The March collections follow a better than expected February in which the City had projected a 55% decline in resort taxes but instead saw only a 12.3% drop, resulting in an additional $3.9 million in revenue. Last September, the City adopted a scaled back budget based on what it anticipated the COVID impact to be but, after it was clear the pandemic was causing a bigger hit than projected, the budget was revised even further down to reflect a longer recovery time.
The overall decrease in resort taxes for March was 9.6% ($9,702,381 down $1,031,661). The food and beverage and room rental component decreased 10.3% with F&B down 12.6% and room rentals down 8.2%.
Miami Beach CFO John Woodruff said, “The numbers are very encouraging” though he noted it’s “unclear if the trend will continue to be this strong as other destinations ‘open up’ as COVID restrictions ease and people have more perceived options.”
Rolando Aedo, Chief Operating Officer of the Greater Miami Convention and Visitors Bureau (GMCVB), said the telltale indicators of a recovery were being felt as early as December. With the launch of recovery programs including those by the GMCVB; the college National Football Championship game here that, although different, still put the area on the national stage; and “a dose of nasty weather up north” converged with the reopening of Florida. “All these things positioned us to capture what was an enormous, enormous amount of pent-up demand,” Aedo said. “We knew travel wasn’t going to go way, but it was a matter of timing.”
By February, hotels saw “rates surpassing 2019 levels which really spoke to the strength of the destination and, of course, the Miami Beach and greater Miami brands,” Aedo said.
“From what I hear from hotels, the lead generation has really hockey sticked in terms of in-house meeting and group business within the hotels,” he said. “We’re thinking the second half of the year will be strong on that end as well.” The Miami Beach Convention Center hosted the first medical convention since the shutdown, Aedo added, with the Aesthetic Meeting at the end of April.
The current demand is only one leg of the stool, Aedo emphasized. The other two – the cruise industry and international business – have not yet kicked in, underscoring the strength of the recovery. He is hopeful cruising will resume in July and that international travelers will return soon. The cruise industry, on average, is responsible for about ten percent of hotel bookings in our area, he said. Once cruises resume, “that will further add momentum and compression and, arguably, will further sustain our [hotel] rates” which “are the highest in the country” based on total inventory.
The recovery, for now, is based mainly on strong domestic travel. The GMCVB’s Recovery Index, shows travel into Miami International Airport (MIA) is at 82% of 2019 travel and total room nights at around 93%. The index is not the same as occupancy which measures total rooms but rather number of rooms (and flights) sold as compared to previous periods, in this case 2019.
The demand for dining reservations is also way up, he said. Using Open Table as a benchmark, the number of reservations a few weeks ago was at 135% over the previous period and is now hovering at about 125%. That means there are 25% more reservations being made through Open Table than two years ago.
Aedo also points to expanded service to MIA as a result of demand. American Airlines, he said, has repositioned some of its larger aircraft from other cities to Miami in addition to expanding the number of flights. Southwest and Jet Blue also now have service here. “These carriers never flew in and out of Miami at MIA which is significant,” he said.
“It’s been brutal,” Aedo said of the last year. “Our industry has arguably taken it harder than most, but the recovery is pacing significantly quicker than a lot of hotels expected.”
Aedo is optimistic that Miami Beach and the greater Miami area will continue to shine as the rest of the country opens up. The crisis, he said, allowed the GMCVB to remind people about all of the many outdoor spaces and activities here which are “on the top of the list of the types of destinations people are looking for” right now and to increase the number of domestic travelers by focusing on the family-friendly features.
Woodruff will lead a budget retreat later this month in which City Commissioners will begin discussions on the FY 2022 budget and preliminary forecasts. The City’s budget year runs from October 1 to September 30.
The Resort Tax and the City Budget
“I am now optimistic that we will meet or exceed our revised projections through the end of the fiscal year as high season is when we generate most of our resort taxes,” Woodruff told RE:MiamiBeach in an email. “I recommend restoring the Resort Tax reserve used in FY 2020 to re-balance the budget ($5 million) and setting aside funds to address next year’s Spring Break which still has a lot of questions re: potential programming and public safety costs.”
“Next year, FY 2022, is more uncertain,” he said. “We are preliminarily assuming 85% of normal for resort taxes as conventions and meetings are still getting back on track and some folks may still be hesitant to travel.”
One of the other unknowns with regard to the City's General Fund that Woodruff talked about last month is what property values will look like. Woodruff is anticipating a drop in commercial property values and, as a result, a drop in property tax revenues. With the impact of COVID on tenants and retail/restaurant receipts, commercial property owners were expected to appeal their property assessments, appeals Woodruff anticipates were probably successful.