Myrtle Beach area hotel owners debate efficiency, fairness of advertising fee

09/01/2013 12:00 AM

08/31/2013 8:30 PM

As this area’s chambers of commerce look for extra money to leverage for promotions and state marketing grants, some are asking – or even compelling – their lodging members to add nightly advertising surcharges to their customers’ bills.

It’s a move that’s favored by those who praise the efficiencies of pooled resources. But it’s also drawing the ire of some hotel owners who’d rather spend that money themselves – promoting their own properties – than hand it over to a consortium that promotes the entire area.

Harold Worley is one of the critics.

“It’s just a money grab,” Worley, owner of the Ocean Drive Beach & Golf Resort, said of the advertising surcharge the Myrtle Beach Area Chamber of Commerce levies on member hotels located outside the city limits. The chamber requires those out-of-city hotels to pay $1 per night for every rented room in addition to the regular advertising package rates city hotels pay. Hotels in Myrtle Beach don’t have to pay the fee because the chamber gets most of a 1 percent sales tax for tourism promotion collected by businesses there.

David Slough, a lawyer and spokesman for the Myrtle Beach chamber, said the extra fees are not meant to penalize businesses located outside the Myrtle Beach limits and aren’t intended to encourage those businesses to lobby their government officials for a similar tourism tax. Slough said the fees are established by the chamber and approved by the chamber’s board of directors, which includes business and civic leaders from both inside and outside of the Myrtle Beach city limits.

Last year, the fee brought in just over $1 million for the Myrtle Beach chamber – a 27.2 percent drop from the previous year and 12.8 percent lower than the chamber had budgeted for at the start of the year, according to its financial statements. It’s not clear from the financial statements what caused the decline.

Tom Davis – a development partner in numerous area projects including the Inlet Sports Lodge, one of the chamber’s out-of-city lodging advertisers – said collaborative advertising, such as the chamber’s, is the most efficient and economical method. Davis and his partners sold the Murrells Inlet sports lodge last year to Ponderosa Inc.

“We all have to get past seeing our ‘own’ name in lights just for the sake of it and realize working together we can do more and be so much more effective,” Davis said.

The extra $1-per-night fee keeps Worley – an Horry County councilman whose hotel is in North Myrtle Beach – from joining the Myrtle Beach chamber, which aims to promote the entire Grand Strand. Worley said it’s not right for the Myrtle Beach chamber to accept more than $1 million each year in accommodations taxes from the county – part of more than $29 million annually in public money the chamber receives – and then charge hotels in the county an extra fee for advertising.

“They’re getting that county [tax] money to put in their advertising pot promoting Myrtle Beach businesses, but in the county they have to pay an additional $1 per room night,” Worley said. “It’s not fair.”

The North Myrtle Beach Chamber of Commerce – which will get $1.2 million, or about half, of that city’s accommodations tax collections this year – has a voluntary program in which some hotel owners contribute a $1-per-night fee to grow advertising spending, according to Marc Jordan, that chamber’s president and chief executive officer. The fee has raised more than $500,000 and Jordan said he hopes to use that money to get a matching grant from the state’s Parks, Recreation and Tourism department.

“We believe North Myrtle Beach has a brand as a tourism destination and we need to be marketing that brand,” Jordan said, adding that money is tight for mid-sized chambers like his that don’t have the financial or political resources of larger organizations and can’t take advantage of special state programs designed to boost tourism in smaller, out-of-the-way places.

Jordan said the North Myrtle Beach chamber has talked about making the $1-per-night fee mandatory, but he hasn’t seen much support for that from the business community.

“We need to come up with some creative ways to get more marketing dollars,” Jordan said.

One thing Jordan isn’t counting on is a local-option sales tax for tourism promotion such as the one Myrtle Beach City Council approved without a voter referendum in 2009. That tax has provided a $69.5 million windfall for the chamber since its inception, but Jordan said North Myrtle Beach residents and business owners would not accept a similar measure.

“We ran it up the flagpole a while back and they just did not like it,” Jordan said. “It’s a hard sell.”

The Georgetown County Chamber of Commerce also has informally talked about a $1 per rented unit fee in the past, but Brian Tucker – the chamber’s president and chief executive officer – said he isn’t sure it’s feasible.

“One of our challenges is that our accommodations inventory is very different than what exists in Horry County,” Tucker said. “We have a lot of single-family, private rentals, and collecting a fee gets complicated because of the broad-based ownership.”

Tucker said such a fee would help the chamber leverage its marketing dollars, but imagines it would be collected on a voluntary basis if it ever comes to fruition.

David Hucks is another hotel owner who says the extra fee is one reason he’s pulling money from the Myrtle Beach chamber to focus on self-promotion. Hucks, who also owns a marketing group that promotes 18 properties, said his group paid the chamber about $450,000 for advertising packages last year. This time around, Hucks said his group – – is opting for the chamber’s least-expensive ad package and three of his hotels won’t advertise at all with the chamber.

This year’s advertising packages at the Myrtle Beach chamber range from $9,950 to $33,650 per property, with additional charges of up to 75 cents each time a consumer clicks a link on the chamber’s that takes them to that lodging property’s website.

“We’re reinvesting our money into Google,” Hucks said, adding that his hotels will pay the popular Internet search engine for online ads that target consumers looking for his specific types of properties. Those ads will direct consumers to click on links taking them straight to Hucks’ websites.

The chamber uses a similar advertising model, utilizing thousands of search engine keywords that drive consumers looking for information about Myrtle Beach to the chamber’s website. Once they are on the website, consumers can click additional links to get to specific hotels’ sites.

Hucks said that model is inefficient. He prefers to cut out the middle man and have the Internet traffic sent directly to his hotels.

“At the moment, Google’s model is simply a better buy,” he said.

Myrtle Beach chamber officials disagree.

Slough said research has shown the chamber’s site helped attract nearly 2.7 million people to the Myrtle Beach area last year, and more than one-third of them were first-time visitors. More than half of the people who visited the chamber’s website in 2012 booked a vacation and the website will have delivered more than 8 million referrals – or clicks to individual properties’ web pages – to chamber businesses by the end of this year.

“Effectiveness of the website is best measured by the economic impact as well as by the area businesses that count on it,” Slough said.

As of Friday, more than 100 lodging properties were advertising on the chamber’s website.

Slough said the chamber does not use brand-name keywords – like individual property owners would – to drive search engine traffic to its site, but instead focuses on keywords and phrases that contain “Myrtle Beach.” Instead of promoting specific businesses, Slough said the chamber’s mission is to promote the entire area and lure more visitors – particularly those coming here for the first time.

“Site traffic continues to grow year over year,” Slough said. “Likewise, referrals to area businesses, whose value is demonstrated by increased exposure year over year on [the chamber’s website], continue to grow.”

Davis said the type of advertising the chamber is doing gives individual properties “a much larger reach and footprint to market to” at a lower cost than going it alone.

“Lesser dollar amounts are required to attract those prospective lodging guests once they decide to visit our area and then begin investigating their lodging options,” Davis said. “That’s the strongest possible marketing pitch I see.”

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