Is tourism vital to Longboat Key’s future?
JOHN O. SUMMERS
Guest Columnist
opinion@lbknews.com
Over the past four years a recurring theme in numerous public forums and newspaper articles has been that increasing tourism is vital to Longboat Key’s (LBK) future. Three basic arguments have been made to support this contention:
1)Tourism is the leading economic driver of the Key. Without the money tourists bring onto the island, the community would decline.
2)Tourism supports the island’s businesses. Without tourists LBK’s businesses would fail and residents have to go off the island for all of the products and services they need.
3)Increasing tourism is critical to the island’s residents being able to sell their homes. As such, increasing tourism is essential to maintaining property values.
These arguments have been repeated so frequently that many, if not most, LBK residents have accepted them without giving critical thought to their validity.
Tourism and LBK’s economy
The reality is that less than five percent of LBK’s residents derive any of their income, either directly or indirectly, from tourism or any other industry on the island. Most of those employed in LBK’s tourism industry are imported from off the island. One cannot afford to live on LBK on the wages paid to most tourism employees (e.g., maids, cooks, food servers, maintenance workers, etc.).
LBK is primarily an affluent residential retirement community. The average household income is over $160,000, the average age is at least 68, and most full-time residents are retired. Nearly all residents, both part-time and full-time, derive the bulk of their income (e.g., wages and investment income) from sources off the island. The financial status of the vast majority of LBK residents would be unaffected if all tourism generated economic activity on LBK vanished overnight. Simply put, tourism’s impact on LBK’s economy is irrelevant to the financial well being of most LBK residents.
Tourism and the survival of local businesses
Advocates of tourism have blamed the decline of approximately 250 tourism units on the island for the failure of a wide variety of businesses on the island (e.g., clothing stores, gas stations, gift stores, a florist, an auto repair shop, a fitness center, a cards and gifts store, a veterinarian, an insurance agency, a facial spa, a dentist, and a law office). They have also suggested that further declines in tourism could lead to the loss of Publix and/or CVS. Basically, LBK residents have been warned that unless the number of tourism units on LBK is increased residents will be required to go off the island for all of the basic services and products they need.
There are several problems with this argument. First, many of the businesses whose demise has been blamed on the decline in tourism are rarely patronized by tourists. Consider how much you patronized dentists, auto repair shops, veterinarians, pharmacies, insurance agencies and law offices the last time you vacationed for a week on a barrier island. Lodging and restaurants are the only types of businesses on LBK that are heavily affected by tourists. Tourists need a place to stay and most tourists don’t like to cook when they are on vacation.
There are far more residents than tourists on LBK (i.e., 8,122 residential versus 1,446 tourist units), residents are more affluent than tourists, residents purchase a much wider range of products/services, and residents are more likely to become repeat customers. Residents clearly represent the major market for most products/services on LBK. As such, it is difficult to understand why some people want to focus on a lack of tourists whenever a LBK business fails.
Second, those who have taken a basic economics course should know that supply adjusts to demand. It will be those businesses that best satisfy customers’ needs that survive when demand drops. The island lost two of its three gas stations because the demand for gasoline priced twenty cents higher than gasoline off the island was not sufficient to support three gas stations. It seems highly likely that the third station will not only survive, but will be significantly more profitable than when there were three gas stations. The same principle holds for restaurants. The supply of restaurants adjusts to meet current demand. If tourism on LBK were to disappear the number of restaurants would decline to that necessary to service the island’s residents. Those restaurants best satisfying the residents’ needs would endure. Restaurant supply would not fall to zero.
Third, both Publix and CVS are doing very well on the island. Moreover, Walgreens is making plans to build a stand-alone drugstore on Longboat Key. Clearly, Walgreens feels that there is sufficient business on the island to support two drugstores. Neither Publix nor CVS is heavily dependent on tourists for their success.
Tourism and property values
Tourism advocates often claim that without a large tourism industry LBK’s residents would have difficulty selling their homes and housing prices would decline. To support this view these advocates point to the fact that many current residents first visited the island as tourists. The unstated assumption is that these people would never have become residents had they not first stayed in a tourism unit on Longboat Key. While it is difficult to directly test this assumption, one can look at other upscale communities that don’t have any tourist units to determine whether their housing markets are suffering.
There are several local upscale communities (e.g., Bird Key and The Oaks) and many upscale communities across the nation (e.g., the Seventeen Mile Drive in California and The Village of Indian Hill near Cincinnati, Ohio) that do not have any tourist units. Despite their lack of tourism, or perhaps because of it, none of these communities is having trouble selling their homes. Locally, Bird Key’s housing prices compare very favorably to those for LBK, which has approximately 1,400 tourist units. Both of these communities have much higher housing prices than Anna Maria, which has numerous tourist units.
The Village of Indian Hill is a particularly interesting case. This city of 5,900 does not allow any commercial enterprises. However, its 2000 median household income was in excess of $179,000 and it is the residence of such well known people as Neil Armstrong and Paul Hackett.
That tourism does not contribute to home prices in well-known, affluent communities similar to LBK, which are near other communities with an abundance of tourist units, is easy to understand. Having tourist units in these communities is not necessary for prospective purchasers to learn about these communities (i.e., knowledge is already high) or to physically tour these communities (i.e., other nearby tourist units are available). Moreover, affluent home buyers appreciate the characteristics of privacy and exclusivity in a community. Tourism serves to diminish both of these characteristics.
Concluding remarks
The case for increased tourism has been grossly overstated. None of the three arguments advanced by tourism advocates can survive careful analysis.
What constitutes progress for a community depends on what the community wishes to be. LBK’s residents must decide between being a haven for tourists or an upscale residential community. No community can be both. Most affluent home buyers don’t want to live in a community with a large tourist population. A friend mentioned that she and her husband had visited Siesta Key several times as tourists, but when it came time to buy a second home they chose LBK. Let us not eliminate their reason for doing so.
John O. Summers is the Professor Emeritus of Marketing, Kelley School of Business,Indiana University, Bloomington, Indiana, and currently a Longboat Key resident.
