Visitor industry merits our support as Miami diversifies
Last fall Miami Today reported that 84 hotels in the pipeline “could catapult 16,135 more hotel rooms into the Miami-Dade market within four years, adding more than 27% to hotel capacity.” Last week, the national Trepp report said the hotel industry faces a historic wave of foreclosures, with 23.4% of hotel commercial mortgage-backed securities loans delinquent.
In a year, hotels have gone from boom to bust.
In July, with tens of thousands of hotel workers jobless, Miami-Dade muddled through a frighteningly low 30.8% hotel occupancy. Foreign travelers to Florida decreased 99%, according to official state organization Visit Florida.
For decades, thoughtful Miami-Dade business leaders warned that relying on a single industry as our backbone could come back to haunt us. They encouraged diversity into industries with higher-paid jobs that don’t rely on visitors, both to push up pay levels and to hedge against a visitor sector disaster.
While Miami-Dade has gone far in strengthening other business segments, the hotel-airline-cruise triumvirate has remained our biggest job provider – our rock in good times, but unfortunately our Achilles’ heel today.
We all know the pandemic sparked the visitor industry disaster. We also know (or hope we know) that some day scientists, doctors and health professionals will triumph over mere hope and the industry will return to some form of normal – though it’s likely to be a different normal than we knew last year.
That new normal will probably open the floodgates for those who want to travel and now can’t or don’t dare to. When that happens, Miami will once again be high on the list of desired destinations.
However, that travel will differ from the past for a time, perhaps a very long time. Health concerns on visits to Miami used to be rare. Even if the virus disappeared tomorrow – a pipe dream reserved for politicians – future travel will have health concerns and protections woven through every fiber.
Meanwhile, in the time gap from today’s pandemic to the future’s relatively painless travel, what path will the hotel world follow and what will we find at the trail’s end?
You can safely bet that we won’t find most of those 84 hotels that last fall were lined up to build here. Those that weren’t rising won’t start work. Those that were in construction will face a vastly slower flow of visitors. If they open, they, like other hoteliers, must be creative in luring a more local market.
That’s true even though, as Miami Today reported last week, international airlines are restoring routes and flights cancelled during the pandemic. They now will fly with fewer seats and less demand, both for health reasons.
In addition, the pandemic has been teaching more businesses that executives and salespeople don’t have to circle the globe to do business, and business travel is a large share of what we live on.
We also have lived on meetings and conventions to supply a quarter of Miami-Dade visitors. Those gatherings have shut down or gone virtual, and like business travel a good share of them may remain virtual once the virus diminishes.
So if business and meeting travel is stunted and a big chunk of individual vacation travel is under wraps, how do hotels fill the gap – or can they?
Hoteliers are creative. They can reconfigure ballrooms and meeting spaces for social distancing. Will some meeting and convention travel be replaced by regional business and civic meetings? The economic yields won’t be as much, but they can help pay bills. We’re certain to see shifts in resource uses like this.
Unfortunately, all of our hotels won’t make it to the end of the pandemic. A bankruptcy sale notice circulated last week for a 42-room South Beach hotel. Others may follow. While reasons differ, the market is certainly dictated by the pandemic.
Last October, Miami-Dade had 58,175 hotel rooms. Owners won’t be able to keep all those rooms open waiting for visitors at 30.8% occupancy levels. And without a room supply approximating what we had before, visitors in a post-pandemic world will total far fewer than we had prior to March.
The post-pandemic supply of experienced hotel workers will also shrink. A shuttered industry had to let go a large share of employees who can’t afford to wait for their jobs back some day. Many might leave the industry entirely; some are trained for other jobs.
Miami is a highly desirable destination with creative visitor industry leaders and quality hotels. Overseas air travel is returning. We have been a global magnet and will be again. The visitor industry will return to play a lead role here.
But Miami’s lead role probably will diminish in volume of guests and total visitor spending once the pandemic enters our rearview mirror. Community and visitor industry creativity, resilience and market promotion will be vital to close that visitor spending gap while we build up other industries to provide needed jobs and economic activity.
What we’ve heard for decades remains true: we can’t rely on visitors alone. The disaster of the pandemic has reinforced the need for diversity without diminishing the industry’s role. While we need multiple concurrent strengths, the community also must work with our hoteliers as they use creativity to fill our visitor gap.