How Does Florida Save Its Tourism Despite the Oil?

Oil began washing up on Florida's gulf coast earlier this month. There's some worry that the Gulf Stream will bring the oil down its west coast, through the Florida Keys, and up the southeast coast as well. That means, in addition to the west coast, the tourism business in the Keys, Miami, Ft. Lauderdale up through Palm Beach could all be in jeopardy. As explained here, this is a dangerous possibility for the Florida economy, which has endured a vicious recession due to its dependence on real estate. How should the state respond to this threat?

First, how much is the spill affecting tourism? It's hard to say. I contacted several major hotel chains last week posing this question, but ultimately, none wanted to talk about it. But the Mobile Press-Register provides a different perspective -- that of rental condo owners (via Calculated Risk):

"June has been gutted, as far as rental occupancies," said David Bodenhamer, a partner in Young's Suncoast Vacation Rentals in Gulf Shores, which handles almost 500 rental units. "We've had $220,000 in cancellations in the last three days. We're running less than a 50 percent occupancy, which is significantly less than this time last year."

In fact, he said, a few of his clients have reduced their rentals rates by half. "They are just saying, 'Get me whatever you can get me.'"

This is about the Gulf Coast, but other Florida beaches that may be affected will likely have a similar fate. The property managers are offering 30% to 50% cuts, according to the article. But that may still not be enough to satisfy many tourists. And in other cases, it may be unnecessary.

A private-public partnership is needed to address this problem. While business profits across the state will suffer if tourism takes a hit, so will government revenue. Tourism is pretty much Florida's only hope at this point, since real estate was the foundation of its economy -- and it isn't coming back. If tourists shun the state for a year or two, you'll see prolonged high unemployment, income declines, and probably even a population drop.

There are two problems that need to be solved. The first is when oil does, in fact, plague a beach in some vacation destination. The second is when tourists fear oil will affect a beach they're visiting even though it doesn't.

In the first case, the state needs to find a way to keep these tourists within its borders, even though it probably won't be able to keep those people in the oil-affected beach towns. It could partially subsidize trip changes to unaffected destinations, like the Orlando theme parks or beaches on the central and northeast Florida coasts. That won't thrill the hotels who lose the business, however, so some of their loss will also have to be covered by the state -- initially. In theory, BP should ultimately be liable for these losses as the liability cap doesn't apply to Florida.

In the second case, hotels need to do their part to convince tourists that their beaches are safe. Technology could help here. Live "coast" cams could show the clean surf. Independent environmental experts could act as sort of beach auditors to verify that the oil hasn't hit these coastal areas. The state should also provide rebates for travelers to visit these clean destinations, in order to entice travelers who haven't made reservations yet, but planned to visit Florida before the spill. Guarantees must also be in place. If oil does hit the coast, these tourists should either get a refund or have the opportunity to transfer their vacation to some other oil-free destination in the state.

It is utterly imperative that Florida does something to prevent tourists from avoiding the state due to the oil spill. Lawsuits on BP can't make up for the entire economic loss that will result if their vacationing industry is significantly harmed. All businesses will be affected: if residents don't have as much tourism income, then they'll have less money to spend to benefit the state's economy. That will hurt businesses without any direct relation to tourism.