Despite The Talk Miamis Economic Glass Is Far From Empty
Written by Michael Lewis on April 3, 2008
By Michael Lewis
Gosh, is Miami’s economy in the dumps! Employment is near a record. And our prime industry, hospitality and leisure, has gained 1,700 jobs in a year and matches an all-time high — after setting a 2007 record with 12 million overnight visitors.
So what’s bad about those figures? Absolutely nothing. They sparkle.
But we’re getting so used to moaning about the economy that we’re overlooking the reality that much of Miami is very healthy, far ahead of the state and the nation. And the visitor industry is leading the way.
Of course, not all is rosy. We all pay more for gas. The paper value of your home has slipped. A flood of soon-to-be-finished condos is about to batter an already depressed market. Construction jobs are retreating from 2007’s all-time high. Financing for big-ticket projects is scarce. Everyone fears financial turmoil.
All that, and more, is true. But the press is scaring us daily with headlines like "Economists are finally starting to figure out what we working stiffs have known for a while: The recession is already here."
Troubles there are, in profusion. But before we send SOS signals in panic, remember the great economic reality:
nEven in the best of times, thousands of our neighbors daily battle financial woes, whether of their own making or not. Spending far above our means now and paying later — or failing to pay — is not limited to downturns. And even in the best of times, tens of thousands of less-skilled or less-fortunate people live on the edge.
nEven in the worst of times, thousands upon thousands find ways to do well. Whether through luck or being born to the right parents or by holding two jobs or breaking backs or working smarter, many prosper under bad circumstances. They are fewer in bad times than in good, but prosper they will.
Miami-Dade’s overall economy indeed has cooled from its condo fever. But our heated crisis in confidence is fueled by headlines that shifted in a matter of months from telling us that everyone was getting rich to moaning that we’re all headed for the poorhouse.
Over and over we’re warned we’re about to crash. Through repetition, prophesies become self-fulfilling. Told that no business will be done, we do nothing and then say, gee, the forecasts were right, things are terrible.
It’s the opposite of the euphoria of a few years ago, when we read daily that others were making millions on any real estate they touched so we rushed to get into the game, when hedge funds were luring those of us who should never have been involved, when the economy could do no wrong.
Going too far toward either euphoria or despair is dysfunctional. The proper economic stance usually is nearer the middle.
Suppose that instead of headlines saying we’re in recession we read "Visitors traveled here in record numbers in ’07, and spent freely." In fact, you saw that headline in this paper last week, together with a chart showing that our 12 million overnight visitors spent an average of $1,430.56, adding $17.1 billion to the county’s economy.
Now, billions make eyes glaze over. Is $17.1 billion, up from the $13.9 billion in 2001, good? It’s so hard to get your arms around.
So let’s make clearer how vital this visitor bonanza is. Federal figures released last week show that 106,300 persons here directly served those visitors — plus many thousands more who sell to visitors in stores or get rent from those 106,300 visitor industry employees or otherwise pocket spinoff revenue.
By way of perspective, 10 years ago February — the month figures were gathered — 87,100 worked in our visitor industry. Now we boast nearly 20,000 more, plus who knows how many new indirect jobs. Even if billions are a puzzle, we know the impact of 20,000 more people at work.
What does the visitor industry mean? It means 33.7 million people came through Miami International Airport last year. It means a county government trying to develop new hotels to support Miami International Airport’s expansion. It means the Gansevoort South Hotel, Spa and Residences opening 332 rooms last week where the old Roney Plaza was on Miami Beach. It means an 83.4% February hotel occupancy, second in the nation, at room rates of $212.38 per night, also second in the nation.
Moreover, visitors here don’t just spend $212 a night, $1,430 a visit and leave forever. There’s a clear progression.
First, as Bill Talbert, Greater Miami Convention & Visitors Bureau president and CEO, told the county commission last month, 83% of those visitors come back. "That’s an incredible figure. If you have a business, that’s what you want — that repeat visitor."
Next, as visitors return again and again, some shift from $212 a night rooms to seasonal condo rentals. Then, with the Canadian dollar strong and Canadian travel here up 5.5% last year, and with the euro killing the dollar and European travel up 5.7%, instead of renting condos they start buying them — helping drain the glut that’s depressing our economy.
And, once they move here, they act like Miamians. They open bank accounts, shop in stores, dine in restaurants, buy cars and invite relatives and friends from back home to visit — again filling those hotel rooms 83.4% at $212 a night for a $1,430 visit.
Finally, they again act like Miamians and get into business, investing in a standing enterprise, starting their own business or moving a headquarters here from elsewhere. And those businesses hire Miamians. Our economic development organization, the Beacon Council, knows that people who like to visit here help fuel such job expansions.
So whether they’re in a hotel or a condo or starting a business, these visitors and former visitors create jobs, keeping our unemployment at its present healthy 3.8%, well below the 4.6% state average.
And that’s the not-so-bad news: a weak dollar and a strong Latin America are continuing to fuel a visitor industry that bolsters virtually every aspect of our economy, even sopping up our condo spillover.
Headlines about such strengths could help balance the SOS cries and round out a picture of Miami-Dade’s economy that is truly not all gloom and doom. In the process, they would nudge us to keep business vibrant rather than barricading ourselves for the ultimate deluge that, by inaction, would be partly our own making.
Sure, not all is rosy. It’s easy to point out where we’re in the dumps. But the reality is that if we focus equally on our strengths and act accordingly, our community will gain needed jobs and businesses will replenish their wallets.
And, at least in the visitor industry, the glass is far more than half full — how about 83.4% full at $1,430 a head?