Getting the Facts Right - Jan 2018
/Dear Commissioner Hanig,
As a business person, you know the importance of making data-driven decisions based on the best data that applies to your specific business. You know that good data leads to insights that yield decisions and actions that improve your business.
I am writing this because I want to be sure that you are receiving accurate and pertinent information as you discuss strategic issues regarding our County’s future.
It is important to separate marketing hype from relevant hard facts. I submit that a great example of marketing hype is the most recent County quarterly newsletter, “Focus on Currituck” which had an article entitled “Tourism Supports Currituck’s Economy.” (copy attached below) This article correctly emphasized that tourism is the major contributor to the County’s economy, but it touted $154 Million (M) spent by “thousands” of tourists in 2016. The article showed a graphic indicating that tourist spending has grown by almost 18% since 2012. The three underlined numbers above are erroneous and misleading. Analysis of Occupancy Tax collections and other county data shows:
· COBX Has A Quarter Million Tourists Each Year Not “thousands”
· Total Tourist Spending In 2016 Was Close To $300 M, Not $154 M
· The Average Rental Home Owner Has Seen No Real Income Growth
I have reviewed the methodology from the US Travel Association (USTA) used to generate the data in the newsletter. Their methodology is top level and generic enough to apply to all 50 states. At the NC level there is a crude method for distributing the total across the 100 counties. The basic data they use for the allocation for Currituck is grossly incorrect. The report is not useful for making decisions for Currituck County. Here’s the factual information based on our County’s own records.
COBX Has a Quarter Million Tourists Each Year not “thousands”:
For the Land Use Plan I analyzed the records of SOBWS for each tap per month and corresponding Tax Department dwelling data. My results have been shared with the Planning Department, the Tourism Department and the Chamber of Commerce. In peak months we have water consumption consistent with between 45,000 and 50,000 people each week in Corolla alone. From May to September this is consistent with more than a 250,000 tourists staying overnight.
Total COBX Tourist Spending in 2016 was close to $300M, not $154M:
The 2016 Occupancy Tax (OT) receipts noted in the County’s audit report were just over $11 million. Since OT is 6% of the base rent, and sales tax is also applied to rent, the total tourist spending for rental homes alone was about $208 M. On top of this is other spending for groceries, restaurants, entertainment and recreational activities. I have verified that tourist season revenues from the public companies Harris Teeter and Food Lion total at least $60M. A very conservative estimate for revenue for Corolla restaurants, retail, and equipment rentals adds an additional $30M for a total of $298M. Adding in horse tour and other recreation revenues puts this way over $300M total.
The Average COBX Rental Home Owner Has Seen No Real Income Growth:
Our tax records show that COBX was built on more than $3 Billion of private investment largely from absentee owners. Investors look at real revenue growth as an important factor when considering the attractiveness of rental investments. From 2012 to 2016 our audited OT receipts do show growth, but only 10.7%. Correcting for inflation drops the five-year real growth to only 5.3%. And during this period new home construction increased the number of bedrooms by 5.8%, thus the average real rent-per-bedroom has, in fact, decreased by half a percent over this period, i.e., no real growth.
-------------
Please ensure that you are given salient and accurate facts as you make the important management decisions that affect our County’s economy and future. You should not have to rely on a watered-down global estimate when the County possesses the actual data that is easily analyzed to give you the true economic picture of the County. You and the County’s tax payers deserve the true facts.
Wise investors do their homework using public records and they already understand the economic deterioration that has been happening in COBX -- which is why home prices and sales are weak. I have sent to you for discussion potential solutions to this real problem: using a business like investment strategy, limiting high-density development, replenishing our beaches and opening up COBX’s natural assets for responsible, tourist friendly use. You need to reinvest/ reinvent for COBX to continue to compete and Currituck’s economy to continue to thrive.
I look forward to hearing your discussions this Friday and Saturday, but please feel free to call me if you have any questions about my analysis.
Sincerely,
Ed Cornet
