Coronavirus

Coronavirus crisis cripples South Florida hotel industry. Closures, furloughs coming.

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Just last month, South Florida hotels were packed with Super Bowl visitors. Last week, hotel lobbies and pool areas up and down the coast were bustling with sunscreen-lathered spring breakers, vacationing families and convention goers.

That was before COVID-19 was declared a national emergency.

Just days later, on Wednesday, the glittering lobby lounge at the St. Regis Bal Harbour Resort was almost entirely empty. Breakfast was being served on request — either through room service, or, in the 21st century way, through curbside pickup from a delivery app.

The tourism industry worldwide is struggling to deal with an avalanche of cancellations as the coronavirus-related travel restrictions and social distancing efforts expand day by day. Miami-Dade County has been hit especially hard.

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Occupancy rates in the county’s 469 hotels — which total 150,000 rooms — have plummeted from nearly 90 percent last week to around 20 percent this week, according to Rolando Aedo, chief operating officer of the Greater Miami Convention and Visitor’s Bureau. That drastic loss of business will have a profound effect on 150,000 local workers employed in the hospitality sector, which does not even include airlines or the cruise industry.

Overnight visitors spent almost $26 billion in Miami-Dade and $7.6 billion in Broward in 2017, the last year for which annual figures are available. Last week, major cruise lines worldwide announced they would halt operations for 30 days, leaving both Miami-Dade and Broward without the hundreds of thousands of monthly passengers heading to South Florida ports.

Chris Rollins, CEO of South Beach Group Hotels, said he anticipates having to close hotels as early as this week. He expects to offer furloughs to some of the company’s 1,000 employees after occupancy at its 17 hotels plummeted from 90 percent last week to 20 percent this week.

The 1,000-room Diplomat Beach Resort in Hollywood, the largest hotel in Broward County, has begun shutting down and will be fully closed by this weekend, according to hotel staff. Guests with reservations for next week are being told to cancel or reschedule.

It likely won’t be the only large hotel to close temporarily. Wendi Walsh, secretary of Unite Here, the hotel workers’ union that represents 7,000 workers in South Florida and 32,000 statewide, said she is hearing rumors that others might follow suit.

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The latest STR report, a hotel industry research tool, showed that the occupancy rate in Miami-Dade for the second week in March dropped from 88.2% in 2019 to 65.6% in 2020. Broward County saw a similar drop, from 88.6% to 68.6%. Occupancy is expected to fall much further this week, after travel restrictions tightened.

Marriott hotels, which has more than 70 properties in Miami-Dade County, announced it is placing tens of thousands of employees on furlough as the hotel giant deals with a wave of cancellations.

“Everything was rocking and rolling until Sunday, and then our occupancy took a nose dive,” Rollins said. “As of Monday, we still had a lot of tourists in town. It was an exciting weekend here on the beach, but now, this is serious. We’re looking at possible hotel closures and furloughing staff, which we hate to do it, but it’s the reality of what’s going to happen. So, we’re hoping this thing passes quickly and we can return to normal as quickly as possible.”

Aedo said the bureau is working overtime to assess the damage and develop a relief plan: “Everything is upside down, and this is an unprecedented situation, but we’ll get through this together, as we’ve gotten through other major traumas.”

This crisis is “deeper and wider” for the tourism industry than the period following the 9/11 terrorism attacks, Aedo said. “It’s like 9/11 wrapped with Zika with the impact of the 2008 recession, and it’s all come together in a very tragic way. Our industry is getting the brunt of this initially, and because this industry is this community’s No. One industry, it’s going to reverberate throughout and already has.

“The hotel occupancy rate is around 20 to 21 percent right now based on those we have talked to, and needless to say, as the cruise capital of the world, to have that industry come to a halt is quite traumatic.”

Francisco Arocha, CEO and founder of HES Group, a hotel management company in Miami, told El Nuevo Herald he expected overall occupancy to drop 50% this year at his hotels.

Jonathan Plutzik, chairman of The Betsy Hotel-South Beach, said that while business is “substantially under par,” the hotel does have guests and its food operation is open for takeout and delivery.

“Our first concern, frankly, is not the hotel, but all the vulnerable people in our community, They’re vulnerable to illness, and economic insecurity. .. The good news, if there is any sliver of good news, is that Miami Beach is very much a unique tourist destination. “

And, said Plutzik, “We are seeing some evidence that there are people that want to come to our part of the country, South Florida, Miami Beach, as a place to hide, for lack of a better word, as this thing unfolds. Everyone is choosing to be in lockdown someplace and we have one of the most pleasant environments in the country to do that...We have one of the great beaches in the world, it’s largely empty, so it’s a safe place to come walk and find some solace, peace, comfort as the rest of the world is swirling around. That’s something even the virus can’t take from us.”

The Fontainebleau on Miami Beach is also open. Wednesday, its famous ground floor was about one-third full as guests heading out for a run and trying to sort out their next moves. Cleaning crews were out in full force. But car valets and chauffeurs were noticeably idle: save for one woman waiting for her ride, her luggage spilled out in the driveway, there appeared to be nowhere to go.

Fontainebleau management would not provide a comment on the situation. Neither would a spokesperson for J Public Relations, the agency of record for The Ritz-Carlton South Beach and The Ritz-Carlton Bal Harbour, who said the company had no comment on how those properties were impacted by the crisis.

Walsh, the hotel workers’ union secretary, said on a national conference call Wednesday that hotel closures in South Florida would leave thousands of workers desperate.

“In South Florida, our members are 90 percent immigrant workers, most are women from Haiti, Cuba, Puerto Rico and throughout Central America,” she said. “This pandemic hit Miami at the height of our busy season while spring break was in full swing.

“Thousands of workers are facing a health crisis with fear of losing their insurance and fear of eviction. Miami is expensive enough to live in in the best of times. These workers will very quickly find themselves unable to feed their families and pay the rent. We are turning to the government for assistance.”

The Greater Miami Convention and Visitors Bureau is leading an effort to help. A fundraising effort with the United Way and Greater Miami and the Beaches Hotel Association is in the works; proceeds will go directly to hospitality workers.

“The industry will rebound; our biggest concern is the workforce behind that industry,” said Aedo. “We were enjoying record unemployment and now, many of these employees are already being impacted and from what I understand will be impacted even more severely.”

“We have done these relief efforts after other disasters, and by all accounts this is a disaster,” said Aedo. “We are a very, very, very resilient industry as has been shown through prior shocks to the system.”

The bureau is launching a campaign to let local residents know that certain sectors of the hospitality industry — such as restaurants — are available for them and need their business, even if it is just via takeout and delivery. And it is developing a broader recovery plan, as it did post 9/11, oil spills, hurricanes and the Zika epidemic. “I wouldn’t say there’s a playbook, because this is a whole new game,” Aedo said. “But at least we have the foundation for a process we have used and are modifying it for this new reality.”

Rollins and other hoteliers say they will need the help.

“We’re going to take a hit,” he said. “Occupancy dropped from 90 percent to 30 to 20 and reservations are not coming in. It’s not like someone’s coming into town for tomorrow. This is the reality we’re looking at. The optimism is everything will come and go, people will have cabin fever and they want to get out and enjoy real life again. Quickly. That’s the perfect world scenario.”

El Nuevo Herald reporter Sarah Moreno contributed to this report.

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