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South Florida hotels see no bottom in tourism decline

Written by editor

The tourism industry continues to worsen in South Florida, with hotel taxes dropping faster in February than in January and recovery proving more difficult than it was after the 2001 terrorist attacks

The tourism industry continues to worsen in South Florida, with hotel taxes dropping faster in February than in January and recovery proving more difficult than it was after the 2001 terrorist attacks.

In Miami-Dade, South Florida’s largest lodging market, tax revenues from hotel guests plunged 24 percent in February after a 17 percent drop in January.

”For me, it was no boat show,” said Kevin McLaney, general manager of the Ocean Five Hotel in South Beach. February’s Miami International Boat Show usually brings a windfall to hotels. Other big events — including December’s Art Basel fair — also drew fewer visitors this winter and spring.

Broward saw a similar trend, with February tax revenues down 20 percent over a year ago compared with January’s 16 percent drop.

The numbers confirm what hoteliers have been saying: They can’t yet detect a bottom in a tourism decline that is now outpacing the fallout that followed the September 2001 terrorist attacks.


While hotel tax revenues dropped much further in the months after 9/11, South Florida hotels were recovering by February. That’s not the case this year, with February posting the biggest decline yet in the wake of the autumn stock-market crash.

A strong spring break has some market watchers hoping March numbers will show improvement. That report should be available in the next two weeks. Also raising expectations is a foreign travel expo known as Pow Wow, which comes to Miami Beach in May and is expected to fill about 20,000 hotel rooms.

But with the annual summer slowdown in tourism looming, hotels are bracing for one of their worst years in memory.

”Without a doubt, rates are dropping. And I truly in my heart don’t believe it’s creating any new demand,” said Fred Euler, general manager of Weston’s Hyatt Regency Bonaventure resort. “I think everybody is hunkered down, believing it’s not really going to turn around in 2009.”

In Miami-Dade, one of the country’s most expensive hotel markets, room rates dropped twice as quickly in February as in January — down 14 percent to $180 a night. That’s just below where rates were in February 2006, according to Smith Travel Research.

But the deals didn’t keep the rooms full. Occupancy dropped 11 points in Miami-Dade to 73 percent.

Though far worse than a year ago, the numbers show just how many people continue to travel during the worst economic crisis in at least a generation. In Miami-Dade, seven out of every 10 hotel rooms were full in February.

In Broward, the figure was closer to eight out of 10 — roughly on par with the 83 percent occupancy level of a year ago. In fact, Broward’s decline comes mostly from cheaper hotel rooms, with rates down 12 percent to $144 a night.

Even without the economic crisis, hotels would face a tougher landscape in 2009 with the reopening of the Fontainebleau and Eden Roc, along with large newcomers like the Epic in downtown Miami. Smith Travel reports a 10 percent increase in Miami-Dade hotel rooms compared with a year ago, meaning more competition.


Aside from being a key barometer for South Florida’s largest industry, Miami-Dade’s hotel taxes have attracted extra attention because of their role in the Marlins stadium debate. About 90 percent of the county’s $442 million construction debt for the new ballpark would be funded with hotel taxes over the next 40 years.

Though typically available by the first of the month, February’s hotel-tax numbers were made public Wednesday morning — the day after county commissioners gave final approval for the stadium bonds.

”This information was available. And I’m pretty sure it was withheld,” said Commissioner Carlos Gimenez.

Gimenez said he requested February’s numbers before Tuesday’s commission meeting but was told by county tax collectors that the report was not ready for release. On Wednesday morning, the tax collector’s office released six elaborate spreadsheets containing detailed information about the five special taxes that Miami-Dade collects at hotels and restaurants.

In an e-mail Wednesday evening, County spokeswoman Victoria Mallette noted that the tax data was released to Gimenez within 24 hours of his request. She said that because the ongoing tourism downturn was well known during the stadium debate, February’s numbers were not likely to change perceptions.

Miami-Dade County Manager George Burgess has until July 1 to decide if tourism has worsened to the point that hotel taxes will not be able to fund the stadium debt. He has proposed two financing plans that would use between $1.8 billion and $2 billion of hotel taxes to pay off stadium bonds through 2049.

February’s decline means hotel taxes have dropped $2 million for the budget year that began in October. That 13 percent drop is better than the 21 percent decline in the same five-month stretch that followed the 9/11 attacks. But while the dip has not been as deep as the post-9/11 stretch, February’s numbers suggest recovery will take longer.

February was the first month during this financial crisis when the decline in hotel tax revenues was larger than the monthly declines posted in the wake of the terrorist attacks.

”I don’t see, at this point, a light at the end of the tunnel,” said Stuart Blumberg, president of the Greater Miami & the Beaches Hotel Association.