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Economic Recession

Florida tourism leaders: Recession isn’t like 9-11 at all

Hazel Heyer, eTN Staff Writer  Feb 06, 2009

Orlando, Florida (eTN) - Florida leaders agree that the impact of a weak economy to the tourism industry can be reversed or minimized if people only work together.

However the recession will have to be addressed at all levels. Although it appears different from, if not worse than September 11, the recession will have an impact to tourism and perhaps more challenging than what many think.

Carolyn Fennell, director of Public Affairs, Greater Orlando Aviation Authority remains cautiously optimistic with double-digit decreases. She said they have seen a leveling off in the 3d quarter. “It has been a rough year indeed. We ended 2008 with a 35.6 M passenger count compared to 36.5 M last year. Despite that, being the busiest, the airport ranks number 1 in Florida, 10th in the US and 20th in the world. International traffic is up 17 percent, down about 36 percent in domestic, and overall down by 2.2 percent,” she said however airline CEO’s are not throwing in the towel yet.

It’s a challenged industry if one looks at the changing roles of airport and airlines. Orlando airport reduced some 400,000 seat capacity for the airlines which questions viability. “Today, we are looking at more non-airline revenues – 29 percent of or our 370M budget comes from airline revenue. The hotel makes up 11 percent of our total budget,” Fennel said adding they need to look at airline partnerships, make it fair and reasonable for airlines to operate, and stimulate the market for leisure and convention from sources somewhere.

Managing a $25 million tourism budget, DT Minich, executive director, Visit St. Petersburg/Clearwater said: “We’ve seen double-digit increases in visitation from our overseas markets. Sponge diving in Tarpon Springs, Dunedin, a highlight year of the arts with the Salvador Dali art museum, pristine beaches on Clearwater, and the new beach walk and promenade will save the face of tourism there.

In Orange County, reports hint to .5 million to 1 million fewer visitors in 2008, an approximate 48.5 million total for last year. In 2009, the Tourism Development Tax (related to room tax, average rates, hotel revenues) will go down 5 - 10 percent in 2009; occupancy will drop 5 to 6 percent for Central Florida. In 2010, numbers will not have improved just yet. Only in the middle of 2011/2012 will numbers return to where they were in better times, according to Gary Sain, president and CEO, Orlando/ Orange County Convention and Visitors Bureau.

“Everybody in the industry knows they are all ambassadors to the state. Every shop, every store that may not even consider itself a tourism store support our mission,” said Visit Florida’s Sales EVP Eileen Forrow.

Sain said he thinks the trade has not seen the bottom yet. “We have more pains to go. It can get worst with more layoffs and yield drops. The good news is that cruises will stay afloat. Almost 98 percent of cruise passengers are still traveling. Most travel agents are focusing on cruise packaging and marketing but we’re all giving this some thought with the fall of visitations,” he said.

Visitor centers have shut down in Florida. Minich said some chambers operate the local welcome centers. “And just to get visitors in, some members of St. Petersburg’s chambers have been given a payment plan just to keep the visitors centers up,” he said while some CVBs which are private-owned struggle as well. “We have $50M budgets (collected from room tax and the rest from membership). It’s been tough to get budgets up to support the welcome centers,” Sain added.

Sure. This recession does not feel like 9-11. Not at all!

Minich said it’s like apples and oranges. “After 9-11, we were in deep shock. But we tried to make people get on the air. To some degree, there’s more uncertainty today with layoffs, pays and institutions in jeopardy,” he said revealing that the news has not so discouraging up to Super Bowl 43 which they hosted. In the last 3 weeks, over 90 percent of media questions he fielded during the Super Bowl were negative. “After 9-11 we knew what had happened and we knew where to go. This one is different. People had the funds and ability to travel after 9-11. Today, people don’t know whether the funds and ability to travel will ever be there.”

Sain said it will be worst. Yes, worst before it gets better. “After 9-11, people were afraid to travel. Now we’re not seeing any improvement. But it is the best time to travel, with all the best value and deals in 2009; but we just don’t know when it will turn around,” he added.

How bad is it really “when it’s happening all over the world,” darted Forrow.

Asked if hotel oversupply could be an issue due to the continued opening of billion-dollar resorts in the city, Orlando’s CVB head said they are building today for the future. “We are booking conventions today into 2032. The Peabody is building in a slower economy which is actually smart. Developers here are building with the thinking that when the economy’s back and peaks in 2010, they’ll be able to capitalize and increase amount of business,” said he CEO of the Orlando CVB.

Going forward, Fennell said they’re focusing on fixing air traffic control systems and bringing up numbers of controllers, labor relationships between legacy and low-cost carriers, energy and environmental policies in this economic environment, dealing with customers when everybody’s hit by the credit crunch (eg offering complimentary wireless) and dealing with new touchdowns and ownership requirements of airlines.

As for international passengers, Fennell said Orlando needs to give them a better welcome. “Because if they don’t have to come, how we welcome them is certainly our future.”

On the dismal outlook for real estate, Florida can only look forward to opportunities in the midst of a property glut. It’s not bad that there’s superfluous inventory of real estate in Florida. Sain said, “There are plenty of vacation homes, yes. But Florida has a stronger foundation like say, Vegas. It will take us a couple of years to get there but since we have prevailed before, we’ll continue to prevail.”

Fennell suggests the airport needs to look at the real estate side of airports because when airlines merge, they use or share one gate. Despite the airline consolidation, airports still need to deal with the debt service.

At the recent 33rd Florida Huddle, an annual event designed to bring domestic and international buyers seeking Florida’s products to the table with Florida’s tourism vendors, key figures in tourism agree that everybody sharing in the burden of this economic meltdown must find ways to solve tourism problems together. "It’s all important to us. And it’s all of us working together,” closed DJ Towle, director of media and public relations, Florida Huddle.

Florida tourism leaders: Recession isn’t like 9-11 at all
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