K E Y W E S T C H A M B E R O F C O M M E R C E L U N C H E O NJ U N E 2 4 , 2 0 1 5

TDC RESEARCH STUDIES: VISITOR TRENDS &

VACATION RENTAL ISSUES

KEY WEST & FLORIDA KEYS VISITOR TRENDS

E X E R T S F R O M V A R I O U S T D C M A R K E T R E S E A R C H S T U D I E S W E U S E I N P L A N N I N G O U R P R O G R A M

LODGING PERFORMANCE TRENDS

HOTEL OCCUPANCY

76.9% 78.0%

82.5% 82.6%

86.3% 87.1%86.60%

69.5% 70.1%

74.3% 74.2%

78.0%79.4%79.10%

54.6%

57.6%60.0%

61.4% 62.2%64.4%

67.50%

50.0%

55.0%

60.0%

65.0%

70.0%

75.0%

80.0%

85.0%

90.0%

2009 2010 2011 2012 2013 2014 2015

Six-Year Annual Occupancy Trends

Key West Key Wide National STR

• YTD occupancy flat for Key West (-0.5%) and Keys (-0.1%)• US also fairly flat (-0.8%)

• But Keys far outpacing competitor

• 1st QTR 2015 2nd

highest in nation• YTD highest in Fla• Key West higher than

Keys-wide average

LODGING REVENUE

Year Lodging Revenue (m) % Change

2009 $ 375,894,294

2010 $ 406,367,421 8.1%

2011 $ 480,742,568 18.3%

2012 $ 517,433,142 7.6%

2013 $ 572,634,609 10.7%

2014 $ 622,255,509 8.7%

• Keys wide Lodging revenue increased 65% in six years per STR

• Occupancy increase 24%

• Strongest gains are from ADR increases• +48% Keys wide• +54% Key West

SUMMER OUTLOOK

• 5.03M searches for Key West accommodations June – July• +12% more searches

• June 1st two weeks• Occupancy flat -<1%• ADR +3%

OUTLOOK FOR LODGING

• Expect occupancy to be flat to decreasing

• Expect ADR to continue to rise

• Expect Lodging Revenue to rise

• Recent research showed most visitors would be willing to pay more per night• 29% would pay $100 more if they

had to • Did not show we have reached

in-season tipping point

VISITOR DEMOGRAPHIC TRENDS

INTERNATIONAL VISITOR DATA

Top Countries1. Canada2. Germany3. Scandinavia4. United Kingdom5. France6. Brazil7. China8. Italy9. Argentina10. Switzerland

• Strong gains 2014 from Germany & Scandinavian region• Germany +32%• Scandinavia +34%

• Last year Brazil & Argentina were top for growth• Flat to significantly

decreasing each quarter

DEMOGRAPHICS

2014 Domestic Top DMAs – Booked Key West Accommodations

1. New York2. Miami-Ft Lauderdale-West

Palm3. Washington DC4. Boston5. Chicago6. Philadelphia7. Atlanta8. Tampa area9. Baltimore10. Los Angeles

• Searching top 10 similar except• Dallas higher in search

volume than Baltimore or LA

LOOKING AHEAD – REST OF SUMMER 2015

July, Aug & Sept Key West Bookings1. New York2. Miami-Ft Lauderdale-

West Palm3. Washington DC4. Chicago5. Philadelphia6. Boston7. Tampa area8. Atlanta9. Baltimore10. Dallas

• New York is becoming top year-round market

• Top search market each quarter 2014• Only surpassed by Miami

last summer for bookings• 2015 topping bookings

& searches

VISITOR PERSONA -SEARCH

Active Searching – Key West 20151. Young Free Spirits (15%)2. Frugal Boomers (11%)3. Adventure Seekers (10%)4. Bucket Listers (10%)5. Self Seekers (10%)6. Visiting Family (10%)7. Dream Trippers (9%) 8. Experience Seekers (9%)9. Go For It Families (8%)10. Couponing Families (8%)

• Searches were fairly well distributed amongst different traveler groups

• Youngest Gen Y topped the list, tied with Boomers

VISITOR PERSONA -BOOKING

Booked Room – KW 2015 YTD

1. Bucket Listers (19%)2. Adventure Seekers (17%)3. Dream Trippers (16%) 4. Experience Seekers

(12%)5. Go For It Families (8%)6. Self Seekers (7%)7. Frugal Boomers (6%)8. Visiting Family (6%)9. Young Free Spirits (4%)10. Couponing Families (4%)

• Quite different order than searching

• Less affluent boomers & Gen Y that were top searchers are low bookers

• Bookings show more disparity among income levels

• More than 50% of bookings from top three groups

• HHI $100 or $150K +1. Age 66+ affluent boomers2. More affluent millennials 25-353. Younger affluent boomers 51-

65• Gen X Experience Seekers

4th place; HHI 200k+

TRAVEL BEHAVIOR TRENDSTDC V IS I TOR PROF ILE STUDY

VISITOR PROFILE SURVEY RESULTSTRIP PLANNING & BOOKING

• Some travel planning & booking shifts likely in response to high demand

• Longer lead time in planning• Almost twice as many visitors planning more than 6 months

ahead (38%)• Fewer arrivals without reservations (50% less)• 20% increase in longer stays (4-7 nights)

• More reliance on OTAs for trip planning and booking• Was top method (67%)• Also saw 36% increase in visitors searching for deals• 14% less called the property directly; 4% less used property site

VISITOR SATISFACTION

• Visitor Satisfaction very strong & increasing• 99% satisfied; +5% from last year• Mostly came from fewer neutral • This is key for increasing revenue

• 99% also likely to recommend Keys to friend/family• Up 3% from last year• Very strong for positive word-of-mouth; a top factor in travel

planning

• 21% more considered the Keys because of friend/family recommendation

ADVERTISING RECALL

• 3 out of 5 recall seeing Key West ad within 6 months of trip• Up 8% from last year

• T.V. recall strongest gains• Up 12% last year• Overall more than 1 out of 4 visitors recall

seeing a TV ad

• Advertising & other marketing efforts also slightly more often recalled as influence responsible for traveler considering the Keys (+2%)

ACTIVITIES & EXPERIENCE SOUGHT

• Culture, Arts & History gained influence• 32% were seeking those experiences• Twice as many participated in events• 28% participated in museums/historic areas

• Also gains in Soft Adventure• 9% more were seeking soft adventure

VISITOR PROFILE STUDY TRENDS CONTINUED

• Big gains in Social Media usage for trip planning• Facebook, Twitter, etc jumped from less than 10% of visitors

to 45%

INDUSTRY WIDE TRENDSP H O C U S W R I G H T ’ S D E S T I N A T I O N U N K N O W N : H O W U . S . A N D

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INFLUENCERS ON DESTINATION CHOICE

Top 5 U.S. & Europe

1. Personal wish to visit the destination

2. Prior Experience3. Cultural Attractions4. Price of

Accommodations 5. The Climate

Take-Aways for Marketers

• Speak to the individual• Target repeat visitor

U.S. & Europe• But not France, they

rarely repeat• Marketing Attractions,

especially cultural, can be significant differentiator

PLANNING IS PART OF THE EXPERIENCE

• Planning travel itself is a morale booster and escape

• Offline sources are loosing relevance in destination selection• Crowd-sourced ratings

and reviews are gaining ground

• Make the planning enjoyable, interactive, an escape experience

TDC VACATION RENTAL ISSUES REPORT

I L L E G A L V A C A T I O N R E N T A L S & V A C A T I O N R E N T A L S C A M S

TDC REPORT BACKGROUND

• Issue that was raised in a TDC meeting general discussion recently and at past DAC meetings

• Why TDC is working to address illegal units and scams• Visitor Impacts

• Safety nets in place through legal process• Fire safety, inspections, 24/7 assistance

• Resident Impacts• Illegal units pop up in zones/neighbors rentals aren’t permitted

• Traffic, noise, parking, & other issues permitting process address• May evade taxes which fund schools, municipalities• May put upward pressure on housing stock

• Level the playing field• Legal units deserve level playing field

HOW WE CONDUCTED THE STUDY

• First question – who could lead the charge? • Met with the Tax Collectors Office• Spoke with the municipal code compliance/enforcement

departments• Spoke with the Chambers of Commerce• Review visitor and residents complaints• Spoke with the State Attorney’s office• Spoke with vacation rental industry experts, DestiMetrics

• Reviewed their research on municipal vacation rental code• Reviewed each Keys municipalities vacation rental code• Reviewed State Statues• Reviewed Vacation Rental ordinances and issues from similar

destination, like Hawaii• Reviewed Vacation Rental by Owner websites and research on

them

LEGAL VACATION RENTAL UNITS

At the State Level• “Six Months or Less”

• also non-continuous rentals of more than six months and those without lease

• The is a taxable privilege• Requires bed tax account,

collecting and remitting bed tax• Requires sales tax account,

collecting and remitting sales tax• Usually requires FDB&PR license• Requires paid Monroe County

Tax license for transient rental

At the Municipal Level• Generally 28 days or less need

• Vacation rental license• Keys-based contact person

available 24/7 whom may also need license

• Sign may be required on property (KW, IL, MA)

• License number may be required in ads (MA, IL)

• Marathon & KCB have 7 day min. • Special rules may apply for

gated communities or other• No transient rentals less than 90

days allowed in Layton

WHAT IS AN ILLEGAL UNIT?

• Failing to comply with any of the previous rules, we refer to as “illegal”

• Requirements must be followed whether rental is couch, spare room, apartment or entire house

• Some may be brought into compliance with due process

• Some may be unable to be legal• May be located in area not zoned for rental, etc.

WHAT IS A SCAM?

• Money is exchanged for fictitious vacation rental• Scammer may steal photos of real parcel and create fake

vacation rental ad• Scammer may hack real vacation rental account and pose

as owner

AIRBNB AND OTHER RENT BY OWNER SITES

• There are both legal and illegal vacation rentals on popular websites

• Craigslist is especially problematic for scams and illegal units

• Airbnb’s set up makes tax evasion and illegal units easy• They don’t collect/remit taxes for

most areas, they don’t build this into their rental form, they don’t remove illegal units or police their site.

OVERSIGHT AND ENFORCEMENT TODAY

MC Tourist Dev Tax Account

MC Business Tax Account

Municipal Vacation Rental

License

FDOR Sales Tax Account

• Each municipality has code compliance staff person(s) overseeing vacation rentals

• As of January 2015, the Monroe County Tax Collector assumed audit and enforcement responsibilities

• Working to create communication loop with municipalities• License/account events

crossed check with our needed licenses

• Code violations/tax compliance event crossed checked

Bed Tax Compliance

Violation

Business Tax Violation

Code Enforcement Violation

FDOR Sales Tax Compliance

Violation

Account Event Communication Loop

Violation Event Communication Loop

TAX COLLECTORS COMPLIANCE SUCCESS

• Tax Collector can go back 3 years, or 36 months, for compliance

• Can use online ads and reviews to build case

• When non-compliance found, burden is on property owner to prove tax is not due

• Will continue to reach out to other municipalities to build communication

• As of April, cases sent to Tax Collector by municipal code enforcement• 130 from Monroe County;

everything from 2011-present• 13 from Key West• 77 from Islamorada + 228

licenses• In short time audit and

compliance review has resulted in• Over $25,000 in TDT,

penalties, interest and fees• 22 new TDT accounts

CHALLENGES OF CODE COMPLIANCE/ENFORCEMENT

• May ask visitor to pose as family member or lie about duration of rental to evade tax or license requirement

• Even more difficult to cite realtors when involved in illegal rental• Have to prove intent

• Online investigations also manually intensive• Address generally not listed on

popular sites (VRBO, Airbnb)• May take several contact

attempts to obtain address and review for compliance

• Some repeat offenders pay fines and continue renting

• Building case is manually intensive• Advertisement or review is not

sufficient to prove use• May involve several visits to

location • Try and intercept renter for

interview• Document changing cars &

activity

• Copy of Rental agreement is most helpful in case

• Departments have tried weekend and evening hour shifts

• For MC, area that must be covered is so far apart

NEXT STEPS & RECOMMENDATIONS

• All TDC agencies & staff are working on implementing recommendations

• Partner with Tax Collector to enhance Tax Compliance audit & enforcement√ Utilize TDT admin funds already allocated to Tax

collection√ Set up 1-800 hotline and email account to make

reporting process easier• Established last month

• TDC raise awareness of hotline through press releases, tourism advisories, ads, printing cards, etc. • Tinsley has developed advertisement for local papers

INCREASE VISITOR AWARENESS

• Be proactive in addressing issue

• Reduce demand for units to reduce illegal rentals and scams

NewmanPR had already boosted Scam info on website

TDC enhanced education on staying legal & avoiding illegal rentalsAsk for license, how to verify Steer visitors to the KWCOC and other

chamber websites as trusted sources

“KNOW BEFORE YOU GO” CAMPAIGN

• How to educate prospective travelers who don’t visit our web site?

• Idea is give useful visitor tips, including checking rental is legal• RBOs generally don’t sell

ad space• Deliver through ad tracking

& key word search• Know Before You Go

landing page is now live• Tinsley is working on banner

ads

TDC IS CONTACTING PROPERTY OWNERS

• Code compliance often hears property owners weren’t aware of requirements

• We’ll reach out to all listings on popular online sites to send proactive education email• Did you know you need X,Y,Z to rent legally?• Encourage legal units to add their license number to help

distinguish• Ask illegal units to desist until all licenses are gained• Send to listings on Airbnb, VRBO, HomeAway, FlipKey, etc.

ADDED CHAMBERS TO COMMUNICATION LOOP

• Chambers often field first inquiries about legality and complaints when scam/illegal unit is encountered• Have shared compliant sheet Key

West developed• Shared report with other

recommendations

• Chambers will share info with Tax Collector

• We cite Chambers as trusted sources

MUNICIPAL CODE REVIEW• As of 7/14 local municipalities can again revise vacation rental code

• Recommended each review current code• Any needed updates for modern methods of rentals like Airbnb, couch/room sharing• Make case process easier for Code Compliance• Emailed copy to all City/Village Commissioners and Councilmen• Emailed and send printed copy to each BOCC member

• Recommend consider citation or other action of Airbnb• Key West has case outstanding• Airbnb is in settlement talks with Key West

• Would put responsibility on property owner to acquire all necessary licenses• Should have update by June 24th hearing. • This is test case; Will go onto other vacation-rental-by-owner sites

• Recommend all require license info in ads• Currently Marathon & Islamorada do

• Make license information readily accessible to potential visitors

TAX COLLECTOR UPDATE

• Now over $40,000 collected• Have filed liens• Sent two cases to State Attorney• Frozen bank assets

• Continued to build communication loop with municipalities• Have added City of Layton & Marathon• Makes every municipality in the Keys

• Hotline is regularly receiving cases

J E S S I C A B E N N E T TJ E S S I C A B E N N E T T

R E S E A R C H @ F L A - K E Y S . C O M3 0 5 - 2 9 4 - 1 9 3 6

QUESTIONS?