competing assessment of economic impact of ocean dr vote

Susan Askew
Susan Askew

competing assessment of economic impact of ocean dr vote:

city hires fiu to provide analysis on reduced alcohol sale hours

It started out a bit rough as two researchers from FIU told Miami Beach City Commissioners that they were just in the beginning stages of their analysis on the economic impact of a rollback in hours for the outdoor service of alcohol on Ocean Drive despite a referendum on the matter in a few weeks. In the shadow of a study sponsored by the Florida Restaurant and Lodging Association forecasting a dramatic negative impact if the measure passes, they are on the hot seat to deliver another view in a very short time period.
 
City Manager Jimmy Morales noted the reason for the late start was because outreach to traditional consultants with experience in this type of analysis was unsuccessful due to various conflicts. The FIU team was retained about a month ago, they said.
 
Dr. Ned Murray, Associate Director of the Metropolitan Center at FIU, said the team is working through City data and an analysis of a community survey of residents of Miami Dade County as well as an analysis of user generated reviews from national and international tourists.
 
While they’ve done some economic analysis and will ultimately provide their own economic impact modeling, he told Commissioners this week they weren’t ready to present any findings, even though the November 7th vote on the question is just a few weeks away.
 
Murray did share some highlights of the community survey of 400 County residents. He said, “25% or so come here at least once a month, others less frequently.” When asked their main reason for not visiting more often, 26% cited difficulty of traffic and access time. The other category that came in at 25%, he said, was “the combination of distance, geography, and the fact that there are other venues around the County” to frequent.
 
“One of the things we found interesting,” Murray said, “is that only 7% responded to crime as an issue as to why they wouldn’t come.”
 
“The next question which we thought was really quite fascinating is how would the proposed alcohol sale restrictions affect your willingness to go to Ocean Drive,” he said. “70% of the respondents said there would be no effect. And quite interestingly, 23% said they would probably visit more frequently … only 8% said they would visit Ocean Drive less frequently.”
 
The initial analysis of user generated content going back two years from Trip Advisor and Yelp consisted of more than 3,300 reviews, with international tourists contributing about one third of reviews and tourists from the United States, the other two thirds. He noted 88% of the reviews were from commenters outside of Florida.
 
In totality of experience, Murray said 68% of the reviews were positive, 25% negative, and 7% of the reviews contained both positive and negative comments.
 
“You can see the good news for Miami Beach is that nearly 70% were positive reviews of their visits here to Miami Beach,” Murray said.
 
One of the major themes of the reviews was “food and drinks” with more than one-third of the commenters mentioning their restaurant and bar experiences. “You can see highly positive, some of the comments [on] their satisfaction with meals and drinks, eating dinner, table reservations, all quite positive…”
 
Mayor Philip Levine cut off the presentation at that point, saying that while “everyone’s interested in a lot of it. We have some time constraints.”
 
Referring to the FRLA report by Dr. Hank Fishkind, Levine said, “What I think the key, and the meat of the matter, what most people want to understand is your breakdown of the Fishkind and Associates analysis. Their numbers versus your numbers. I think that’s the meat of the matter. I think that’s important. It all comes down to dollars and cents.”
 
Senior fellow Kevin Griener said, “We are still early in our analysis. We are not prepared to publicly debate specific numbers, put up our numbers yet. That’s still under review in-house.”
 
After hearing the data would be available “within the next week or two”, Levine pressed. “At a certain point it’s not even necessary, because absentee ballots are out … this is a time urgency, guys. If the residents and voters don’t get the information, it’s really worthless at this point.”
 
Greiner responded there were a few points the two wanted to make. “We think the ordinance has been unfairly mischaracterized in the press as a ban. It’s not. It’s a tightly targeted management of alcohol sales after 2 am specifically. And what frames this whole thing is that it’s 55 establishments that serve alcohol between 5th and 15th. The ordinance impacts only eight of those.” He noted there are two significant sellers, Mango’s and the Clevelander, “But it’s still very tightly focused.”
 
“Fishkind looked at total revenues,” Greiner said. “They did this cascading effect of negative economic impacts beginning with the loss of sales. They calculated the total revenue of the eight establishments that are going to be affected by the ordinance not selling after 2 am.” Fishkind used $64m in total annual sales and an estimate of a 25% reduction ($16m) in sales while the City – and FIU – used a 15% estimate for a loss of $9.8m in revenues, he said. “The big leap that Fishkind makes, and where we’re having real conceptual difficulties, analytical difficulties, is they forecasted, based on reduced sales between 2 am and 5 am at eight establishments, you’re going to lose over a million nights, hotel room nights in Miami Beach.”
 
“When you start cascading these numbers,” Greiner said, “the impacts then look incredibly negative; $228m in lost hotel revenues; $97m in café and restaurant sales; total sales losses of $334m and then the whopper, $1.6B in property value reduction because of lost operating profits at these hotels  … They attached reduced sales at these eight bars to a 20% decrease in the hotels below 5th Street, 10% decrease in those above 15th. We’re not clear how they got there at all … Based on their numbers, there’s then an incredible loss of public revenue, State sales taxes, City property taxes, etc. We think that the study badly overreaches.”
 
He acknowledged, “There are going to be significant losses of income. The Clevelander and Mango’s are the two top sellers of alcohol in Miami Beach. Between them it’s $38m in alcohol sales a year. That’s significant. Those are large businesses by Miami Dade standards. They may lose someplace between 15 and 20% of sales revenues based on that. However connecting those sale losses … to the loss of one million hotel room nights, we’re just not getting it. We’re not getting it. If there is a loss in hotel room nights – we’re not sure that there may be because of the simple fact that you have a wide variety of choice” of other places to go when the eight bars would close at 2.
 
Levine asked, “Could there be a gain of hotel nights based on brand enhancement?”
 
Greiner responded, “There could be. We don’t know that yet and I can’t say that with any confidence. But, basically, looking at the reduction of sales at these eight establishments, the financial impacts of that to the city will be rather nominal…significantly less. We’re just not understanding how [the loss of sales at the eight businesses] is connected to loss of hotel room nights, especially at that scale.”
 
Rather than a survey of the operators, which is what Fishkind conducted, the FIU researchers said they are using City tax records for their analysis.
 
Greiner concluded, “The three questions to really ask – and I think it’s proper to pose them – is the sale of alcohol from 2 am to 5 am at eight establishments driving the sale of one million hotel room nights? We’re not there. We’re nowhere near that. We think that’s a stretch.”
 
Second, he said, “Based on average occupancy of those rooms, does reducing the sale of alcohol at eight establishments from 2 to 5 am result in a hard loss of close to 2.5 million tourists in Miami Beach. That’s what Fishkind is forecasting. We don’t think so there either. Somewhere a lot less than that, if at all.”
 
“Last one, given that you have 55 establishments just between 5th and 15th selling alcohol – I think it’s 17 or 18 that have licenses right now to sell after 2 am and more could apply – even if you lose all of the business at those eight establishments,” he asked, “isn’t it more likely that customers will just go to one of the other bars on the street after 2am? So you may, in the end, not see a net loss of total revenue at all. There may be some. We don’t know.”
 
 
Signs at the Clevelander indicating their opposition to the ballot measure


“The Clevelander certainly is a national brand,” Greiner said. “It’s something to be dealt with on its own. They’ve done a lot of work to create a draw of their own, but we think it’s highly likely most of the customers, some large percentage of the customers that would otherwise be at those eight establishments will probably find their way to others and … given the international flavor especially of visitors to Miami Beach, are these eight bars really driving that much … our surveys confirm this, they’re coming for the totality of the experience. It doesn’t really seem to us that they’re coming because 'I want to go to a certain bar at 2 am.'”
 
Regarding the Fishkind study, he said, “Our numbers we think will be considerably different.”

Levine said even if the researchers could simply give ranges, getting comparative numbers sooner is important. Morales said FIU planned to deliver numbers by October 31st, but Murray and Greiner said they would try to get them sooner.
 
Commissioner John Alemán asked the researchers to explore both their assumption that visitors will still come and simply go somewhere else when one bar closes at 2 and the other side which is the concern that she’s heard that they “just might not come” because they don’t want to go through the hassle of going somewhere else.
 
Regarding lost hotel night projections, she said, “A million room nights would be 2,740 room nights a day all year round. I agree with you, that doesn’t sound correct. I would want to have that explained to me but this points to why I’m a vote no on the 2 am because so much more study is needed. These results compellingly call into question the other study. I think it needs a lot more study. That’s why I personally vote no. It’s not that I think 2 am is not the answer, it might very well be the answer, but I’m concerned about jumping into it not really haven it proven. That makes me nervous. It is our economy.”
 
Commissioner Kristen Rosen Gonzalez asked the team to also look at how the City’s 68% positive rating compares to other cities to which Commissioner Joy Malakoff responded there’s no need to look at other places when you can look at different areas of Miami Beach. “See what the Collins Avenue reviews are, how they rate it … I don’t think you have to go far out of the City to get a pretty fair comparison to see how the hotels located on Collins Avenue are treating the customers, and the price of their drinks, and quality of service versus what’s happening today on Ocean Drive.”
 
Morales concurred. “I get complaints all the time from people who go to Ocean Drive and feel like they’ve been ripped off for their meals. And if you look at [the FIU survey] when they ask people about prices on Ocean Drive, 74.55% were negative.” He held up a thick notebook containing reviews compiled by an intern in his office of the most recent Yelp and Trip Advisor reviews for Ocean Drive restaurants. “The reviews are horribly negative and a lot of it is price, scam, you know, $75 beer and a $110 burger,” he said. “So when you look at brand issues, that’s another huge brand issue on Ocean Drive [the] people who don’t come back that we’re losing now.”
 
Asked by Levine to give the Fishkind report a grade based on “Truth, validity, accuracy”, Murray said, “When we see a study that does not have sources of data or methodology, that’s really problematic … probably a D minus.”
 
Levine said he was looking forward to the final report and comparative numbers. “We’d like to know how much of Fishkind’s fiction is real,” he said.
 

Image at top: Shutterstock

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