There’s only so much South Florida can take in a year, hoteliers say.
First the Latin American economies plummeted, severely impacting the region’s major tourism market. The dollar got stronger so the other foreign tourists got more frugal. An army of new hotel rooms drove down rates and revenue. Hurricane Matthew battered the coast. And then came Zika, the blow that almost knocked the tourism industry out.
Now, the industry is facing another tsunami-size hit. Visit Florida, the state’s marketing agency, could be gutted.
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The agency that helped bring South Florida back from Zika, hurricanes and the oil spill in the Gulf of Mexico in 2010 and that touts the state’s tourism virtues around the globe, faces a budget whack of epic proportions.
Last week, the Florida House Appropriations Committee voted to shrink Visit Florida’s budget to a third of its size, from $78 million to $25 million. Before it could become law, the measure would have to pass the full House and Senate, and could be vetoed by Gov. Rick Scott.
Detractors argue the state should not be spending taxpayer dollars so companies can create jobs — a philosophy has already led to a House effort to eliminate Enterprise Florida, the state’s economic development agency.
We’ve had such a turbulent year with Zika and everything else happening and you would think that the state would actually want to spend more money to help build an industry that really drives its economy.
Jared Galbut, managing principal and co-founder of Menin Hospitality
But Jared Galbut, managing principal and co-founder of Menin Hospitality, which operates various restaurants and hotels in Miami Beach, is among those who find the decision to cut Visit Florida baffling, particularly as Miami-Dade rebounds from the worst of the Zika crisis.
“We’ve had such a turbulent year with Zika and everything else happening, and you would think that the state would actually want to spend more money to help build an industry that really drives its economy,” Galbut said.
Tourism is one of Florida’s leading industries, responsible for a record 112.8 million visitors in 2016. Last year marked the sixth consecutive year of record visitation to the state.
Under the House’s proposal, Visit Florida’s budget would be less than both Fort Lauderdale’s, which is $27 million, and Miami’s, which was nearly $27.5 million during fiscal year 2015/2016.
In 2015, the most recent year for which data is available, visitors spent $108.8 billion in Florida, of which $11.3 billion was returned to the state in tax collections. In other words, said Dr. Jerry Parrish, chief economist and director of research for the Florida Chamber Foundation in a 2016 release, “those are taxes Florida’s businesses and families don’t have pay because our visitors have paid them for us.”
In size, Florida’s tourism marketing budget most closely resembles Hawaii’s $93 million budget, according to the U.S. Travel Association’s 2016 projections. But The Aloha State brought in only about 9 million visitors in 2016 — less than a tenth of the number of those who visited Florida.
Other states have boosted their budgets. California — considered by Miami tourism boosters as a Florida competitor — increased its budget from $50 million to $100 million in 2015, and got nearly $120 million in 2016, according U.S. Travel estimates. In 2015, that resulted in 263 million travelers.
112.8 million Number of people who visited Florida in 2016, marking the sixth consecutive year of record visitation to the state
In South Florida, the tourism industry is also a job creator, responsible for nearly 142,000 jobs in Miami-Dade and more than 95,000 jobs in Broward this year.
Under the House proposal, Visit Florida’s new budget of $25 million would be less than both Fort Lauderdale’s, which is $27 million, and Miami’s, which is $29.3 million.
“To think that you could reduce that investment when there is all this competition from California and from Texas; to reduce the investment and sustain record tourism is outrageous,” said William D. Talbert, III, president of the Greater Miami Convention & Visitors Bureau and chair of Visit Florida’s board of directors.
SOUTH FLORIDA IMPACT
Visit Florida magnifies local efforts, Talbert said, creating opportunities to leverage ads, present showcases at global events, join forces for press tours and combat crises. For example, the Miami bureau worked with Visit Florida representatives in India and China, ultimately making it possible for Miami International Airport to launch flights with Qatar Airways and Turkish Airlines, he said.
To think that you could reduce that investment when there is all this competition from California and from Texas; to reduce the investment and sustain record tourism is outrageous.
William D. Talbert, III, president of the Miami tourism bureau and chair of Visit Florida’s board of directors
Said Stacy Ritter, president of the Fort Lauderdale Convention & Visitors Bureau. “[Visit Florida has] a much longer reach than we do because they just have a much bigger budget. They can tell us who we need to talk to, point to the right people, as well as put our message out locally.”
Visit Florida’s sphere of influence also helps individual hotels, from some of the largest on Miami Beach to boutique lodgings.
“It comes back to the leverage of the resource that one singular hotel or hotel company is not going to be able to get the word out and be able to communicate,” said Alex Tonarelli, managing director of the 790-room Loews Miami Beach.
They have a much longer reach than we do because they just have a much bigger budget. They can tell us who we need to talk to, point to the right people, as well as put our message out locally.
Stacy Ritter, president of the Fort Lauderdale Convention & Visitors Bureau
For smaller businesses, Visit Florida’s impact is event greater, said Peggy Benua, general manager of the 108-room Dream South Beach
Without the state agency, she said, “there is no way that we would have the same impact.”
THE NEXT COLORADO
In downtown Miami, InterContinental general manager Robert Hill is bracing for a Colorado-like blow.
In 1993, Colorado became the only state to eliminate its tourism marketing organization, obliterating that agency’s $12 million budget. Within two years, Colorado’s share of domestic travelers dropped 30 percent, resulting in $1.4 billion of lost tourism revenue annually, according to a 2009 report by Longwoods Travel USA. Over time, revenue loss increased to more than $2 billion a year and Colorado plunged from first in visitorship to 17th.
After cutting its state marketing agency, Colorado’s tourism revenue loss increased to more than $2 billion a year and the state plunged from first in visitorship to 17th.
Ultimately in 2000, the state’s legislature reinstated a $5 million budget for its marketing arm, which led to a return on investment of 12 to 1 and the eventual increase of the budget to $19 million in 2006 (about the same as it is now). The next year, Colorado hit a record 28 million visitors. The state has hit record numbers every year since.
Much of the push back against Visit Florida came after the agency signed a $1 million contract with rapper Pitbull to be Florida’s media ambassador beginning in July 2015. A quarter of that money was spent on a video featuring Florida beaches and scantily glad models dancing to his song, “Sexy Beaches.” The agency also spent $2 million to sponsor a race car team.
The Florida House is expected to approve the budget cut next week when the legislature convenes. The Florida Senate has previously refused to consider a similar measure, and Gov. Rick Scott opposes the proposal.
We are going to just take second place and second place is never as good as first.
Henry Delgado, general manager at Smith and Wollensky
For their part, local tourism advocates are hoping the state won’t quit Visit Florida while Florida’s tourism is ahead.
“We know restaurants and hotels, it’s a luxury. People cut them out as soon as times get tough,” said Henry Delgado, general manager at South Beach steakhouse Smith and Wollensky. “So it needs to be a constant reminder of what we are doing and that can only be done through a lot of funding.”
“We are going to just take second place and second place is never as good as first.”