A recent report shows that the Myrtle Beach Area Chamber of Commerce has $37 million in advertising tax subsidies on hand this April going into the peak tax collection months of May through September.
Another $51 million is expected to be collected during the peak 2023 summer tourism months.
By state law, the Myrtle Beach Area Chamber of Commerce must spend this $88 million during one fiscal year on “out of market” advertising.
Chamber has $37 million on hand with $51 million coming
WHY IS THIS A PROBLEM?
The Myrtle Beach Area Chamber of Commerce’s problem is the law of diminishing marginal returns as pictured in the above graph.
The law of diminishing returns is an economic principle stating that as investment in a particular area increases, the rate of profit from that investment, after a certain point, cannot continue to increase if other variables remain at a constant.
Explained another way, let’s say we have a small pot for potting tomato plant seeds. If I plant one seed, I am likely to get one tomato plant.
If I plant 5 seeds, I am also likely to get 5 tomato plants.
However, if I plant 100 seeds in such a small pot, I will get no more than the pot can sustain. That number is likely to peak at around 5 plants maximum.
Regardless of how many more seeds I plant, I won’t get another additional tomato plant rising from this same pot.
THEN THERE’S THE MYRTLE BEACH BRAND
The City of Myrtle Beach would be better off using these funds to improve a tarnished downtown brand.
Such a move would be like getting a much larger pot.
However, the city would need state approval to change the Tourism Development tax into a Brand Development tax.
AND THE NATIONAL ECONOMY
Despite being required by law to spend the $88 million this fiscal year, projections have the 2023 Summer tourist season as down. We covered those projections earlier this month.
Overriding factors like the global and national economy trump any monies invested in advertising, especially when the brand name itself needs an upgrade.
Such is the current state of affairs with the Myrtle Beach brand.
GOOD NEWS
Some city government leaders, as well as, city investors are considering ways to be better stewards of those penny tax dollars being invested.