Walton County devotes bed tax hike to Southwest promotion

DeFUNIAK SPRINGS —Walton County will use 90 percent of all of the funds it raises through a bed-tax hike that went into effect last month to help promote Walton and Bay counties to travelers who fly to the Emerald Coast on Southwest Airlines.

The board of county commissioners voted at Tuesday’s meeting to approve an agreement with Southwest that essentially mirrors one signed last week between the airline and the Bay County Tourist Development Council.

Last month, Southwest announced that it would begin offering flights out of Panama City beginning in May 2010.

The agreement with Walton County, which runs through Sept. 30, 2014, requires the airline to provide daily, non-stop flights from four different cities. Those cities have not yet been named, but Dan Rowe, director of the Bay County TDC, said Southwest has announced it will fly two flights out of each of the sites.

In August, Walton County commissioners voted to approve a proposal by the TDC to raise the bed tax that is imposed on short-term rentals by a half cent, to 4.5 cents on the dollar.

Tracy Louthain, director of public relations for the Beaches of South Walton Tourist Development Council, said the half-cent increase was meant to “show our commitment to a low-cost air carrier … and it was effective. Southwest said, ‘You’re committed to us, we’re committed to you.’”

That hike went into effect Oct. 1, and the more than $1 million in additional revenues the county expects to collect will be used to reimburse Southwest for its promotional and marketing activities in the four origin cities. Louthain said those cities will be named sometime next month, and the decision is at the sole discretion of the airline.

“Southwest will go out and market the destinations (in the four cities) to the Panama City airport,” Sonny Mares, the executive director of the Beaches of South Walton TDC, said after Tuesday’s meeting. “They’ll spend that money and then submit invoices to us that we will reimburse up to the amounts of dollars that we raise.”

According to the agreement, Southwest will provide at least 525 seats into Panama City. But Rowe said in an interview ahead of Tuesday’s meeting that the airline plans to fly 737s, which each can accommodate 137 seats. That translates to more than 1,000 seats, or eight planes.

The Walton County TDC expects to raise more than $1 million in additional revenue through the tax hike, and 90 percent of those funds are earmarked to help with the marketing efforts.

The agreement also calls for Southwest to submit a “creative brief” detailing its marketing campaign “so that we see what kind of advertising they’re going to do, and we’re assured that they’re going to do advertising that will generate business to us,” Mares explained.

It’s not yet known how much additional revenue has been raised since the tax hike went into effect in Walton County on Oct. 1. Those numbers will not be available until next month, Louthain said.

“October, November and December are lower (tourist) months where June, July and August are very high,” Mares said. “But the main thing Southwest understands is that over the course of the 12 months, we estimate there’s $1,032,000 dollars that we’ll generate that will go to reimburse them for the marketing that they’ve done.”

In February, Bay County raised its own bed tax to 5 percent with the expectation of raising about $2.2 million per year. Ninety percent of those funds – or $1.98 million – are similarly committed to reimbursing Southwest for its marketing efforts.

Rowe said the one-cent hike raised about $1.35 million over the five-month period from April 1 – when the increase was implemented – to the end of the last fiscal year on Sept. 30.

“This (fiscal) year, the budget office is budgeting the value of that penny at $1,876,000,” he added.

Louthain said TDC officials expect to meet next month with Southwest’s public-relations and marketing professionals to create a promotional campaign. Marketing activities are expected to start in February.