Economic Impact of the Coronavirus on Miami Beach

Susan Askew
Susan Askew

Economic Impact of the Coronavirus on Miami Beach:

City Officials and Tourism Group urge vigilance while staying the course

In a city built on tourism, the coronavirus is creating uncertainty for Miami Beach coffers as well as the local hospitality industry and the businesses that depend on it. The message for now from City officials and one tourism group is, remain vigilant while staying the course. For the City, with higher contributions to budget reserve funds, it is in a better position than previous years to weather an emergency.

So far, two events scheduled for the Miami Beach Convention Center have cancelled or postponed.  Following last week’s cancellation by Zendesk of its three-day conference, eMerge Americas announced on Friday it would postpone its annual conference scheduled for the end of this month until November.

In an email to residents, Miami Beach Mayor Dan Gelber acknowledged the cancellation of events that attract international visitors, including the City of Miami’s cancellation of the Ultra Music Festival. While following health guidelines is a pretty straightforward process, he wrote, “It is a far trickier question when it comes to what extent should municipalities be actively cancelling events and gatherings.” 

Given that no County, State or Federal agencies are advising or directing events be cancelled, Gelber said, “At this point, while we are closely monitoring the situation and in constant communication with local and federal health care and emergency management officials, our City is not prohibiting community events nor affirmatively cancelling gatherings.”

While assuring residents the City is taking every precaution and urging vigilance, he said, “Our decision making must be grounded in health care and emergency management expertise. Panic should not be part of our playbook.”

Gelber's message was released earlier in the day, prior to the Florida Health Department's reporting two patients – one in Lee County and one in Santa Rosa County – have died. Lee County is in southwest Florida on the Gulf Coast. Santa Rosa is in the northwest in the Panhandle. In addition, two patients in Broward County are presumptive positive cases of COVID-19 and have been isolated.

Miami Beach City Manager Jimmy Morales, in an email response to a resident’s questions, noted that, in addition to working with the Greater Miami Convention and Visitors Bureau (GMCVB), the Greater Miami and the Beaches Hotel Association (GMBHA), and management at the Miami Beach Convention Center, the City will host a meeting on Monday with the general managers of Miami Beach hotels “to talk about COVID-19 preparedness and response.”

Meanwhile, the GMCVB is providing updates on its website and notes, “The area remains open for business, and we recommend events and conferences continue as normal while heeding the CDC’s guidelines for healthy travel habits.”

“The Greater Miami Convention & Visitors Bureau shares in the deep concern about coronavirus and is working closely with health and government officials to relay the most accurate and timely information to visitors of Greater Miami and its travel and hospitality communities," it says.

“The Florida Department of Health has announced there are two presumptive positive cases of 2019 coronavirus disease (COVID-19) in Florida. Despite these cases in Florida, the overall immediate threat to the public remains low,” GMCVB states in a March 6 update prior to the announcement of the two deaths.

In moving its popular annual technology event from March to November, eMerge released a statement saying “Due to global precautions for the COVID-19 Coronavirus, the state of Florida's public health emergency declaration, and building upon recommendations from the World Health Organization, eMerge Americas is postponing their 16,000 attendee tentpole event to November 4-5, 2020.”

"We're committed to the health and wellbeing of our attendees, partners, and the community as a whole,” Felice Gorordo, CEO of eMerge Americas, said. “This decision follows careful consideration, and this postponement will enable us to provide the experience that our customers, partners, and employees expect and deserve in a safe environment." 

Meanwhile on Lincoln Road, which attracts locals as well as tourist and convention attendees, Timothy Schmand, Executive Director of the Lincoln Road Business Improvement District, wrote in an email, “To date, the Lincoln Road BID has not received any feedback from merchants reporting a slowdown due to the virus. Therefore, we will carry on promoting Lincoln Road as Miami Beach’s cultural, retail, and lifestyle hub.”

Schmand noted the BID has a full calendar of events planned for March including the fourth annual Pride Lights the Night event in partnership with the City of Miami Beach and Miami Beach Pride, the new musical A Wonderful World, The Life and Music of Louis Armstrong opening at the Colony Theatre and a pop-up performance by the New World Symphony fellows on March 15.

He said the BID “will continue to monitor developments of the Coronavirus and encourage the Lincoln Road businesses to follow the recommendations provided by the CDC and the City of Miami Beach to best ensure the safety and wellbeing of our patrons. As an added layer of precaution, we are preparing a flyer for distribution that will answer questions, provide general guidelines regarding the virus, and include best practices on how to remain healthy.”

Meanwhile, Lincoln Road is preparing for the opening of nine new businesses in the coming months, Schmand reported.

In addition to local businesses that depend on the hospitality industry, the City of Miami Beach relies on resort tax revenue. Unlike most cities, Miami Beach is less reliant on property taxes because of its resort tax which makes up 10% of revenue to the General Fund, according to Miami Beach CFO John Woodruff.

With a tough couple of budget years recently, the City was counting on the Convention Center being back online and filling out its schedule to goose the resort tax revenues.

We asked Woodruff what it would mean to the City to take a hit from coronavirus cancellations. He noted the economic impact is “yet to be determined,” but emphasized the City’s “strong reserve policy for our Resort Tax fund (and General Fund).” 

Woodruff said, “We will certainly be actively monitoring the situation.”

Asked to compare the potential coronavirus impact to the recent Zika emergency, he responded in an email, “Zika only affected a limited geographic area, whereas the coronavirus is impacting the entire country (and globe).  As a result, there are no meaningful preliminary observations to be drawn as of yet, other than the economic impact could be substantial.”

The City had contemplated purchasing insurance on its resort tax revenue a couple of years ago. “Through that analysis we discovered that our resort taxes are surprisingly resilient in that they recover fairly quickly from shocks and that the potential payouts didn’t justify the cost of the premiums,” Woodruff told us. “As a result, we created a higher reserve in our Resort Tax and for our General Fund in the past year.”

In January of last year, the City Commission approved increasing the resort tax reserve goal “from a minimum of two months of total revenue with a goal of three months, to a minimum of two months with a goal of six months,” he noted. Woodruff said the City currently has three months of reserves in the Resort Tax fund.  

Over the summer, the City Commission also approved increasing the General Fund Reserve goal “from two months (17%) to three months reserve (25%),” Woodruff added. “This was important given that 10% of the revenue in the General Fund is from Resort Taxes. We are currently at 20% reserve level in the General Fund.”
 
 

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