by Wheeler that the five tourism districts of the Keys would spend the revenue generated by the fifth penny. Currently, one penny of the three pennies collected for marketing already is devoted to district marketing efforts.

We see this as nothing more than pandering to the various districts to gain approval of the tax. This approach also flies in the face of Wheeler's rationale that more marketing firepower is needed in Europe, where the efficiency of the dollar is squashed by currency exchange. We believe a coordinated marketing effort trumps the persistent local skirmishes for representation.

Speaking about skirmishes, the timing of the request, on the heels of Key West Mayor Morgan McPherson's ill-fated attempts to use a fifth penny to subsidize worker housing, seems a bit suspect. Is the fifth penny really necessary or simply a tactic to block out competing interests?

In reality, the bed tax should benefit everyone in the county and should not be looked at as the exclusive domain of the lodging industry.

Wheeler's goal to keep the Keys a "top-desired destination" is a worthy one. However, we believe simply attracting more tourists through increased promotion falls well short of that mark. Long-term success must include enhancing the Keys product and being price-competitive.

Strategies should include making the Keys more attractive to tourists while providing a tangible benefit to residents. For example, a significant portion of any new bed tax should be used for beautification projects such as park and beach restoration, landscaping and bicycle paths, while improving and maintaining high-impact tourist areas such as Duval Street.

The TDC and District Advisory Council meetings begin next week. We encourage all interested parties to contribute their two cents to the fifth penny debate.

-- The Citizen