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Time to shrug off recession More than 4 million expected to vacation in OC this summer

THE BALTIMORE SUN

The "recession-proof resort of the East Coast" is what Ocean City's promoters and real estate agents affectionately call their city on the sand.

And by some indicators, Ocean City, poised for the start of yet another good season, does seem to possess the ability to survive, if not thrive, in bad economic climates.

More than 4 million people are expected to vacation in Ocean City this summer, with between 250,000 to 330,000 descending on the resort each summer weekend, city officials said.

Already, real estate agents predict at least a 90 percent condo occupancy rate and say the best units are virtually all taken for the best weeks of the season, in July and August.

"It's going to be a great year," predicted Dee Rigsby, director of rentals for the Ocean City office of O'Conor, Piper & Flynn, which experienced more than a 15 percent increase in business last season over the year before. Bookings this year are neck and neck with last year, she said.

Likewise, the city's 10,000 motel and hotel rooms are almost 75 percent booked for Memorial Day weekend, indicating a good start to the season, said Mary Tawney, administrator of Ocean City's Hotel/Motel/Restaurant Association.

"Everybody likes to think we can hold our own with last year," Ms. Tawney said. Even property sales, which have suffered through a three-year slump, are starting to pick up, area real estate agents said.

In the past 45 days, sales have increased 10 percent, said Bud Church of Coldwell Banker Bud Church Realty on Coastal Highway. "I feel like we're seeing the end of the tunnel," he said, echoing the hope of many Ocean City businessmen.

While it hasn't been a bad two years, the recession has had an impact on Ocean City in two important ways: It has slowed construction, and, Ocean City's population figures show that fewer tourists visited here in the summer of '91 than in at least four years.

Although Ocean City has no official way of counting its visitors, two figures give some indication of how many people vacation here.

Money collected through a 3 percent room tax, charged every time a motel, hotel or condo unit is rented, show a slowing of growth in 1991. While the room taxes have increased by 8 to 12 percent per year in the past decade, it increased only 4.5 percent last fiscal year, said Martha Bennett, finance administrator for the city.

Ms. Bennett said the 4.5 percent would translate into about a 2 percent real growth once increases in room rates and other factors are considered.

"We're doing OK, given the state of the economy," she said.

Another indicator of the number of tourists visiting Ocean City are Demo-Flush population figures, which calculate the number of people in Ocean City on summer weekends by measuring the amount of wastewater pumped through the sanitation system. Demo-Flush figures show that Ocean City had 8 percent to 10 percent fewer tourists in the summer of '91 than in the preceding two years.

In the mid-1980s, Ocean City experienced tremendous growth. The number of summer visitors increased by a million from 1983 to 1988, from 3.2 million to 4.2 million.

The boom peaked in 1989 when a record 4.44 million vacationed in Ocean City during summer weekends. In 1990, Ocean City saw a modest decline of 10,000 in its Demo-Flush population figures. Then last summer the estimated number of visitors plummeted almost 10 percent. The city estimates the number of visitors between Memorial Day and Labor Day was 4,007,210, some 436,243 fewer visitors than in 1989.

What makes the figures distressing is that they came at a time when tourism should have gotten a healthy boost.

Besides 500 new hotel rooms, which opened in the city last year, the area also saw three new golf courses open, including one owned by the city. Ocean City officials had hoped the golf courses, which now number six in and around the city, would make the resort as popular among golfers as among sunbathers.

Hotels report that golf packages are selling well, but not enough to push occupancy rates higher than in 1990, before the new courses opened.

Gregory L. Foster, general manager for Comfort Inn at Gold Coast, developed a special, all-inclusive rate for golfers and sold $28,000 worth of golf packages just in May.

These sales would have boosted the hotel's May occupancy rate by 10 percent over last May, but overall occupancy in the hotel was down about the same amount, he said. Consequently, the hotel occupancy rate will be on a par with last May, he said.

For the first time this year, some hotels have slashed prices to bring in customers.

The Castle In the Sand, which has been in business for 34 years, ran spring specials, offering customers a waterfront room for $39 a night weekdays through mid-May.

The family-run hotel started the special "because there are so many available rooms in Ocean City," said Adam Showell, manager of the 200-room, two-building complex.

"Ocean City has always been a recession-resistant resort, but there are more hotel rooms in Ocean City then we've ever had. The number of room since the last recession has grown by 50 percent," he noted. "We need to have attractive rates."

Mr. Showell said he believes this recession has hurt area hotels and motels worse than the recession of 1978, when the motel industry actually prospered.

"How much is recession and how much is additional rooms, I don't know," he added.

Realtor Bud Church agrees this recession is worse than the previous one, partly because it has lasted so long.

"In 1978, people expected a short-term recession, and it was a short-term recession. The confidence level of people with money was better last time," Mr. Church said.

These days people are putting off the decision to take a vacation, he noted. In the '80s, 50 to 60 percent of condo units offered for rent were rented in January and February. In the past three years, that four-month lead has dropped to a month or two, as more people chose to wait until April and May to put their money down on a vacation unit, he said.

"This time, even people you know have the money are hesitant to buy. I don't think the consumer confidence has been there," he said.

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