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News Analysis: Oil Perception Could Severely Hurt Florida

May 11, 2010 By: Susan Young
 


Even if a drop of oil never touches Florida’s pristine beaches, the public perception of that happening could be devastating to the state’s $57 billion hospitality industry, which represents 20 percent of Florida’s economy, 3.4 billion in sales tax revenue, and 900,000 jobs. 

Just how difficult is expected to be outlined this afternoon for the U.S. Senate’s Committee on Environment and Public Works. Travel Agent obtained the written testimony of Keith Overton, senior vice president and COO, TradeWinds Island Resorts in St. Petersburg, FL, and chairman of the Florida Restaurant and Lodging Association, which represents 10,000 tourism entities.

His prepared remarks offer analysis and stunningly frank perspective on the current oil slick situation and why tourism officials are urging Congress to better control future drilling within Gulf of Mexico waters.

Adverse Effect on Florida’s White Sandy Beach Image

“Florida’s image has been consistently attractive for nearly a century and continues to create fond memories of sugary white sandy beaches, warm sunshine, blue waters, beautiful natural resources, fresh seafood and a variety of unique and fun attractions for everyone visiting,” said Overton. “The mere thought of oil rigs in the nearby waters off Florida’s shores and beaches changes this fantastic imagery instantly and permanently!”

Overton cited a 2008 study conducted by the Visit St. Petersburg/Clearwater Convention & Visitors Bureau, in which the top five most influential factors in choosing a beachfront destination were a safe destination, beaches, environment, relaxation and sun tanning. Overton’s view: “It is clear that off-shore oil drilling along Florida’s shoreline, even absent a disaster such as the one that recently occurred, will negatively affect three of these attributes in immeasurable ways, costing Florida billions of dollars.”

He also said a soon to-be-released 2010 Portrait of American Travelers by YPartnership indicates that “beautiful scenery” and a “beach experience” are among top five factors considered important for American travelers interested in visiting Florida. “This further makes the point that Florida’s tourism will be materially affected by the disaster that continues to pour oil into the beautiful Gulf of Mexico,” said Overton.

 

Negative Effect on Florida’s Economy and Tourism

Overton noted that while tourism is Florida’s largest industry, it also continues to suffer with a recessionary economy. Travel Agent magazine and national media organizations have repeatedly cited Florida has among the worst hit states for recessionary impact; the state has a fiscal crisis, it boasts high unemployment in many areas, plus Florida is seeing record foreclosure rates in some areas.

“When you also consider factors such as an unseasonably cold winter, Florida’s hospitality in 2010 looks to endure another year of declining revenues,” Overton said.

“Even a further 10 percent reduction in our tourism dollars could force many tourism-based businesses out of business,” he said, adding that profit margins are already thin in Florida’s tourism industry and bank debt service coverage ratios are regularly at risk for many of our restaurants and hotels.”

Potential Economic Effect to Florida’s Citizens

He also projected that without the current production of tourism dollars, government services and programs could be cut, and a state income tax could be necessary to offset budget deficits going forward. That could personally impact many travel agents who live in the state. Currently, Florida residents do not pay any personal state income taxes, as much of that revenue comes from tourism taxes and fees.

“Recognizing just how fragile Florida’s tourism has become, I fear the affects of this oil spill will be devastating and similar to those Florida’s tourism industry experienced after the multiple hurricanes of 2004,” Overton said in his written testimony. In that situation, while a few areas of the state were hard hit and suffered, most of the state had no damage and was open for business, yet tourists stayed away.

“What people saw in the national and international media was the sensationalism of the news coverage surrounding these storms, which ultimately lead to a perception that all of Florida was under water and badly damaged,” he stressed.

Even six years later, Overston said the travel industry finds that both business and leisure travelers are still very hesitant to plan a visit to Florida during August and September. Some hotels and cruise lines  now even offer “hurricane season” discounts, deals or vacation refund policies should a hurricane interrupt a cherished vacation. 

Potential Effect on Florida’s Long-Term Reputation

As for the current oil slick situation, if it does come Florida’s way, “imagine for a minute what is ahead for our industry as oil continues to cover the pristine natural environment in our Gulf waters,” he said. “This disaster has the potential to devastate Florida’s coastal ecosystems.”

He pointed to the aftermath of Alaska’s Exxon Valdez spill in 1989. “The tourism trade relies upon healthy, sustainable ecosystems,” Overton told the committte. “So, let me be unequivocally clear, the importance of tourism far exceeds any economic benefits realized by oil drilling in the Gulf of Mexico.”

He urged the committee to look beyond the catastrophic impacts of the current spill and to ensure legislative reforms are enacted so this type of situation never happens again. He also said the government’s current oil-spill-handling approach to the problem is “woefully insufficient” and called for an independent commission to investigate the cause, response and impacts.

Tourists have a multitude of choices when traveling and Overton said Gulf fisheries offer a unique driver that brings them to coastal communities. Overton says it’s vital that the committee provide necessary resources and funds to mitigate the disaster in the Gulf of Mexico.

But he also warned: “Please also recognize that stopping the oil from continuing to enter the Gulf waters and the clean-up process doesn’t make everything better and it certainly does not address the long term effects this spill will have on Florida’s tourism and natural resources.

Need for More Tourism Marketing Dollars

He also said that in 2005, Florida’s marketing agency, Visit Florida, needed as much as an additional $25 million for a total of $50 million for marketing efforts to try to let travelers know the state was okay and open for business after the hurricanes of 2004.

He had an ominous projection  for what will be needed this year as the oil slick situation continues. “I would suggest that Florida will need at least $100 million, $75 million more than we have today, to sustain the necessary marketing to overcome the damage this oil spill will continue to have on our state’s tourism,” Overton said.

 


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