Ocean City deals helped bring back visitors after 2009 slump

By Danielle Douglas
Monday, August 23, 2010

OCEAN CITY, MD. -- The aroma of cotton candy wafted through the air of this resort city last Tuesday afternoon, as crowds of visitors stopped at stores, tried their luck at games or stuffed their faces with funnel cake. The boardwalk was packed, creating at least the appearance of good times even if the local economy is still in recovery mode.

"There's been swings and fluctuations in sales, but they're up across the board from last year, which was pretty bad," said Christopher Maxa, the general manager at the Kite Loft in downtown Ocean City.

A few doors down from Maxa and his outdoor display of fluttering kites, sales associate Caleigh Wooten said she has been ringing up more sales at the Quiet Storm surf shop where she works. "We might see 40 or 50 customers during the day. But at night, like 100 to 200 people stop in between all of the events on the beach," she said.

All along the 10-mile stretch of Ocean City, retailers, restaurateurs and hotel operators noted an uptick in business from the slumping sales of 2009. Like a lot of resort communities, this coastal city has benefited from good seasonal weather and a general resurgence in vacation travel.

But families are increasingly booking shorter trips at the last minute, creating pockets of downtime for merchants. Ocean City's local government and trade associations have tried to compensate by bolstering advertising and crafting promotions aimed at drawing visitors from a wider geographical area and giving people reason to stay longer.

The results have been promising. Room tax revenue, for instance, rose nearly 5 percent in June from a year earlier, while the intake from food and beverage taxes grew roughly 10 percent, according to the most recent data from the Greater Ocean City Chamber of Commerce. That revenue is certainly stronger than that for 2009, but it was still off a few percentage points from 2008. The number of visitors per week has slipped by 10 or 20 people this year compared with last, but those who come are spending more.

"Last year was kind of an eye-opener," said Melanie A. Pursel, executive director of the chamber. "People are being very cautious on how they are spending their dollars, so we need to give them a good, solid reason to take the vacation that they deserve, and to take it with us."

Adjusting to these travel trends has been challenging for resort towns all along the Eastern Shore. "If you're a seasonal business and [visitors] are only coming Thursday through Sunday, you just lost a third of your business," said Carol Everhart, executive director of the Rehoboth Beach-Dewey Beach Chamber of Commerce. Businesses in the other coastal towns are, similar to their counterparts in Ocean City, offering midweek specials and hosting events to attract vacationers.

Visitors to Bethany Beach occasionally opt for extended weekend stays, but since many of them are renting homes or condominiums, they tend to remain for a full week, said Carrie Subity, executive director of the Bethany-Fenwick Chamber of Commerce. In cases in which guests take shorter trips, she said, hotel operators are learning to manage the "ebb and flow of how people are vacationing." That may mean discounts to combat lulls in business.

Destinations across the country are offering a wealth of bargains, making competition fierce, said Susan Jones, executive director of Ocean City's Hotel Motel and Restaurant Association.

"We've had to encourage our members to be really creative," Jones said. "Most people have told me that they are ahead of where they were this time last year."

Indeed, overall occupancy rates and room revenue in Ocean City have trended up this year. According to Smith Travel Research, total occupancy registered at 78.2 percent in July, a 6.4 percentage-point increase from the same period a year ago. Revenue per available room also climbed 7.9 percent year over year to an average $159.96 per night.

At the Francis Scott Key Family Resort, sales manager Kourtney D'Amore said the hotel has been offering more packages, such as 15 percent off when guests stay three weeknights. The 232-key lodging, which sits just off the main bridge in West Ocean City, has maintained an average occupancy of 90 percent, with rates ranging from $155 to $215 per night.

"We're always trying to get new clients, but we do a lot of family reunions, with 20 or 40 families that gather here every year," she said.

Jones said she suspects that between soccer and summer camps and demanding work schedules, families simply don't have the time to stay as long as they once did. This has meant more extended weekend trips of three or four days, which translates into higher room turnover, upping operation expenses like laundry.

With the school year starting earlier for many children, Jones noted that business typically slows around the week before Labor Day. As a result, the city will kick off its first Ocean City Hotel Week from Aug. 22 to Sept. 2. Nearly 40 hotels will offer a variety of discounted packages. Take the Courtyard Oceanfront Ocean City, where guests who stay four nights will get 20 percent off. Considering that rates at the inn typically hover around $400 a night, that's not a bad deal.

"The chamber and the association are really stepping it up," said Richard J. Smith, the hotel's general manager. "Everybody is focusing on tourism and trying to get people into the city." A few years ago, the city began offering more free events, such as concerts and movies, geared toward families, hoping to keep them on the boardwalk longer.

"Activities add value to the vacation experience, and that's what visitors are looking for," said Ocean City Mayor Richard Meehan. The surge in promotions and packages, he said, are an outgrowth of the town's decision to reevaluate its marketing campaign back in 2008.

Families from Richmond to Baltimore have flocked to Ocean City for generations, creating fairly sustainable demand for the centrally located resort town. But relying on that repeat business left quite a bit of value on the table. Members of the hotel and restaurant association asked the mayor to raise the room tax from 4 percent to 4.5 percent to fuel a full-throttle advertising campaign.

At the time, the city was carving out about $1.5 million for marketing, "vastly underspending competition, such as Virginia Beach and Myrtle Beach," Meehan said. By dedicating the half-percentage-point tax increase to advertising, the city more than doubled the budget, which is now $4.1 million.

This year marked the first time residents of New York, New Jersey and Pennsylvania were treated to OC radio spots, television commercials and billboards throughout the summer season. "As our competition was cutting back, we saw an opportunity to move forward," Meehan said. "Not only has it helped us today, but it's going to have us in a better position moving forward as the economy improves."

Back on the boardwalk, sunburned patrons filed in and out of Sanibal Jewelry, as the general manager, Huey, who declined to give his last name, offered his take on the beach economy. In some form or another, he has worked on the boardwalk for the past 50 years, remembering the 1970s and 1980s as the "best years" for business and deeming the 1990s as the leanest.

As for this year, Huey explained, "We're going to eat, but we won't get fat."

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