Business owners split on Zika threat to Miami Beach economy
Six weeks after Zika officially landed in Wynwood, the virus has taken a bite out of Miami-Dade County’s economy — and it’s no mosquito-sized nibble.
Downtown Miami hotel bookings are down. Airfare to South Florida is falling. Business owners in affected areas report steep losses. Polls show many visitors would rather stay away.
As the weeks progress, the impact won’t be limited to tourism. Real estate, dining and retail depend on South Florida’s attractiveness as a destination. Small businesses need locals feeling confident, too. With Zika cases confirmed in South Beach, can Miami’s sun-and-fun brand survive a sickness for which a vaccine is still years away?
[Zika] is going to hang over Florida’s economy certainly through the end of 2016 and probably beyond.”
Sean Snaith, economist
“It’s a major threat to all of Florida’s economy,” said Sean Snaith, an economist at the University of Central Florida. “Suddenly, young people are going to think twice about going to Miami or families going to theme parks in Orlando. I think this is going to hang over Florida’s economy certainly through the end of 2016 and probably beyond,” unless Zika is eradicated quickly.
Miami’s hip Wynwood neighborhood, with its outdoor restaurants and public art, has been hit hardest. Public health officials announced mosquitoes were spreading the virus, which also is sexually transmitted, in and around Wynwood on July 29. They labeled a one-square mile area as a Zika zone and issued a federal travel advisory, the first of its kind in the United States.
The advisory is a scarlet letter for shops and restaurants. Despite visits by Miami Mayor Tomás Regalado and Gov. Rick Scott — and giveaways like free parking — business has plummeted.
The Centers for Disease Control and Prevention said it could lift the advisory (which applies to pregnant women and their partners) on Sept. 19, if no new locally contracted cases are discovered. Every business owner in Wynwood has that date circled on a calendar.
56 Number of confirmed cases of non-travel related Zika in Florida as of Thursday
The sting hasn’t been as severe in South Beach, the heart of local tourism, where the virus was discovered in a 1.5-square mile-area Aug. 18. While outdoor tables sat mostly empty on Labor Day, Lincoln Road has generally been busy on the weekends: Tourists who booked expensive vacations months ago are unlikely to cancel. But experts worry if Zika sticks around, the virus will scare away visitors who haven’t yet made reservations for the winter season. Top credit agencies believe harm to Miami-Dade’s tourism sector is inevitable.
“If we are still talking about this in November, December, leading up to Art Basel, that will be telling,” said Scott Berman, a Miami-based tourism analyst at PricewaterhouseCoopers.
Miami-Dade’s crucial meeting business is what most worries the Greater Miami Convention & Visitors Bureau. Since late August, a growing number of 100-person groups have canceled trips to Miami for 2017.
Outside the Zika zones, small businesses are hurting. Felipe Correa has run a tour business, Tourstoyou.net, for 15 years.
“My Miami tour basically collapsed ... all of my pre-arrival reservations canceled,” said Correa, who runs tours in Miami, Key West and the Everglades. “This tour goes out once a week and I had to cancel eight out of my 12 weekly summer season tours,” he said. He had to lay off one employee.
No one wants to think about what would happen if a third Zika zone is identified in Miami-Dade, as investigators look into at least six cases that occurred outside of the existing transmission areas.
A growing number of 100-person groups have canceled conventions in Miami since Zika was detected.
“The dollar is strong, the global economy is relatively weak and that’s already taken demand out of our tourism sector,” said Mekael Teshome, an analyst at PNC Bank who was surprised to see an informational poster about Zika at Charlotte’s airport on a recent business trip.
“That tells you how concerned the public is,” he said.
There were 56 confirmed cases of non-travel related Zika in Florida as of Thursday. Because local tourism feeds into so many businesses, the ripple effect could hurt worker incomes in other industries, as well as reducing sales and hotel tax revenues, Teshome said.
“Floridians have less money to spend when there’s less money coming in,” he said.
Travelers already are avoiding South Florida.
Coco Lewis of Connecticut has celebrated her October birthday for the past three years by staying with more than a dozen friends and family at the Kimpton Surfcomber Hotel on Collins Avenue.
This year? “We don’t want to chance it,” said Lewis, 23, who will party in Vegas instead. “It’s just too risky.”
The evidence is more than anecdotal.
In August, leisure airfare prices fell 17 percent year-over-year at Miami International Airport and Fort Lauderdale-Hollywood International Airport, according to an analysis by Harrell Associates. Fares for top routes at the nation’s other airports rose 4 percent over the same time period, the firm found.
And hotel bookings in greater downtown Miami fell by nearly 3 percent in the first three weeks of August compared to last year, according to data collected by analytics firm STR.
While it’s not clear how much of that decline is attributable to Zika — struggling economies in Latin America and more hotel rooms on the market aren’t helping the numbers either — bookings trended slightly up before the outbreak.
But a strong end to August is painting a brighter picture: More visitors meant downtown Miami’s hotel numbers for the entire month finished just 0.3 percent lower than last year.
“It’s a race against the clock for public officials,” Teshome said. “If they can contain the virus quickly before the peak winter season, we could see confidence come back.”
Analysts won’t have a full picture of Zika’s impact until early 2017.
At Coyo Taco, the popular Mexican joint with a late-night bar, owner Sven Vogtland said he lost 70 percent of his customers immediately after Zika hit Wynwood. He’s had to cut hours for his kitchen and wait staff, although business has lately picked up.
Still, he’s concerned about tourists crossing Miami off their lists.
A poll conducted Aug. 18-24 by the Kaiser Family Foundation found 48 percent of Americans would be uncomfortable traveling to Zika infection areas within the U.S., including Miami.
“The people coming out are the locals, the familiar faces,” said Cesar Morales, who owns Wynwood’s outdoor bar Wood Tavern. “But it seems like visits from tourists [are] way down.”
After Zika was announced, the bar’s crowds dipped from as many as 400 people at peak hours to 100 or 200.
“If these numbers go on for three to four months, that will be devastating,” Morales said.
Many business owners blame the media for over-hyping Zika’s threat.
The virus produces minor symptoms in most patients. Some don’t even know they’re sick. Pregnant women and people of child-bearing age are most at risk because Zika can cause a severe birth defect in babies called microcephaly. Despite worries about Zika during the Olympics in Rio de Janeiro, visitors didn’t suffer from an outbreak.
“There has got to be better connection between the journalists and the headline departments,” said Joe Furst, chairman of the Wynwood Business Improvement District, which represents about 440 businesses in the district employing an estimated 4,000 people.
Wynwood Walls, a popular outdoor event space and tourist draw, typically gets three bookings a day this time of year, said Furst, who is also a managing director at the company that owns the Walls, Goldman Properties. But in the last five weeks, there have been just three total bookings, he said.
(The BID has asked the city for money to compensate for Zika’s impact.)
Furst attributed the economic downturn to the decision to “box off” the Zika zone in Wynwood, calling it “the single greatest failure of the state government.”
In August, leisure airfare prices fell 17 percent year-over-year at Miami and Fort Lauderdale airports. Hotel bookings in greater downtown Miami fell by nearly 3 percent in the first three weeks of August compared to last year.
Aileen Marty, a physician and infectious disease expert at Florida International University, said boxing off an area for intensive mosquito control efforts makes sense. But assuming mosquitoes were only spreading Zika in limited areas was foolhardy, Marty added.
“That’s not the way disease works,” she said. “The rest of the world realizes it’s bigger than just Wynwood or South Beach.”
The European Centre for Disease Control and Prevention has classified all of Miami-Dade as an area of “widespread transmission.” The United Kingdom has advised pregnant women to avoid Miami-Dade for non-essential travel and said they should also consider postponing non-essential travel in the rest of Florida.
In the U.S., the CDC has warned pregnant women to avoid both Wynwood and South Beach, and has said they might want to consider postponing non-essential travel in Miami-Dade. The long-term impacts of the virus still aren’t known.
Marty said everyone in South Florida should wear bug spray with DEET to protect vulnerable coworkers and friends. “You’re literally doing mosquito control when you wear repellant,” Marty said, because mosquitoes feed on human blood.
The South American [real estate] buyers think our level of concern is ridiculous. They feel it’s much safer here with the air conditioning and the spraying.
Danny Hertzberg, broker
Many locals doubt the disease has been contained.
“There are no fences to stop people or mosquitoes from traveling in Miami, right?” said Jose Goyanes, who owns a barbershop and beauty supply store in downtown Miami.
Zika is also hurting South Florida’s luxury real estate market, already slumping because of weak foreign currencies. While Latin American buyers are accustomed to Zika — the virus is prevalent there — those from New York and Europe are more afraid.
“The South American buyers think our level of concern is ridiculous,” broker Danny Hertzberg said. “They feel it’s much safer here with the air conditioning and the spraying.”
But Hertzberg said younger couples from New York have canceled or rescheduled trips to visit South Florida.
“With an already challenging market, it’s definitely an area of concern,” he said.
Senada Adzem of brokerage Douglas Elliman said on a recent business trip to Europe, Zika was the first thing clients brought up in each of 15 meetings.
“I think psychologically people are concerned,” Adze said. “And I think Zika concerns are affecting the brand of not just Miami, but also Florida. ... Zika is a deal-breaker for clients who plan to have children.”
The disease will likely hibernate through the winter, if it’s not eliminated. It could then reappear when mosquitoes return in the spring.
At the end of the day, taxpayers will pick up the bill for anti-mosquito spraying and financial relief for troubled businesses. Miami-Dade officials expect to spend an extra $10 million fighting Zika through the summer, money that county commissioners otherwise hoped to use for affordable housing. The city of Miami approved $247,000 for special events meant to draw customers back to Wynwood. And the Florida Department of Economic Opportunity is surveying local businesses about economic damage sustained because of Zika.
Meanwhile, Congressional gridlock has stymied federal funding.
Miami? No thanks
Businesses that serve people who plan to have children, such as wedding planners and nanny services, have front-row seats to the outbreak’s impact.
Lisi Korn, owner of Bay Harbor Islands-based Forever Events wedding planning service, said a couple from California spent several months planning a destination wedding in Miami only to cancel. The couple is having the nuptials in California instead.
“It’s a little hyped up ... just like everything that’s new and just like everything that is unknown,” said Korn, who tells couples they can move their wedding indoors.
Sharon Graff Radell’s nanny service, TLC for Kids, has also seen a steep decline.
We used to get calls every couple of weeks for a mom coming in town having her baby and now we haven’t gotten any in months — No calls at all.
Sharon Graff Radell, owner of nanny service TLC for Kids
Graff Radell said TLC babysits for families staying at hotels and resorts, often to celebrate weddings, but cancellations started coming in when Gov. Scott announced travel-related cases of Zika had been discovered in February.
“[The families] told us it was because their wives were pregnant and they were nervous to come to Miami,” Graff Radell said.
Business has plummeted by about 25 percent, she said, hurting her staff. Phones have gone quiet for TLC’s newborn service that helps new moms learn how to care for their babies.
“We used to get calls every couple of weeks for a mom coming in town having her baby and now we haven’t gotten any in months,” Graff Radell said. “No calls at all.”
Few want to be associated with the disease. One entrepreneur who is infected with Zika declined an interview. She fears her business will suffer if her diagnosis became public.
South Beach buckles down
On South Beach, government and private industry figures are desperate to prevent another Wynwood scenario from spreading to the city’s tourism jewel.
Planes fly over beachgoers baring the new South Beach mantra: “Use insect repellent. No Zika.” A mock movie poster at the Regal South Beach Stadium 18 on Lincoln Road promotes the message from Miami-Dade mosquito control: “MOSQUITOES … The only way to stop them.. Drain & Cover.” The SLS South Beach hands out Zika kits to each guest. Area hotels spray regularly. And $400,000 vacuum trucks find new use as standing water eliminators, sucking out water from storm drains where mosquitoes can collect and breed.
“The public works team has been working nonstop … they really haven’t had a day off,” said Miami Beach Commissioner Ricky Arriola.
So far, Miami Beach’s efforts to keep tourism flowing are working.
7.4 percentIncrease in hotel bookings on Miami Beach since the first Zika case was detected
Metrics are up on most of the key indicators for Beach hotels during the weeks following the Zika announcement, according to numbers provided by STR and the tourism bureau.
Bookings were up 7.4 percent year-over-year since the first Zika case was detected in South Beach.
And the major local cruise lines — Carnival Cruise Line, Royal Caribbean International and Norwegian Cruise Line — have reported no impact from Zika. All offer alternate itinerary options or cancellations for pregnant women traveling to Zika-affected areas.
On Lincoln Road following Labor Day, some restaurant managers said the weekend was slow, but Zika wasn’t fully to blame.
“September is a really slow month,” said Bill Croft, general manager of Spris Pizza restaurant. “And the Zika will definitely not be helping.”
At the Café at Books & Books on Lincoln Road, general manager Layne Harris said it was business as usual on Labor Day.
“I haven’t heard anybody say, ‘I haven’t been here because of Zika,’ not one person,” Harris said. “We have fans everywhere and the fans really help … keep the mosquitoes away.”
Ashley Gibson, 26, celebrated her bachelorette party at the Fontainebleau Hotel in July before the Zika news broke. She said she would come back to South Florida, as long as she and her soon-to-be husband weren’t planning to have children anytime soon. But she’s worried about the virus spreading to her home in Houston.
“We have mosquitoes swarming all over,” Gibson said.
Miami Herald staff writer Daniel Chang contributed to this report
This article includes comments from the Public Insight Network, an online community of people who have agreed to share their insights with the Miami Herald and WLRN. Become a source at wlrn.org/topic/public-insight-network