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The Atlanta Fed's SouthPoint offers commentary and observations on various aspects of the region's economy.

The blog's authors include staff from the Atlanta Fed's Regional Economic Information Network and Public Affairs Department.

Postings are weekly.

Tourism Update: Demand for Southern Exposure Remains Strong

On October 8 in sunny South Florida, the Miami Branch of the Atlanta Fed hosted our Travel and Tourism Council for the second semiannual meeting of 2013. Business leaders and hospitality industry experts spoke about current economic conditions and their outlook for the sector. The environment in the meeting was generally positive as each member shared news and plans for growth. The meeting took place during the partial federal government shutdown, so it was interesting to hear what effects if any the shutdown was having on the hospitality industry.

According to council members, the region’s hospitality industry has been growing at a reasonably fast clip as growth in business and leisure travel has more than made up for declines in government travel over the past year. Most contacts reported robust growth in tourism activity and anticipated that the fourth quarter of 2013 is likely to continue to be fairly strong, though it may not outpace the third quarter. South Florida in particular is enjoying an increase in visitors. According to a recent newsletter from the Greater Miami Convention & Visitors Bureau, demand for travel to Greater Miami and its beaches remained strong from January through September of this year, ranking fourth among the top 25 U.S. markets in both revenue per available room (RevPAR, a widely used industry metric) and average daily room rate. The area also ranked fifth in hotel room occupancy rates. Tourism professionals there have an optimistic outlook for the next year.

We heard from our council that hospitality employment continues to grow at a solid pace, especially in the hotel business. Firms are reportedly having little trouble finding qualified candidates to fill new positions. Consistent with reports from other sectors of the economy, the tourism industry is seeing a very high applicant-to-opening ratio, with applicants often considered overqualified for available positions. Apart from the ongoing problem of having difficulty attracting specialized skill sets or lower-skill workers willing to relocate to areas with a high cost of living, filling openings has been reasonably easy. (The cruise industry was a notable exception, where lower demand from U.S. and European travelers has prompted industrywide downsizing.)

Council members cited the hospitality industry’s two main concerns regarding the partial federal government shutdown: one was the increased time required at airports to clear customs and security, and the second was the closure of national parks. Some of our airport contacts did confirm longer security lines and longer times to clear customs. In many cases, tourists who had booked tours including visits to a national park shifted to visiting nearby privately owned alternatives. The government shutdown prompted the need for an overseas communication campaign. Since a large portion of southeastern tourism is international, the industry had to clarify any misunderstanding about the U.S. government shutdown, particularly to European tourists and booking agents. The general assumption was that a “U.S. government shutdown” is a full shutdown, similar to strike-related shutdowns that have taken place in other countries. The campaign seems to have been successful thus far; council members had not seen any tour or booking cancellations as a result of the government shutdown.

Council members’ outlook for growth over the next three months was strong as the winter season kicks off. According to our industry contacts, the first two quarters of 2014 are showing strong advance bookings in the hotel sector, and the growth outlook for the cruise industry is in the single digits. Overall, the outlook for 2014 is optimistic, though there was a tone of wariness about the impact of fiscal policy uncertainty on business and consumer confidence. For now, at least, the future is sunny and bright for the hospitality sector in the Southeast.

By Gloria Guzman, an economic and financial education specialist at the Miami Branch of the Atlanta Fed