Miami-Dade’s tourism industry just can’t catch a break.
Last month, demand for local hotels rose 4.4 percent over the same month last year — an increase in room nights sold that the industry needed after months of declines. But the bump wasn’t enough to offset unusually low average room rates, $232 compared to $249 last February, which meant hotels came out making 7.4 percent less revenue for each available room than during the same time last year.
Those numbers amounted to the steepest declines nationwide in those two measures last month, according to data and analytics firm STR.
In February 2016, demand for hotels in Miami-Dade went negative for the first time since the Great Recession — despite the usually blockbuster President’s Day weekend that brings throngs of tourists to the three headliner events: the Miami International Boat Show, the Coconut Grove Arts Festival and Art Wynwood. Leading up to this year’s President’s Day weekend, room nights sold were in the red from October to January before swinging positive in February.
-2.8 percent Decrease in overall hotel revenue in Miami-Dade County in February 2017, compared to February 2016
But other measures were even lower than last year’s ailing February. Overall, hotels made 2.8 percent less revenue last month compared to February 2016.
Hotel taxes are also on a downward streak that has plunged deeper into the negative every month since September, according to the latest numbers from county tax collectors. In January, hotels generated 13 percent less revenue than they did during the same month last year, marking the fifth straight month of declines and the steepest drop since numbers started trending down. Tax revenue for February is not yet available.
The rate of decline is unlike anything Miami-Dade has seen since the recession.
At the same time, there were 5 percent more hotels rooms than a year ago, which is a key factor, said Mark Lunt, partner in the hospitality and real estate practice at Ernst & Young.
“New supply on its own dilutes the rate power of base demand and also brings in lower pricing [at new hotels] to incite demand, so it’s kind of a double whammy,” Lunt said. “It does catch up with you.”
Other factors are still in the mix since last year, including the strength of the dollar, Brazil’s struggling economy, the growth of the short-term rental industry and yes, even Zika.
Recently I had a private equity fund calling asking if there were fire sale deals on Miami Beach because of the Zika virus. Their perception was that Miami must be devastated. Mark Lunt, partner in the hospitality and real estate practice at Ernst & Young
“You have the lingering Zika [effect] out there, it’s still a perception,” Lunt said. “Recently I had a private equity fund calling asking if there were fire sale deals on Miami Beach because of the Zika virus. Their perception was that Miami must be devastated.” (One locally acquired case of Zika was reported this week from a person who was tested in February.)
But this year, the hotel industry is contending with a new challenge, Lunt said: The Trump factor. President Donald Trump’s attempts to impose a travel ban against several Muslim-majority countries, and a recent U.S. ban on laptops, tablets and electronic cameras from 10 airports in Muslim-majority countries, likely plays a role in the subpar performance, he said.
“It’s trickling into the perception of visitation and welcomeness,” Lunt said. “The lodging industry is trying to really roll out the red carpet to international [travelers] ... [but] it does hit markets like Miami and New York that are somewhat more international.”
[The effect of Trump’s former travel ban] does hit markets like Miami and New York that are somewhat more international. Mark Lunt, partner in the hospitality and real estate practice at Ernst & Young
Broward County’s hotel industry, despite facing similar pressures with loss of business from Latin America and the effects of a shooting at Fort Lauderdale-Hollywood International Airport in January that claimed five lives, remained about flat in February.
Overall revenue, revenue per available room and average room rates were each down 1.7 percent from February 2016, according to STR. Room nights sold and occupancy were both flat.
Overall, the lodging industry is in a “wait and see mode,” Lunt said.
“We are experiencing above historical norms in new [hotel rooms] ... but there has been no shocking downturn — there has been pressure,” Lunt said. “[In 2017], it’s pretty much flat to little growth.”