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BY DOUGLAS HANKS
dhanks@MiamiHerald.com
As the steel girders and concrete ramps of the new Florida Marlins stadium reshapes the view of Little Havana, the taxes paying for the project are ahead of the game.
When construction began last summer on the new $642 million ballpark, the hotels funding most of the tab wondered how much worse their business could get. A year later, a steady recovery by the tourism industry has left Miami-Dade County with more hotel-tax revenue than expected to pay back about $320 million of the stadium debt.
A surge in winter and spring bookings bolstered hotel occupancy rates throughout South Florida this year. Some of the boost came from February's Super Bowl XLIV, but the comeback went beyond football mania and reflects a broad recovery in travel spending across the country.
Most analysts didn't see the rebound coming, so the turn-around offers another milestone as construction of the new Florida Marlins ballbark crosses its one-year anniversary at the site of the old Orange Bowl stadium in Little Havana.
``Things are better than anyone expected,'' said Jennifer Glazer-Moon, the county budget director.
Even so, Miami-Dade will need hotels to continue their growth for several years to keep the stadium forecasts on track. But the early numbers offer an encouraging sign for a revenue plan seen by critics as too optimistic when it passed in the spring of 2009, as well as a hotel industry that once-feared 2010 would be an even worse year.
``It's certainly a step in a positive direction,'' said Mark Lunt, an hospitality analyst for Ernst & Young in Miami. Previously he predicted the average hotel room would, at best, see no revenue gains in 2010. Now he expects gains closer to 3 percent.
``It's a helluva lot better than flat,'' Lunt said.
Though still well below pre-recession levels, Miami-Dade hotel taxes have grown 8 percent this year. The stadium plan forecast no growth. And while the stadium plan expected to enter the 2010 budget year with a 20 percent plunge in hotel taxes, 2009 fared a bit better, with the revenues down 15 percent.
Combined, county budget writers have about $11 million in hotel taxes they didn't forecast. Glazer-Moon said the money will add to a $32 million reserve fund for debt payments on a stadium with a retractable roof, fish tanks behind home plate and 60 skyboxes.
Even with a better year, hotel taxes aren't expected to cover the stadium's debt until well after the ballpark's scheduled opening in 2012.
But the new numbers have the county accelerating that break-even point.
The 40-year financing plan expected hotel taxes to fall short of bond payments for more than two decades, with reserves dwindling to just $127,000 in 2024 before growing again. But with the 2009 and 2010 results, Glazer-Moon said the turning point will come much sooner. She expects reserves to hit a low of $14 million in 2014, and then grow after that.
``Changes in the early years are so powerful when you're talking about a 30- or 40-year projection,'' Glazer-Moon said.
The county sold bonds tied to hotel taxes to fund the bulk of the stadium's $525 million construction tab, with the parking garage, infrastructure costs and some financing fees costing another $117 million.
Miami-Dade is paying most of the costs, with Marlins contributing $154 million and Miami building a $100 million parking garage.
Yearly bond payments for the county, which include some debt tied to paying off older hotel-tax bonds, start at $10 million and soar as high as $180 million near the end of a financing plan that runs through 2049.
In May, PKF Hospitality Research in Atlanta upgraded projections for hotel markets across the country, citing improved economic fundamentals and stronger bookings. In Miami-Dade, the average hotel room went from generating 3.3 percent more revenue under PKF's original scenario to enjoying 9.6 percent growth.
Through May, the average Miami-Dade hotel managed to boost room rates just 2 percent to $168 a night, according to Smith Travel Research. But occupancy grew from 69 percent in 2009 to 75 percent, a six-point swing that boosted per-room profits by 11 percent.
Even with this year's improved results, Miami-Dade's stadium plan still relies on a bullish future for the hotel industry.
Glazer-Moon said none of the growth forecasts for 2011 and beyond have changed.
The plan calls for hotel taxes to grow another 10 percent next year and then climb between 7 percent and 9 percent through 2014.
``That could be aggressive,'' said PKF's Scott Smith, who specializes in Florida hotel markets.
He said with corporate groups still hesitant to boost travel budgets and spend heavily on meetings, resort destinations like South Florida will have trouble sustaining big yearly gains in hotel revenue. And as concerns grow that a broader economic rebound could be fleeting around the world, industry watchers hesitate to sound too optimistic about a sustained recovery for hotels.
``Corporate America is feeling better, but still very cautious,'' said Scott Berman, a hotel analysts and head of PricewaterhouseCooper's Miami office. ``There's a lot of work to do.''
dhanks@MiamiHerald.com
As the steel girders and concrete ramps of the new Florida Marlins stadium reshapes the view of Little Havana, the taxes paying for the project are ahead of the game.
When construction began last summer on the new $642 million ballpark, the hotels funding most of the tab wondered how much worse their business could get. A year later, a steady recovery by the tourism industry has left Miami-Dade County with more hotel-tax revenue than expected to pay back about $320 million of the stadium debt.
A surge in winter and spring bookings bolstered hotel occupancy rates throughout South Florida this year. Some of the boost came from February's Super Bowl XLIV, but the comeback went beyond football mania and reflects a broad recovery in travel spending across the country.
Most analysts didn't see the rebound coming, so the turn-around offers another milestone as construction of the new Florida Marlins ballbark crosses its one-year anniversary at the site of the old Orange Bowl stadium in Little Havana.
``Things are better than anyone expected,'' said Jennifer Glazer-Moon, the county budget director.
Even so, Miami-Dade will need hotels to continue their growth for several years to keep the stadium forecasts on track. But the early numbers offer an encouraging sign for a revenue plan seen by critics as too optimistic when it passed in the spring of 2009, as well as a hotel industry that once-feared 2010 would be an even worse year.
``It's certainly a step in a positive direction,'' said Mark Lunt, an hospitality analyst for Ernst & Young in Miami. Previously he predicted the average hotel room would, at best, see no revenue gains in 2010. Now he expects gains closer to 3 percent.
``It's a helluva lot better than flat,'' Lunt said.
Though still well below pre-recession levels, Miami-Dade hotel taxes have grown 8 percent this year. The stadium plan forecast no growth. And while the stadium plan expected to enter the 2010 budget year with a 20 percent plunge in hotel taxes, 2009 fared a bit better, with the revenues down 15 percent.
Combined, county budget writers have about $11 million in hotel taxes they didn't forecast. Glazer-Moon said the money will add to a $32 million reserve fund for debt payments on a stadium with a retractable roof, fish tanks behind home plate and 60 skyboxes.
Even with a better year, hotel taxes aren't expected to cover the stadium's debt until well after the ballpark's scheduled opening in 2012.
But the new numbers have the county accelerating that break-even point.
The 40-year financing plan expected hotel taxes to fall short of bond payments for more than two decades, with reserves dwindling to just $127,000 in 2024 before growing again. But with the 2009 and 2010 results, Glazer-Moon said the turning point will come much sooner. She expects reserves to hit a low of $14 million in 2014, and then grow after that.
``Changes in the early years are so powerful when you're talking about a 30- or 40-year projection,'' Glazer-Moon said.
The county sold bonds tied to hotel taxes to fund the bulk of the stadium's $525 million construction tab, with the parking garage, infrastructure costs and some financing fees costing another $117 million.
Miami-Dade is paying most of the costs, with Marlins contributing $154 million and Miami building a $100 million parking garage.
Yearly bond payments for the county, which include some debt tied to paying off older hotel-tax bonds, start at $10 million and soar as high as $180 million near the end of a financing plan that runs through 2049.
In May, PKF Hospitality Research in Atlanta upgraded projections for hotel markets across the country, citing improved economic fundamentals and stronger bookings. In Miami-Dade, the average hotel room went from generating 3.3 percent more revenue under PKF's original scenario to enjoying 9.6 percent growth.
Through May, the average Miami-Dade hotel managed to boost room rates just 2 percent to $168 a night, according to Smith Travel Research. But occupancy grew from 69 percent in 2009 to 75 percent, a six-point swing that boosted per-room profits by 11 percent.
Even with this year's improved results, Miami-Dade's stadium plan still relies on a bullish future for the hotel industry.
Glazer-Moon said none of the growth forecasts for 2011 and beyond have changed.
The plan calls for hotel taxes to grow another 10 percent next year and then climb between 7 percent and 9 percent through 2014.
``That could be aggressive,'' said PKF's Scott Smith, who specializes in Florida hotel markets.
He said with corporate groups still hesitant to boost travel budgets and spend heavily on meetings, resort destinations like South Florida will have trouble sustaining big yearly gains in hotel revenue. And as concerns grow that a broader economic rebound could be fleeting around the world, industry watchers hesitate to sound too optimistic about a sustained recovery for hotels.
``Corporate America is feeling better, but still very cautious,'' said Scott Berman, a hotel analysts and head of PricewaterhouseCooper's Miami office. ``There's a lot of work to do.''
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