Zika fears swat Florida occupancy

Hotel bookings in Miami are down over fears of the Zika virus. The virus’ appearance in the state appears to have shaken travelers' confidence, according to data from STR showing hotels sold 2.9 percent fewer rooms in the city’s central business district and northern neighborhoods during the first three weeks of August when compared to the same period in 2015.

Last year, Miami’s tourism industry generated $24.4 billion according to statistics from the Greater Miami Convention and Visitors Bureau. The recent drop in bookings is directly affecting downtown and north Miami, where bookings have grown uninterrupted since 2010. Beginning January 2016 through July of this year, bookings were up 1.2 percent over 2015, but for the week ending on Aug. 20 bookings were down 4.2 percent, including the Wynwood arts district where Zika cases were confirmed on July 29.

The drop in bookings could be attributed to a number of concerns, but Jan Freitag, SVP of lodging insights at STR, said in a statement that the appearance of Zika in the city correlates to the immediate retraction from the market. Though Freitag said he would like to see up to two months of data before making a definitive statement. In addition, he recommended monitoring traffic into Miami from Europe and Brzil, both of which have a strong pipeline of visitors to South Florida and both locations to have confirmed carriers of the virus.

“We don’t know enough yet,” Freitag said. 

Florida’s economy thrives on tourism, which is why many of its largest tourism operators are taking the Zika scares seriously. Starting last weekend, Walt Disney World, Sea World Entertainment and Universal Orlando began handing out free mosquito repellant as a means to keep guests in their parks. Aerosol spray cans of repellant are also reportedly being offered at nearby hotels, and signage is being displayed throughout properties with safety tips.

“Orlando is the gold standard of mosquito control efforts," Visit Orlando CEO George Aguel said in a statement. "Both our government leaders and our tourism businesses are very serious about mosquito control."

While the Sunshine State is looking for ways to swat its Zika problem, other destinations may be benefitting from guests seeking an alternative. In an Aug. 4 earnings call, MGM Resorts International CEO James Murren said Las Vegas has been the recipient of the wayward bookings, though he isn’t particularly happy with the reason why.

“As sad as that situation is in Florida, I certainly don't want to benefit from it as a result of that, but I can say that we're seeing a pickup in air traffic and in driving traffic even in the last couple of months," Murren said in the call. Other destinations expected to see a boost include New York state, southern California, Vermont, the midwest and Canada.

But these occupancy gains are coming off the back of markets feeling strong retraction. In the first half of 2016, Puerto Rico saw its occupancy drop from 78.6 percent to 74.8 percent, and it hit its lowest mark in May at 67 percent according to data from STR. And tour operators are stepping in to perform damage control in the same way Orlando is, offering Zika-free guides and alternative destinations.

This is a year of high marks for the industry, but also strong retractions. The market’s reaction to Zika echoes that of the terror attacks that took place in early 2016. A report conducted by STR in May found that occupancy was more affected by these events than rate, and hotels were not advised to try to recovery lost occupancy through lowering rates as travelers are most likely to avoid an affected destination no matter the price. 

The comparisons between a virus and terror attacks end at sudden occupancy loss and disaster management. European hotel markets affected by terror attacks stabilized after roughly three months, while the recovery from a virus like Zika cannot be estimated because the issue has yet to be resolved, or even fully understood. But the industry does have a possible past example to draw on for the damage Zika is capable of. The outbreak of severe acute respiratory syndrome (SARS) from 2002 to 2003 was estimated by the World Bank to have cost the world’s global economy an estimated $54 billion.