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Florida Key's Tourism Officials Carefully Examine Effects on
 the Bed Tax as More then 2,400 Hotel Rooms Go Condo

By Steve Sanoski, Florida Keys Keynoter, Marathon
Knight Ridder/Tribune Business News

Jun. 21, 2006 - The total number of condominium conversion projects in the pipeline in Monroe County has risen to nearly 40, encompassing more than 2,400 rooms throughout Monroe County. This number was revealed as the Monroe County Tourist Development Council released its updated study of condominium conversions aimed at better understanding how the increasing number of condos is affecting Keys tourists, coffers and industries.

This steady increase of planned condo hotels in the Keys does not surprise TDC researchers. "I'm not surprised because a third of all development in hotels across the country right now include condo development," market research director Jessica Bennett explained. "We're seeing a mirroring of what the industry is experiencing across the nation."

One objective of the updated study was to identify condo projects that have been approved since the August 2005 release of the initial overview, she said. A total of six new projects and 421 beds are now in what is referred to as the pipeline - the total number of buildings and rooms slated for condo reconstruction.

It's not the rapid growth of condo-hotels in the Keys that worries the Lodging Association of the Florida Keys and Key West. That group's anticipated that for years. However, the association is concerned about the process by which bed taxes will be collected from the structures. Such taxes are collected from tourists on a per-night room basis.

"Our primary concern is to see the county and city establish, ahead of time, how bed-tax dollars are to be collected," said Jodi Weinhofer, president of the group. "You're going to have a very different situation that could be very difficult to properly organize if we don't put a plan in place now."

Included in the updated report is bed-tax collection findings from recently constructed and fully operating condo-hotels located in Hawaii. The Hawaii Tourism Authority Condominium Conversion Report suggests an initial loss of $2.1 million in bed taxes overall in 2004. Whether the findings in Hawaii have any comparative merit to the Keys condo-hotel phenomenon is uncertain, however, Bennett speculates bed taxes could initially be off slightly in the Keys as more condo-hotels open.

"They're undergoing the same thing as us, and during their first year they did lose out on bed taxes," she said. "But in the long run, their numbers are back to the positive side. We're anticipating that bed taxes could be flatter initially, just because there are fewer units online during the construction. But if that happens, we would then anticipate those numbers to come back up."

Beyond speculating about what may happen, Weinhofer is most interested in taking a proactive approach in developing methods to adequately account for all the unique bed-tax situations presented by the operation of a condo-hotel. "We're pushing to make sure there's a plan in place - how bed taxes are tracked and who is tracking them," she explained.

"It's too much money to not pay attention to it. We're in a unique position in that our state allows us to collect and use bed taxes to benefit our tourists as well as our residents, and so we have to make sure they're collected and used appropriately."

All told, the updated version of the impact study on condominium conversions in the Keys provides few surprises for the majority of political, residential, development and business communities involved. The biggest surprise of the updated study has nothing to do with condos or hotels at all, Bennett said. It has to do with the visitor profile survey associated with the study. "One thing that really stood out for us was something we found out through the repeated visitor survey," Bennett said. "We knew we'd have a lot of families vacationing in the Keys over the summer, when the kids are out of school. But surprisingly, those numbers have been high all year."

The next update on the study of the impact of condominium conversions to the Florida Keys is due in three months, and should be available to the public shortly after. Copies of the most recently updated study can be obtained by contacting the TDC at (800) 648-5510.

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Copyright (c) 2006, Florida Keys Keynoter, Marathon

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