Miami Herald: South Florida hotels show signs of recovery
February 23rd, 2010
The Miami Herald published this article on February 22, 2010
BY DOUGLAS HANKS
South Florida hotels finally hit bottom this winter and have begun a recovery from a brutal downturn.
In Miami-Dade, the region's largest hotel market, per-room revenue grew 4.2 percent in January to $124, according to Smith Travel Research. That's the first gain in the closely watched measure since August 2008.
``The destination itself is in pretty good shape,'' said Scott Brush, a lodging analyst and president of Brush & Co. in Palmetto Bay. ``The demand didn't go away.''
Like many signs of recovery throughout the economy, this one showed improvement over a brutal 2009. In January 2009, Miami-Dade hotels saw per-room revenue plunge 18 percent to $120 a night, Smith Travel said. It grew to $124 a night last month, the lowest for January since 2005.
Miami-Dade's hotel rebound will be particularly welcome in County Hall, where hotel taxes are paying the debt on the Marlins baseball park under construction in Little Havana. County Manager George Burgess' finance plan calls for hotel taxes to flatten this year, and a strong winter tourism season would offset last autumn's 8 percent decline.
Smith Travel's January figures show how much hotels are suffering from a building boom that flooded the lodging market with thousands of extra rooms just as a brutal recession began in fall 2008.
In Miami-Dade, hotels sold 16 percent more rooms in January than they did a year ago, but occupancy only climbed eight percentage points to 75 percent. Why the gap? Miami-Dade has 6 percent more rooms than it did a year ago.
With more competition and weaker demand, hotels slashed rates to fill beds and rolled back the clock on what tourists must pay for a South Florida vacation. Rates dropped 12 percent last year and the downward trend continued in January, with rates off 6 percent to $166 a night.
Miami-Dade hotels charged an average of $166 a night last month -- the cheapest for January since 2006.
``They cut rates significantly more than necessary,'' Brush said. ``It's going to be a long time for [the rates] to come back.''
In Broward, per-room revenues were flat from January 2008 at $95 and the Keys saw a 1.8 percent gain to $129. The figures combine occupancy and room rates, making per-room revenue one of the best single measures of a hotel's financial performance. Broward saw occupancy grow four points to 74 percent, while the average room rate dropped 7 percent to $128 a night. In the Keys, occupancy was flat at 68 percent and rates inched up 2 percent to $189 a night.
Early numbers from Smith Travel suggest February will be just as strong, helped along by high room rates for the Feb. 7 Super Bowl.
That leaves March -- typically the peak of South Florida's tourism season -- to determine if hotels will enjoy a rush of profits to sustain them through the slow summer.