Florida Seeing Changes in Its Tourism Business

Vicki and Rob Murdock prefer to fly when they go on vacation so they can avoid the highway construction delays they often encounter on trips from their home in the Smoky Mountains of North Carolina.

But they drove on their latest vacation, a trip to Orlando’s theme parks with their two sons. They did so to conserve money; Vicki recently quit her airline ticket agent job. “Price was pretty important,” she said, “considering I’m not working.”

Florida’s tourism industry, second in the U.S. only to California’s, expects to have its strongest year in the last four. But hoteliers, theme park operators and industry officials find their customers have changed dramatically compared with 2000, considered the apex of the state’s success in tourism.

Visitors to Florida now are less likely to fly, less likely to rent cars and less likely to have foreign accents. They will spend fewer days in the state. And they probably made their plans closer to their travel dates than they did just a few years ago.

Business travel has declined, so hotels have cut back on marketing to that sector. With fewer car rentals, rental car companies have employed smaller fleets. Visits from overseas are down but making a strong comeback this year because of the weak U.S. dollar. Visitors are spending fewer nights in Florida hotels, and they’re waiting a lot longer to make their plans, so many resorts are offering multi-night deals. Many visitors have expressed greater interest in nature-based activities, or eco-tourism.

“The whole ball of wax has changed,” said Thomas Waits, president and chief executive of the Florida Hotel & Motel Assn.

A record 75.6 million visitors traveled to Florida in 2003, only two years after the floor dropped out from under the industry after the Sept. 11, 2001, terrorist attacks. Business in the state’s $50-billion industry declined more than 20% in the months after the terrorist attacks. A sluggish economy and war in Iraq delayed a full recovery.

Several key indicators still have failed to return to their pre-9/11 levels and these measurements in many ways reflect the changes in tourists’ travel and spending habits. More visitors arrive by car than airplane, a reversal from four years ago and an important indicator because air travelers tend to spend more money. Visitors spend fewer nights in Florida now than they did in 2000.

“They have less money to spend, so one night less is X amount of money they can save on their vacation,” said Peter Guptill, an executive vice president at Dollar Thrifty Automotive Group Inc. and a member of the Florida Commission on Tourism.

Fewer visitors are staying in hotels. Occupancy rates were at more than 62% in January compared with more than 69% in 2000. Hoteliers who slashed prices after Sept. 11 also weren’t making as much money as they did four years ago. The average room rate in 2003 was slightly more than $90 a night, compared with almost $96 a night in 2000.

However, travelers have cheaper options to fly to Florida than they had in 2000 with the addition of low-cost carriers such as JetBlue Airways Corp. and Delta Air Lines Inc.’s Song, and the route expansion of Orlando-based AirTran Holding Inc.’s AirTran Airways.

Low-cost carriers five years ago made up only about 7% of the flights coming into Florida, but now represent close to a quarter of the flights arriving in the Sunshine State, said Bud Nocera, president and CEO of Visit Florida, the state’s tourism marketing agency.

That trend is swinging the pendulum back to an equal balance between visitors who arrive by air and tourists who arrive by car.

Tourists such as Margaret McConnell of Lafayette, Ind., and her family flew to Florida and they are taking advantage of some of the good deals still around. McConnell, her husband Bob and their two sons planned to pay $800 for six nights in a suite at an Orlando hotel.

“If it was something really expensive, we probably wouldn’t have done it,” McConnell said, adding that they considered the price to be “pretty reasonable.”

Still missing from Florida’s recovery is the business traveler, who is different from convention visitors -- an area that has rebounded nicely. Technology such as e-mail and videoconferencing have made business trips less necessary, tourism officials said.

Business travelers used to make up about a quarter of the clientele at the upscale Lago Mar Resort & Club in Fort Lauderdale. They now constitute only about 18%.

“The corporate market is still sensitive to what they spend,” said Walter Banks, the resort’s president. “They’re going to be more frugal in the future.”

The decline in business travelers, as well as the fact that more vacationers are coming by car, has contributed to the slowdown in car rentals.

Florida raised $146 million from the state’s surcharge on rental cars in 2000, compared with what will be an expected $121 million in 2003. In addition, low interest rates and zero-percent financing offered by some car dealerships have turned many Floridians who leased cars into car owners. The rental car surcharge is the primary source of financing for Visit Florida’s marketing efforts.

Car rental companies have responded with smaller fleets and new ways to make money.

“They’re offering upgrades as people approach the counter -- ‘You know you can get into this SUV for just a few more dollars,’ ” Nocera said. “They’re selling insurance packages and gasoline programs.”

Some of Orlando’s theme parks set attendance records during the Christmas holidays, and several this month had to turn away guests because of the busy Easter holiday crowds, giving them enough confidence to raise ticket prices during the last three months. Vivendi Universal’s Universal Orlando studios and theme park has raised prices twice. Cruise industry executives said last month that bookings in the first quarter of the year were up 50% from last year.

The single uncertainty that threatens to pop the jubilance about the year is spiraling gas prices. But tourism officials such as Broward County’s Nicki Grossman plan to respond with deals where hoteliers offer visitors a free tank of gas in exchange for staying at their hotels.

“We have had a remarkable recovery,” said Grossman, president and CEO of the Greater Fort Lauderdale Convention & Visitors Bureau. “I’m scared to say that. I don’t want to invite the evil eye.”