May 19, 2010--No matter the source of dozens of tar balls found in Key West, the discovery risks soiling the island's reputation with travelers.

That's the consensus emerging in the Keys' $2 billion tourism industry after a day of dreaded headlines announcing oil had landed on a Florida coast. The news handed local and state travel promoters a delicate marketing task. They pointed out tar balls -- thin discs of hardened oil -- occasionally wash up in Florida, but still stopped short of reassuring tourists that the spill hadn't reached the state's beaches.

"This is a huge conundrum," said Andy Newman, spokesman for the Florida Keys tourism bureau. "There are so many ifs, and nothing definitive. And every single expert is out there saying different things."

The tar-ball discovery put Florida's $60 billion tourism industry on its highest alert level since BP's Deepwater Horizon oil rig sank on April 22, sending oil gushing into the Gulf of Mexico hundreds of miles from the Sunshine State. The U.S. Coast Guard reported finding 20 tar balls on the sands of Key West's Fort Zachary Taylor, and more on the remote Dry Tortugas 70 miles off Key West.

"There's a very quivering-lip moment going on down here now that it's in the Tortugas," said Capt. Marlin Scott, who runs the Fish Monster charter company out of Key West. "It's probably going to kill our summer and probably our fall, and maybe our next season. But this place will survive."

Cancellations of fishing charters are picking up, Scott said, and business owners say the tar-ball story will accelerate the problem.

For the first time, Florida's main tourism website warned vacationers of oil fouling a state beach.

The timing probably couldn't be worse as the big Memorial Day travel weekend approaches and Orlando plays host to Pow Wow, a major convention of foreign vacation brokers.

"It's getting really frustrating for us," said Bob Holston, a partner at Dive Key West. "We don't even know where the tar balls are coming from. There have been a lot of cancellations from people who just don't want to take a chance."

For most of Tuesday, the Keys tourism website advisory on potential oil-spill impacts ignored the tar balls discovered on Fort Zachary Taylor's popular beach Sunday and disclosed to the public on Monday. But by late afternoon, the website noted the tar balls were receiving widespread media attention "though the U.S. Coast Guard has yet to identify its source."

Visit Florida, the state's tourism bureau, also had to shift its online message from "all clear" to a notice about the tar balls found in and around Key West since Sunday.

Should the tar get chemically linked to the Deepwater oil well -- the Coast Guard expects to know the answer by the end of the week -- it would damage Florida's standing as a vacation destination " 'exponentially," according to a Visit Florida's contingency marketing plan for the crisis.

The state's tax-funded bureau proposes spending $100 million over two years on an emergency marketing campaign if oil from the spill hits a state beach -- four times the budget should oil never arrive.

BP recently announced a $25 million grant to Florida for a tourism campaign to combat marketing damage from the spill.

Robert Spottswood, whose Key West company manages 10 hotels and resorts in Key West, said guests have not been canceling their rooms but bookings have slowed "more than I would have expected." Even so, a report from Smith Travel Research on Tuesday afternoon showed the average hotel occupancy throughout the Keys was still above 80 percent this month -- basically flat with a year ago.

Even with reports of oil spotted in the Tortugas on Tuesday, tourists still crowded ferries bound for the cluster of islands, said Christopher Belland, CEO of Historic Tours of America, which runs one of two ferry routes to the Tortugas.

"This is birding season, when people come to see the terns," he said. "We're running pretty full right now."

Belland and others noted that the tar balls attracting national attention could just be a coincidence -- that with so much attention focused on the shorelines, reports of tar-ball sightings were bound to increase.

"To me, finding 20 tar balls on a beach isn't unheard of," said Jamie Olwell, sales director for Sebago Water Sports in Key West and incoming president of the Key West Attractions Association. "Until someone tells me they have matched [the Deepwater oil] to the oil on that beach, I wouldn't believe it."

Others noted that scattered tar balls -- no matter the source -- aren't the equivalent of a ruined coastline.

"I have a guy coming in from California next week," said Holston, of Dive Key West. "He called and said, 'What's the real story? Is oil really covering the beaches?'

"I said, 'No, they found 20 tar balls,' " Holston continued. "He said, 'That's what I thought. I'll see you next week.' "

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