What began as a great year for travel and tourism ended as merely a good year. Visitor growth of more than 6% through mid 1998 dipped to a 5.4% gain after raging summer forest fires in the north and a hurricane in the Florida Keys. A weak Canadian dollar and fiscal chaos in Brazil also hurt. The August slide on Wall Street cooled the domestic industry. Typical may be the experience of Cheeca Lodge in the Florida Keys. In spite of a tornado on Groundhog Day, blazing summer heat, a wallop from Hurricane Georges and a drop in bookings following the stock market's fall, the resort logged an impressive 80% occupancy rate last year. "It was a turbulent year, but all in all we really can't complain," says Cheeca Lodge general manager Herbert Speigel. "Barring the unexpected, 1999 looks pretty good."
Economic uncertainty may actually be a boon to some sectors of the Florida tourism industry. U.S. travelers may forgo trips abroad in favor of more cost-conscious domestic vacations. Out-of-state visitor totals are expected to inch up this year, continuing the 5% to 8% growth registered since 1995. Bookings from Canada -- a key market for Florida tourism -- already exceed last year's figures. In-state travel should also grow. Central Florida theme parks may be the biggest winners. "Orlando has shown over the years that it remains resilient even when the industry is in a slowdown," says Fred Lounsberry, executive vice president for marketing at Universal Studios Escape and a state tourism commissioner.
Tim O'Brien, southeast editor of Amusement Business Magazine, agrees that 1999 should be a good one for central Florida theme parks. The phased-in opening of Universal's Islands of Adventure, to be completed this summer, and Disney's recently opened Animal Kingdom will draw many of the visitors scared away by last year's fires. "A lot of people held back in 1998, creating pent-up energy and demand," says O'Brien. "This should be a strong rebound year, despite the economy."
The increase in theme park traffic is expected to boost stop-over tourism in north Florida. To capitalize, the Panhandle -- which registered strong domestic and foreign visitor increases in 1998 -- is heavily promoting off-season travel to lengthen visitor stays. The region also is banking on two new convention facilities: the 30,000-sq.-ft. Boardwalk Beach Resort and Convention Center in Panama City Beach, which opened in October, and a similar-size facility slated to open later this year at the nearby Holiday Inn Sunspree.
The cruise industry should also show solid growth. After a brief slowdown in passenger traffic in the mid '90s, the industry posted an estimated 5% increase last year. Celebrity Cruises' Sasso, who also serves as chairman of the Florida Caribbean Cruise Association, says those numbers could continue in 1999. Less than 6% of U.S. vacationers have taken a cruise, he notes. That leaves a vast, untapped market. One industry strategy for attracting new passengers is the introduction of smaller ships that can offer more flexible, theme-oriented cruise packages. Carnival Cruise Lines, for example, launched two mid-size ships last year including the Paradise, which is billed as the world's first smokefree cruise ship. Some larger vessels also will hit the water in 1999. Royal Caribbean's 142,000-ton behemoth Voyager of the Seas -- with onboard ice skating rink, in-line skating track and rock-climbing wall -- will launch in November. Carnival's Carnival Triumph also begins Florida service in November.
Another travel and tourism segment expecting a solid year in 1999 is timeshares. Thanks to the entry of big-name players such as Marriott, Hilton and Hyatt, the industry has shed an image once dominated by cheap construction, sleazy sales gimmicks and restrictive usage policies. Paula Morabito, vacation ownership specialist with Ernst & Young LLP in Miami, says today's timeshare industry is nothing like the old. "Everything is about flexibility," she says. Morabito predicts 15% growth for Florida's timeshare industry in 1999.
To be sure, timeshare remains an Orlando-centered industry. Close to 25% of the world's timeshare properties are in central Florida. Disney, through its Disney Vacation Club division, now operates more than 1,200 units, with 34 slated to open this year. Construction of 137 additional units will begin in late 1999. And the popularity of timeshares is generating projects in other parts of the state. In Miami Beach, for example, timeshare pioneer Arthur Zimand, through his Miami Beach Vacation Resorts, is converting two art deco-style hotels into timeshare properties. The Crescent, with 28 units, will open in June. The Sagamore Suites Hotel, with 93 units, will open a couple months later. Zimand expects buyers to break the mold of the typical timeshare buyer. "There are a lot of reasons to buy property on Miami Beach," says Zimand. "We expect our buyers to reflect all of those motivations."
The growth in Florida's timeshare market may also be a reflection of long-term confidence in the state's lodging industry. Although the statewide hotel occupancy rate fell more than 4% through the first nine months of 1998 (a casualty of weather, more than anything), the average room rate increased more than 6%. The reason: an expected increase in demand this year. "Rates reflect what the industry thinks people will be willing to pay in the future," says Chuck Ross of Smith Travel Research in Hendersonville, Tenn. "They act as an industry barometer."
That expected demand has spawned a rash of hotel construction, particularly in Miami-Dade County. At least a half-dozen high-end properties are in development. Among the big names: Ritz-Carlton and Marriott's upscale J.W. Marriott label. Another high-end project is Grand Bay Resort & Residences on Key Biscayne. Now under construction, the project will include a 243-unit hotel mingled with 226 condominium units that can be placed in the rental pool. So-called condo-hotels provide upfront capital in the form of pre-opening condo sales. The project, which is scheduled to open spring 2000, has already sold nearly half its condo units. "The message we hear is that quality product is in short supply," says Doug Weiser, president of Grand Bay Resort & Residences. "Demand has been tremendous."
That demand, of course, has been the bane of Miami-Dade's meeting and convention trade. For years a shortage of first-class convention hotels in the vicinity of the 1.1 million-sq.-ft. Miami Beach Convention Center has driven conventioneers to Orlando. The number of convention delegates visiting Orlando has jumped more than 100% in the last decade, making it far and away the state's convention capital. The long-awaited, 800-room Loews Miami Beach Hotel, which opened in December, is expected to help Miami-Dade catch up a bit this year. "The Loews will go a long way toward solving the (room shortage) problem," says hotel consultant Ron Muzii Jr. of Innovative Hospitality Group. "But Miami-Dade still has a lot of ground to make up."
Unfortunately, little ground may be gained in 1999. Wall Street's drop hit the hospitality industry particularly hard, leaving dozens of new hotel projects across the state in limbo, scrambling for financing. Miami-Dade, despite strong room demand, is no exception. "Until the market fell, we were on track to receive 2,000 new hotel rooms by the year 2000. That's phenomenal," says Mark Lunt of the hospitality practice section of E&Y Kenneth Leventhal Group. "Now, it looks like things will remain on hold well into the coming year."
Q&A with Austin Mott
Working for a Common Goal:
VISIT FLORIDA
In 1996 the state Legislature created the Florida Tourism Industry Marketing Corp. (FTIMC), a public/private partnership between the Florida Commission on Tourism and the state's travel and tourism industry. FTIMC, which does business under the name Visit Florida, coordinates the state's marketing, sales and visitor-services initiatives for the tourism sector. It is funded by part of Florida's $2-per-day rental-car surcharge. Austin Mott, a 30-year tourism industry veteran, is FTIMC chief executive officer.
FT: Why was the FTIMC created?
AM: The primary purpose was to find ways to get the private sector involved in the overall marketing effort for Florida tourism. Historically, there has been little participation from the private sector. This was seen as a way to bring the industry together with state tourism officials.
FT: Have you accomplished that goal?
AM: Yes, we already have more than 1,500 partners who are supporting us. They contribute based on who they are and how big they are -- they pay $500 for every $1 million in Florida sales. We're hoping that by the year 2001 those contributions can match what we receive from the state.
FT: How much do you receive now from the state?
AM: About $22 million. But when you look at what others are spending you realize that we have a ways to go. Puerto Rico, an island just 35 miles wide and 100 miles long, is spending $70 million a year on marketing; Hawaii is spending close to $90 million.
FT: What are the advantages of operating as a public/private entity?
AM: Well, most importantly, we're able to partner with the private sector. The state can't do this. But also, we're set up to make decisions and act upon them in a timely fashion. For example, last summer we conducted a $300,000 exercise trying to manage the crisis caused by the fires. Things like this are difficult when working through government.
FT: What is the greatest challenge facing FTIMC?
AM: I guess the most difficult thing is getting the industry to belly up to the bar. We really can't put together an effective marketing program unless everyone contributes, working towards a common goal. Some people realize this; for others the idea is a tough sell.