The hotel business in Florida is booming. Can that keep pace in 2023?
The hotel industry in Florida is starting to see some normalcy after weathering the pandemic, Hurricane Ian and the general tightening of consumers’ budgets, according to a new report.
Hotels across the nation saw revenues per room drop at the end of 2022 but Florida led the nation, with Fort Myers, Miami and West Palm Beach being the top three markets in the U.S., according to a fourth quarter report on the industry from Moody’s Analytics published this month. The Tampa Bay area wasn’t far behind.
Florida saw increases between 7% in Jacksonville and 75% in Fort Myers overall, the report found. Tampa Bay’s luxury hotels saw more than 80% gains in revenue per rooms, while “lower-tier” hotels saw jumps of up to 30%.
In this conversation, Moody’s Analytics assistant director of research Çağlar Demir and economist Mary Le spoke with the Tampa Bay Times about how the hotel industry is faring and why Florida stands out. This interview has been edited for length and clarity.
What is the state of hotels nationwide right now?
Demir: It’s been a pretty turbulent few months for the hotel market. The room rates were skyrocketing in part because people were coming back to leisure travel post-pandemic. Over the course of the last quarter we have seen a return back to normal and more sustainable levels. The market is over the hectic months of summer and returning to sustainable levels.
What do you think is the biggest obstacle hotels will face this year?
Demir: The key driver is going to be the macroeconomic uncertainty. We are looking at high inflation and a potential recession. So it’s subject to any pitfalls on the demand side. Travelers can cut back on spending.
Le: With inflation, fears of recession, a change of travel routine and even preferences as to whether or not someone would want to stay in an upper-tier or a lower-tier hotel since cost would be a concern.
Looking at the data in your report, Florida stands out. Why?
Le: With Florida, there’s been a strong recovery in general and also for the hotel sector. That can be attributed to population growth. It’s a popular migration destination - where everyone wants to be. During the pandemic, there was more relaxed protocols, so Florida really benefited from that in terms of domestic and international travel.
Fort Myers especially got hit hard by Hurricane Ian. Why has it been one of the top markets in Florida in the last quarter?
Demir: Taking a look at actual traveler numbers [in Florida], the number of travelers are comparable to 2019 levels. In the case of Fort Myers they’re actually a little below the 2019 numbers, but given the impact of Hurricane Ian as restoration efforts continue, dislocated people are going to need accommodation. That in itself is driving Fort Myers even beyond what we are observing in other markets.
With Florida performing so high, how long do you think that can last in these economic conditions?
Demir: We have started to return to normal throughout the fourth quarter. So right now, they’re at more sustainable levels, at least in comparison to the summer months. When it comes to the future, we are forecasting occupancy levels in the 65% to 75% range, the historical average essentially. With room rates, a slight increase but then again, these are all subject to the macroeconomic environment which can influence the decision-making process of consumers.
How is Tampa Bay performing compared to the rest of Florida?
Le: Tampa Bay is overall going pretty well, it’s almost on par with Miami and other southern Florida markets. Because it is a financial hub also, there is a business travel aspect that drives the market forward in addition to leisure and hospitality. Leisure and hospitality saw an 11% increase in employment from December 2021 to December 2022, which is actually higher than Miami’s and even Orlando’s employment change.