Vacationers, business travelers, and cruise ships could all make the difference as the state’s hospitality industry bounces back

It’s no secret that Florida’s hotel industry relies on out-of-state and international travelers to keep it thriving. And for the most part, the industry has been recovering from the COVID-19 pandemic quite well, at least compared to other parts of the country. 

In spring 2021, South Florida had an overall occupancy rate of over 70%, suggesting that a full recovery could be likely in the near future. But conventions, cruises, and international visitors are what push Florida’s hospitality industry to the next level, and they aren’t entirely in play. Without a return to complete normalcy, some properties could struggle. 

Another factor is the delta variant, which has pushed Florida’s COVID rates to the highest in the country. While Governor Ron DeSantis doesn’t seem in a hurry to shut things down again, he might not have much choice about imposing some restrictions if the state continues on this course. 

Here’s an overview of the current state of Florida’s hotel industry and the factors essential to a full recovery.

What’s the holdup?

It appears as though a complete return to normal is a fair distance off for Florida, despite significant vaccination progress. There are currently multiple restrictions on individuals flying into the United States from other countries, including a ban on international travel from the United Kingdom, the Republic of Ireland, Germany, Italy, Spain, France, Austria, Sweden, Finland, and Belgium. 

Restrictions on land border crossings from Canada will continue until at least August 21. However, new flights from Canada have been added over the summer, which could provide a bump in traffic. The reason for keeping border restrictions in place is simple: the delta variant of COVID-19. 

This highly contagious mutation is causing an additional wave of cases worldwide, even in areas with high vaccination rates. Florida and many other southern states are being hit hard, and we don’t yet know how this will impact the tourism industry and business travel.

The delta variant could delay conventions and international tourists arriving in Florida at pre-pandemic levels for at least another year, which could prevent the hotel industry from totally recovering anytime soon.

What happened in Florida?

COVID didn’t impact Florida’s hotel industry as much as some other places in the country, but that doesn’t mean it wasn’t hit hard. 

For example, the Diplomat Beach Resort in Hollywood closed its doors early in the pandemic and didn’t open again until June 1, 2021. This hotel is the third-largest in South Florida, with 1,000 guest rooms, 209,000 square feet of meeting and event space, multiple restaurants, and two swimming pools. The fact that this massive resort was closed for over a year shows just how heavily the pandemic affected the state’s tourism sector. It’s likely worth keeping an eye on the Diplomat’s status because if it closes its doors again, this could be a good sign the industry as a whole is struggling. 

It’s worth noting that Fontainebleau Development nearly purchased the Diplomat in May 2020, but the agreement was called off because of uncertainty surrounding the pandemic. If we see another group make a play to buy to Diplomat, it’s a bullish signal for the sector’s future. 

Another thing to keep an eye on is Miami Worldcenter. MDM Hotel Group called off its plan to build the Marriott Marquis Miami Worldcenter Hotel & Expo Center at the site of the former Miami Arena and even sold the land to Witkoff Organization and Monroe Capital. The rationale for the deal was the toll the pandemic took on the meetings and convention market. This selloff shows that there’s still significant risk in hospitality.

The impact of business travel and cruises

Questions surrounding business travel and the cruise industry remain.

The CEO of Hyatt Hotels believes that business travel could return to normal in the fall. This occurrence would be massive for South Florida because it should bring conventions back, too. Of course, that all depends on how much damage the delta variant does in the coming months. 

As for the cruise industry, we’ll have to wait and see how the situation plays out. The CDC wants adequate regulations on cruise ships, but Florida’s government and a federal court ruling disagree. If we see substantial COVID cases coming from cruise ships, it should scare people away from that industry and possibly tourism overall.

An evolving situation

Florida’s hotel industry is heavily reliant on the return to pre-pandemic travel levels from a range of sources, including leisure, international, and business. Some dour analysts believe it could take years to recuperate fully, but the early rebound in spring leisure travel has been a positive sign. Florida will also see a significant uptick in visitors once international travel opens back up.

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