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Rise in Bookings May Signal Rebound for South Florida Hotels;
Profits May be Another Story

By Douglas Hanks, The Miami HeraldMcClatchy-Tribune Regional News

Dec. 2, 2009--The winter shouldn't be quite as harsh for tourism this time around.

As Art Basel Miami Beach heralds the unofficial launch of the "high" tourism season this week, demand has finally begun to rise for trips to South Florida. That could signal a turning point for a hotel market besieged by discounted rates and weak demand, trends that have pushed some of the region's flashiest hotels to the brink of foreclosure.

Severe cutbacks in travel spending haven't stopped art buyers from driving up rates in Miami Beach this week -- the cheapest rooms at the Delano go for $825 a night this weekend, compared to $345 next weekend.

The real test begins Sunday after the country's largest contemporary art show turns off the lights at the Miami Beach Convention Center.

"It looks like the slide is either slowing down or reversing," said Peter Sahora, general manager of the Z Ocean Hotel in South Beach. "We'll see what happens in January and February."


No one expects the upcoming winter to rescue South Florida hotels from the grips of a harsh economy, even with the arrival of Super Bowl and the NFL's Pro Bowl eight weeks from now. And gains in demand do not translate into more profits if hotels are forced to continue discounting rates to fill beds.

A recent forecast by PKF Hospitality Research predicts Miami-Dade hotels' per-room revenue will drop another 6 percent in 2010 after a 23 percent plunge in 2009, with Broward hotels faring slightly better with a 4 percent drop in 2010 after 2009's 17 percent decline.

That's discouraging news for teetering hotels counting on a strong winter to bring them back to profitability and stave off foreclosure. It also doesn't bode well for the hotel taxes that fund public venues throughout the region, including the new $515 million Miami baseball park under construction.

But there are signs that the region's tourism industry will set the stage for a modest rebound in the coming months.

Among them:

Increasing bookings.

For the first time since the financial crisis began in late 2008, more people are booking hotel rooms in South Florida.

Figures from Smith Travel Research show Broward hotels booked 1.6 percent more hotel rooms between July and October than they did a year ago, compared to a 5.2 percent drop in the four prior months, according to Smith Travel Research.

For Miami-Dade, the gain was 1.3 percent between July and October versus a 2.5 percent drop in the four prior months.

"There's no question we turned the corner," said Scott Berman, a leading hotel analyst who runs PricewaterhouseCooper's leisure department from the company's Miami office.

The mainland numbers follow a trend underway in the Keys since the summer, when demand began picking up as room rates continued to fall. The Keys are on track to finish the year with demand up about 3 percent, compared to a 2.5 percent drop in Broward and a 1.4 percent drop in Miami-Dade.

Berman said the increased bookings throughout South Florida were predictable and came at a steep cost to hotels: As they cut prices -- rates are down about 14 percent this year -- travelers opened their wallets.

"It's been a very humbling year," Berman said.


Corporate America meeting again.

No trend hurt South Florida hotels more than the collapse in corporate meetings. And in recent weeks, there are scattered reports of companies booking trips to South Florida again. "We're 30 percent over last year for October and November," said Arnoldo Ramirez, chairman of Water Fantaseas Luxury Yacht Charters in Miami.

As backlash spread over lavish trips by bailed-out banks and insurers, even healthy corporations shunned resort destinations like Fort Lauderdale and South Beach. That cost hotels millions in meeting bookings, and helped make this economic downturn more painful than past ones.

"For a good year and a half, there was no corporate business -- none," said Jessica Goldman Srebnick, who oversees South Beach's The Hotel and the Park Central for Goldman Properties. "About two months ago, we started to see a difference."

Walter Banks, owner of the Lago Mar resort in Fort Lauderdale, recognized a similar turnabout in recent weeks.

"There's doesn't seem to be as big of a concern about perception" from companies planning conferences in sunny destinations, he said. "Groups that canceled out last year because of perception and economics [are] returning."

A weak U.S. dollar.

This year's rise in foreign currencies wasn't enough to persuade more international travelers to visit South Florida. Foreign tourism still dropped 2.9 percent through August in Miami-Dade, one of the country's top destinations for international visitors.


Konrad Pramsohler, who runs a Miami Lakes tour company that caters to Europeans, said South Florida was hurt in the foreign market this year by even deeper discounts in the Caribbean. "Miami is a beach destination," he said. "You can get much better deals in the islands than you can in Miami."

Still, Pramsohler saw his European bookings increase 10 percent in Miami -- far less than in other U.S. markets but still a gain in a rough year for travel.

This summer, he bought a small bus modeled to look like a trolley car, where he leads tours of Miami and Miami Beach with taped commentary in German, English and Spanish.

"In January, I'm adding French and Italian," he said. "I'm trying to do Russian."

Foreign tourists provide South Florida hotels the biggest boost in the summer, when steamy weather turns off U.S. vacationers from the Midwest and Northeast.

Travalco, a North Miami company that sells U.S. vacation packages to Europeans, saw bookings drop between 10 and 15 percent in 2009 as a U.S. recession spread around the world.

But President Peter van Berkel said the summer of 2010 should see gains. Many Europeans book summer trips in the fall, and the recent rise of the euro to $1.50 is helping boost sales. "It's a psychological level," van Berkel said. "You get three dollars, and you only have to pay two euros."


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