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Front Page » Opinion » New blueprints are coming for hospitality industry’s future

New blueprints are coming for hospitality industry’s future

Written by on March 24, 2020
New blueprints are coming for hospitality industry’s future

Miami-Dade’s hospitality sector is under economic siege from the coronavirus. How it recovers is crucial to the future for us all.

Of course, whatever industry we look at is struggling while society battles a peril with no track record to indicate when the siege might ease up. 

Hospitality is in the same boat – but hospitality has been what Miami was built on, our beacon to the world, no matter that other businesses play equally vital roles. 

The globe sees us as hotels and beaches, cruise ships and airlines – all of which are being hammered unmercifully. In Florida, hotels and support businesses had cut 400,000 jobs as of last Thursday in an industry that previously employed 900,000 in the state, according to the American Hotel & Lodging Association.

Short-term patches may help. The Greater Miami Convention & Visitors Bureau started “Miami Eats. Order Out. Help Out” to keep restaurants that cannot welcome guests serving food. The Coconut Grove Business Improvement District teamed up with Freebee to deliver restaurant food. Coral Gables and others took similar measures. Small, helpful steps in a battered dining world.

At some point, however, the visitor industry will recover ground, and the nature of its recovery may alter Miami.

In particular, the hotel sector may get a new blueprint. 

Right now, under county Mayor Carlos Giménez’s emergency orders hotels are limited to a clientele that has been lumped together as “essential lodgers,” which includes 17 categories ranging from healthcare professionals and first responders to displaced residents and visitors. 

One category also would look to coronavirus patients as hotel occupants, a category that Gov. Ron DeSantis said Saturday was being seriously considered to prevent them from infecting other persons at home.

Others in the 17 categories targeted for hotels are members of the National Guard; law enforcement personnel; state and federal employees; airline crewmembers; patients’ families; journalists; others responding to the coronavirus; persons who can’t return home due to the coronavirus; people who must evacuate homes in fires or floods; those using hotels for transitional housing; domestic violence victims; hotel employees, service providers and contractors; and people who are temporarily unable to live at home.

These groups will have a lot of rooms to use. 

Miami-Dade at the end of 2019 had 58,175 hotel rooms, according to hospitality research guru STR. That’s 58,175 rooms that in the first week of this month had, according to STR, a 75.5% occupancy (down 9.2% in a week as coronavirus spread intensified), with an average daily room rate of $239.71.

At those occupancy and room rates, those hotels would produce well over $326 million monthly just in room charges, let alone food and beverage and other costs. And those guests also spread spending through the community. 

“Essential lodgers” are going to be spending a small fraction of that $326 million on rooms, and in far fewer ways in this emergency will they spend in the community. That’s far fewer guests spending far less.

None of that lost money can be regained, because today’s empty beds won’t be spending when tomorrow’s beds are filled.

Beyond that loss that our hotels can never recover is the looming list of plans for far more hotel rooms.

When Miami Today last checked the data in December, developers planned to build 84 more Miami-Dade hotels with a total of 13,364 rooms, according to STR’s industry records. That would have added 27% to hotel capacity here.

Now the waiting queue for new hotels to check in is even longer. STR last week cited 90 new hotels in the pipeline that would add 16,898 more rooms here, an increase of 29% in our hotel capacity.

Be certain that this massive increase in capacity is not going to arrive – at least, nowhere near as quickly as we expected short weeks ago.

STR says that 27 of those new hotels totaling 3,897 rooms were under construction this month, with 28 more totaling 4,840 rooms in final planning and 35 others with 8,161 rooms in less advanced planning. It might be hard to halt hotels in construction, but many in the other two groups will surely delayed or canceled.

That will reverberate to the construction industry, which sends aloft the birds that circle us overhead in good times, the construction cranes. Hotels that aren’t built mean rooms that aren’t filled with travelers, diners, shoppers, potential real estate and business investors and more. Those also are rooms that construction firms and workers didn’t get paid for. 

The impact reverberates regionally, touching virtually every business category and even government, because tourists who don’t stay here don’t pay sales taxes and room taxes. 

The largest hotels in the pipeline are almost all in planning. No hotel under construction is as large as 300 rooms, STR records show. Further, the 372-room Miami Hilton Bayfront is the only hotel with more than 300 rooms in final planning.

But in the planning stage – furthest from opening so probably easiest to postpone – seven of the hotels are at least 300 rooms.

Largest of those is the 1,723-room Marquis Marriott Downtown, the centerpiece of plans for the vast Miami Worldcenter.

Other large hotels in planning are an unnamed 792-room hotel at Island Gardens on Watson Island, a 520-room Resorts World Miami Convention hotel in the Omni area, a 400-room unnamed resort hotel near Hard Rock Stadium, a 348-room citizenM in Miami Worldcenter, the 300-room Jungle Island Eco Resort, and a 300-room Super 8 Miami near Northwest 36th Avenue and 24th Street.

Most of these are pivotal projects. Even if they’re built, some will slide off years into the future.

That slowdown in industry growth will parallel a brake on both airlines and cruise lines. All of the visitor industry depends on global economic health and growth, and growth is likely to give way to economic decline at an unknown rate for an unknown period. Again, we are in uncharted waters.

In the long run Miami-Dade is still ideally positioned to regain its strong hospitality environment. There may be a global slowdown, but we have both a premiere position among competitors and the hospitality infrastructure to take advantage of that position.

The burning question is, how far and how fast will hospitality’s rebound be?