Pay for Parking? Tourism – Dollars and Sense

Submitted by

Malcolm Noden

Malcolm A. Noden

Recently the issue of charging users for parking at or near the beaches of Fernandina Beach has come to the attention of the City Commission. It has been reported that the city spends approximately $500,000 per year on beach related expenses, such as life guards, repair and maintenance, and utilities, etc. These costs have a significant impact on the city budget and as a result a study group, known as the Beach Parking Advisory Group was established and met together during the last half of 2011. The group, which reportedly did not issue a final report, stopped meeting when the city dropped the idea of pay for parking, reportedly under the pressure of negative reactions from the local community. It is not publicly known what data were collected and used by the advisory group during their inquiries. Also unknown is whether the group developed or used any form of economic model such as a localized econometric model to assist in measuring the relationship between supply and demand, and also to measure visitor demand elasticity in response to localized cost increases in supply.

Thus, the question of whether and how to apply parking fees to a specific element of local infrastructure, (beach parking), needs to be carefully and accurately assessed in light of a number of known demand responses and the resulting impacts on the local economy, i.e. jobs, taxes and multipliers.

It has been argued that parking fees should not be characterized as a tax, but rather as “user fees”, and that it is only fair that those who use, should be those who pay. However, it must be clearly understood that charging for parking in areas of high demand and relatively low supply, will, even if characterized by differential rates for locals versus visitors, result in significant local negative reaction on the grounds that the local community has already paid, and via their property taxes, continue to pay, for the capital and operating costs of local infrastructure, including roads, beaches and parking. Moreover, for the same reasons above, short term parking fees are a very different form of user fees from those entrance fees associated with State parks such as Ft. Clinch and the Talbot Islands State Parks. The City has no control over those State Parks, receives no direct revenues from them & has no costs associated with their operations.

In addition, while we are competing against many other destinations for the attention, demand and dollars of visitors, the argument that many other destination communities charge for parking, and thus we can do so with a large degree of impunity, is the siren call of the “…everybody else does it…” approach that completely ignores the realities of visitor demand characteristics. In the absence of accurate, current and comparative data, the argument that “…other destinations have done this successfully…” is not only specious, but dangerous to any form of local policy decision making.

Another pro parking charge argument is related to our existing tax on the use of hotel rooms. It is argued that the room tax is relatively small; mostly falls on our visitors, and thus is unlikely to generate significant increase in the elasticity of demand. Fernandina Beach gets to use the resulting room tax revenues for the purpose of tourism marketing and promotion, and so it is seen that the visitors are paying for our marketing costs to attract them to come here. Thus, since the charge is “relatively small” why should we not charge them also for the use of scarce parking spaces? Once again, a specious proposition, and one entirely lacking in any form of supporting and accurate consumer behavior data from which to estimate any likely reduction in demand.

There is the broad issue of the variations in visitor demand which are described by tourism researchers as being those of seasonality and periodicity. Seasonality refers to what are known as “high season, shoulder season and low season” in which demand changes as the result of annual shifts in weather, school and vacation schedules, and a host of other variables. Periodicity refers to demand variations within each season, examples of which are driven by such variables as national holidays, and the weekday versus week-end demand patterns. Neither of these is going away. Both sets of pattern variations are clearly known to the hospitality sector of the tourism industry, and both are characterized by very wide swings in demand which that industry sector attempts to address by discounting. Thus, if we are to proceed logically and objectively we must ask what is the shift in marginal utility of a parking space at Main Beach, on a Saturday afternoon in July, versus the same space on a Wednesday morning in mid-November.

It seems to me that before the City Commissioners decide whether and when to institute parking fees at or near the beaches, they need a good deal more objective data and  information, on which to base a any decision in this matter.

Editor’s Note:  Malcolm Noden is a (Retired) Senior Lecturer in Management, Economics, Marketing and Tourism at the School of Hotel Administration, at Cornell University, and is well known expert in the applied economics of hospitality and tourism policy. promotion and development.  (Click here for further information on Noden.)

July 5, 2012 11:18 a.m.

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Len Kreger
Len Kreger (@guest_263)
11 years ago

Some excellent points.

The problem may be that some have already decided that parking fees at beaches are the goal. They will find the justification they like.

Fernandina Beach already has a reputation of being unfriendly to business, looks like we are working at geting a reputation as being anti-tourism too.

William Osmun
William Osmun (@guest_274)
11 years ago

Most tourists walk to the beach from their hotels. If a 10$ a day fee would deter the day-trippers then they don’t have enough disposable income to matter. These are not the people that are dropping 70$ on lunch at Sandy Bottoms. They come from Yulee and south GA because they have a free beach to trash. Let’s get rid of the riff-raff so we can attract better “tourists”. All FB residents,of course,would be permitted to obtain a free parking pass. I know it’s the right thing to do, I’m just worried about implementation.