Miami Beach tourism: One blow after another
Where is the tax revenue on tourism? Miami Beach’s tourism industry has suffered one blow after another in recent years.
Brazil’s economy forced Brazilian tourists to stay home. Zika made tourism to Florida a challenge and the hurricane was like the nail on the coffin for Miami Tourism
And it wasn’t just the tourism industry that suffered. Miami Beach’s tax revenue also took a hit.
Now according to a local news report the City of Miami is considering an insurance policy for resort tax revenue to make up for unexpected budget shortfalls.
Resort taxes, which include taxes on hotel stays and restaurant tabs, make up more than 10 percent of Miami Beach’s primary operating budget and contributed about $83 million to city last fiscal year. The money can be used to help pay for tourism-related expenses, like construction on the Miami Beach Convention Center and maintenance at South Beach.
While resort tax revenue usually grows by 3 to 5 percent a year the amount of money the city collected stayed almost flat between the 2016 and 2017 fiscal years.
The city council is now ready to take action and introduced a solution.
Take out an insurance policy for resort taxes. Miami Beach has asked an insurance broker to run the numbers on how much such a policy would cost. The request is more complicated than it might seem — the city would likely be the first in the country to ensure its resort tax revenue.
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Although the details are still being worked out, the insurance policy would depend on certain triggers, said Sonia Bridges, the city’s division director for risk management and benefits. If winds reached a certain speed or water rose to a certain level during a hurricane, for example, or if Miami Beach saw an unexpected drop in resort tax revenue, the city would automatically get an insurance payout.
This type of insurance policy, known as parametric insurance, is still fairly new in the United States. Miami Beach already has more traditional types of insurance, like property insurance for publicly owned buildings, but has no insurance on its tax revenue.
Luckily there is a light at the end of the tunnel. Resort tax revenue is on track to increase by 10 percent this fiscal year. This takes a no hurricane approach of course.