Peter Kageyama
by Peter Kageyama
Fri Nov 27th 2009 at 8:00am UTC

Florida Tourism – A Double-Edged Sword

14th Street Lifeguard Tower

In her September 3 blog post, “Creative Florida”, Rana Florida asked for thoughts about Florida tourism. As a resident of St. Petersburg, Florida, I thought I should respond.

Tourism has long been the golden goose in Florida but it is also a double-edged sword. We have no state income tax in large part due to the sales tax revenue that tourism provides. When the tourists come, the coffers fill and all is well. When we have downturns in the economy or other disruptions (such as hurricanes or 9/11) our budgets shrink. This volatility prevents us from having a predictable revenue stream which in turn means less long-term planning.

For better or worse, tourism also defines Florida. For many it is great to have that identity but I know a lot of creative class entrepreneurs in high-tech who lament that they can’t attract talent or VC interest because no one takes Florida seriously as a business environment.

But to me the largest impact of tourism is that it has made us lazy (I say this with love, Florida!). Tourism is easy money and we have coasted on that for too long. When the tourists just arrive with bags of money, why innovate? Why invest in our schools or our infrastructure? Why make the hard tax choices when we can raise the bed tax on hotel rooms or local tax on car rentals? We need to rethink tourism and make it a higher value experience, one that leverages the service economy and makes it more creative and innovative.

Florida had a wake-up call last year when, for the first time since WW2, we had a net outflow of population. That is a seismic shift in the underpinnings of Florida’s economy and I hope that it forces us to look at diversifying our economy and making the harder choices of developing industries beyond the beach and theme park.

4 Responses to “Florida Tourism – A Double-Edged Sword”

  1. Mike L. Says:

    From the perspective of non-Floridians, Florida is government-run science-innovation (Cape Canaveral), retirement (The Villages), tourists (Daytona Beach, Disneyworld) and ethnic enclaves (Miami). Sorry, not the place for VCs. IBM launched the PC from Boca Raton, but corporate big-wigs soon reined it in …

  2. Scott Says:

    Peter, it is interesting to read this, because I think it is common to many countries and regions.

    Many of Australia’s coastal regions are getting growth for similar regions to Florida, but for the most part it is tourism and the old economy driving it (i.e building suburbia and retail businesses). Not surprisingly, incomes here can be quite low, in line with the reasons people are moving to such places:

    a) Baby Boomers retiring to their favourite holiday spots often sell up in the city and intended to live on the proceeds that gave them – until the GFC hit and they lost a lot of it. Some of these people find that the smaller places they have moved to don’t have the same level of services as the cities they moved from, but there is no way they can now afford to move back.

    b) For much the same reason (i.e overinflated property prices), the people who are less well off in the cities move to these areas in search of cheaper rent or housing prices. Quite often, the same group of people tend to be those who are less educated (which is part of the reason they earnt less).

    Both of these groups are hopeful of finding a better lifestyle “in the sun”, but overall the effect is for the bigger cities to “export” unemployment. Many regional economies cannot grow fast enough to provide enough employment for all of the newcomers, because they cannot attract higher-wage industries (in part because they cannot attract Creative Class people), at the same time as low-skilled jobs are going offshore.

    And just as you say about Florida, trying to get venture capital into some regions is really hard because the perception is that the only people living in some places are either “newlyweds or nearly deads”, not the skilled workforce VC’s are looking for.

    On a broader scale, Australia overall has a similar problem with mining. China and Asia generally pay a lot for what we dig up out of the ground, but this makes the $A appreciate – and our remaining manufacturers find it very hard to compete. As a result, it’s hard to convince local students that there are careers in high-skill fields like science and engineering because even the local perception is that “Australia’s not good at high-tech”, despite evidence to the contrary.

    Australia is a hostage to commodity prices and our society here does not seem to realise we need a “Plan B” if that demand falls off for whatever reason.

  3. Ed Breaux, Pittsburgh Pioneers Says:

    Every state must continually redefine itself.

    No one took Florida seriously as a theme park destination until Walt Disney made it one, forever redefining the state. Forget the marketing. Lay the foundation by getting local companies to do good things, and then partners will follow.

    What are your assets? Actually Disney is a very powerful and “serious” business asset. There are ways to play up on this asset both working with Disney and working independently of Disney. Disney would love it if a local company or organization held a business conference and paid Disney to run a portion of the conference. If that’s not in your budget, then have a local company that is familiar with Disney (perhaps a former employee) run a program on the Disney way.

  4. Michelle Bauer Says:

    Perfectly said, Peter. As a fellow Floridian and someone who cares as much about the state as you do, I am also mystified why economic developers and state officials make such a to do about fueling our “innovation economy” but do little to actually support the foundations upon which those are built situation. The cash strapped universities are only the tip of this unhappy iceberg.

    However, there is a fabulous bright spot on the economic horizon that these folks have completely overlooked: Florida is the global leader in the anti aging medicine industry, an industry currently values at $60B in the US and over $90B worldwide. It is driven by the 50+ consumer – we have lots here, but so does every other country – and is exploding worldwide. Globally the anti aging medicine/product industry is expected to reach $292B by 2015.

    Florida really does have a new position of strength upon which to build its economic future. Check out the cover story of this month’s Florida Trend for more: