Late 2014 found Donald Trump effusing about the influx of
Brazilian visitors to the Miami market.
“There’s a great energy in Miami, and a lot of it has to
do with South America,” Trump told Travel Weekly at a New York event promoting the
Trump National Doral Miami. “And the Doral section of Miami is very big with
Brazil, Venezuela. It’s an energy that it’s got. Energy and vibrancy.”
Last week, with the state of Rio de Janeiro having
declared an economic crisis and Venezuela torn by food riots, that energy
appeared to have largely depleted, along with the tourism boom it once spelled
for Miami in particular and Florida in general. And, with some economists
forecasting that Brazil’s recession will be the country’s worst in more than a
century, the tourism boom is not likely to be restored anytime soon.
During the early part of the decade, with its economy
booming and its number of outbound travelers surging, Brazil became Miami’s
largest international feeder market. Today, its economic woes are significantly
depleting demand in Miami at a time when the market is hungrier than ever
following a number of recent hotel openings and the extensive renovation of the
Miami Beach Convention Center.
Coastal resorts and inland business hotels alike are
starting to feel the impact, which has added to challenges to inbound tourism stemming from a strong dollar.
“South American travel is dropping much more
precipitously than U.S. travel in South Florida,” said Fern Kanter, managing
director at CHMWarnick, an asset management group with a financial interest in
two South Florida hotels. She estimated that Brazilians account for about 15%
of those hotels’ business. “It has an impact on Miami, and I think it’s
creeping up to Fort Lauderdale and, more significantly, Orlando.”
Florida is not alone in feeling the impact. In New York,
inbound Brazilian tourism numbers have surged in recent years, making it the
city’s second-largest supply market after China. New York is expecting to
attract 948,000 Brazilians this year, up 2.4% from last year, but the economics
have clearly changed.
“We hear that they are still coming, but they are
spending less when they do,” said Fred Dixon, CEO of NYC & Co.
Still, the hit has been particularly hard in Miami
because Brazil is the city’s largest international inbound market. Between 2011
and 2013, Miami’s number of annual inbound Brazilian visitors surged 19%, to
more than 755,000. In the ensuing years, that number fell about 1% while
Miami’s total number of foreign visitors rose more than 5%.
Meanwhile, with the value of the dollar relative to the
Brazilian real doubling in the last five years, the number of Brazilians
visiting the state of Florida dropped 10% last year, to 1.48 million, according
to Visit Florida.
And since then, room demand numbers suggest that
inbound Brazil travel has dropped substantially. Through May, RevPAR in the
Miami-Hialeah market fell 4.1% from a year earlier, compared with 3% growth for
the U.S. as a whole, according to STR, a hotel research firm. Meanwhile, room
supply is up 4.1%. And while Miami-area room rates of $182 per night are more
than double the U.S. average, they have fallen 2.6% since the beginning of the
Last month, Marriott International CEO Arne Sorenson,
speaking on his company’s earnings call, called Miami “weak, mostly because of
the weakness in Brazil.”
Add the $615 million renovation of the Miami Beach
Convention Center that began in December and is slated for a mid-2018
completion, and the Miami tourism market finds itself facing significant
The downturn from the Brazilian market is all the more
daunting because of the ramp-up in new hotels in South Florida in recent years.
Miami was widely regarded as a prime testing ground for established boutique
hotel operators to try out new brands or expand existing ones.
Commune Hotels & Resorts’ Thompson Miami Beach opened
in late 2014, while Thompson’s former owners, the Pomeranc family, opened their
Sixty Nautilus last March. And last April, former Starwood Hotels chief Barry
Sternlicht debuted his 1 Hotel eco-luxury brand in South Beach.
As a result, the Miami-Hialeah market’s room supply
increased 3.6% last year, the fastest growth rate of the 25 largest U.S. hotel
Tourism officials up and down the East Coast are hoping
that such a spending decline will prove to be a short-term phenomenon.
NYC & Co.’s Dixon cited roundtrip tickets between New
York and Brazil going for as little as $400 and said such discounts could help
the industry weather the storm.
And as bad as things have gotten, there seemed to be
little desire last week to give up on Brazil or the potential market it
“We continue to invest in Brazil and haven’t given up on
Brazil,” said Frank Belzer, Universal Orlando’s senior vice present of sales
Visit Florida CEO Will Seccombe said, “While we have seen
a dip with the challenges with the economy in Brazil and the strength of the
dollar, there’s no question that we’re 100% committed to growing that business.
It’s a very, very important market for Florida.”
Meanwhile, investment activity continues in the Miami
Starwood Hotels & Resorts’ W brand rebranded the
Viceroy this spring after the hotel was acquired by the Qatar-based Al Faisal
Holding Co. for $64.5 million, and renovations are planned for the 148-room
More reflective of the investment churn, Hyatt Hotels in
March agreed to buy the Thompson Miami Beach, rename it the Confidante and add
it to its Unbound Collection of independent hotels.
As for the near future of inbound visitors from Brazil
and other parts of South America, David Loeb, senior hotel research analyst at
Baird, said, “Brazil’s economic and political situation is pretty dire, but I’m
not sure someone in Venezuela wouldn’t say it’s a lot worse [there].”
Maybe so, but the bottom line, said Kanter, is that “this
is going to be a tough summer.”