Brazilians and Canadians have for years flocked to Florida’s warm beaches, but a strong dollar and the weak global economy is negatively affecting these sunny vacations and threatening Florida’s economy in the process.
Travel has been the top-earning category in U.S. service imports for the past two years and amounted to $10.4 billion in December of last year.
The Florida tourism industry seeks to attract new foreign visitors as international visitors, such as Brazilians and Canadians, spend less on their vacation because of the rising dollar.
“Canadians have for years held Florida as their second home but they just don’t spend as freely as they would otherwise,” said Alfredo Gonzalez, vice president of international sales and marketing development of the state’s official tourism marketing corporation Visit Florida. It has been a similar case for Brazil.
In 2014, Brazilians spent $2.3 billion compared to $2.7 billion in 2013. Canadians spent $5.1 billion compared to $5.5 billion in the year prior.
The strong dollar is good for the American traveler, but it is unfavorable for visitors visiting the U.S. from abroad. Currently, it costs 3.69 Brazilian real for every dollar and 1.37 Canadian dollars for every American dollar.
Visit Florida estimates that Florida welcomed 89 million domestic visitors, 11.2 million overseas visitors and 4 million Canadian visitors in 2015. High visitation numbers are not as meaningful as how much they are spending in Florida.
“If you have millions of visitors without money, then you’ll have a problem,” said Gonzalez.
Preliminary data from Visit Florida show spending by Brazilians decreased by 10 percent to $1.7 billion from 2014 to 2015 and spending by Canadians is down 19 percent to $4.1 billion.
As the Canadian economy improves, Florida should see a rise in their spending.
Brazil, which faces political turmoil, is a different story as protesters push for President Dilma Rousseff’s resignation citing government corruption.
“Politics, economics, everything affects the traveling market. There is always a concern. There is always a domino effect,” said Cecilia Orbegozo, director of sales and marketing of Hampton Inn Hallandale Beach.
Room occupancy from Brazilian visitors, the number one international visitors to the three-star hotel, was down by 55 percent year over year from 2015 to 2016. Orbegozo attributes this decline to Brazil’s recession and a new state credit card processing tax that started this year.
Hampton Inn Hallandale Beach had a decline in overall Latin American travelers of 12 percent, but a rise in total room occupancy from 83 percent in 2014 to 85 percent in 2015. International visitors account for around 70 percent of all visitors to Hampton Inn, which costs an average of $155 a night. An influx of domestic visitors along with Chinese travelers has led to Orbegozo to change their strategy to attract more tourists from new markets like China.
The strengthening dollar has not deterred Chinese tourists. China, which used to be number 30 on the list of top international visitors, is now number six for the hotel. The top five groups in no particular order are Brazil, Argentina, Mexico, Colombia and Canada.
In targeting emerging markets like China, Orbegozo said, “At the end of the day, it’ll give us more of a mixture than relying on Latin America.”
Florida tourism cannot rely alone on top visitors from Canada and Latin America, so the tourism industry must diversify its visitor profile.
“India. China. Australia. The future is going to happen in those markets,” said Alfredo Gonzalez of Visit Florida. “We call it the ICA.”
Not everywhere has seen a slowdown, at least not yet. The greater Fort Lauderdale area has not seen a slowdown in either number of or spending from international visitors, in part because of its location as a major cruise port and an increase in luxury travel.
Florida as a state is betting big on tourism development. Governor Rick Scott announced last week that $76 million of a new state budget will be used to attract domestic and international tourists.
After months of consecutive growth in hotel occupancy over the past six years, Fort Lauderdale is investing over $1 billion in hotel and condo development with a goal of over 1,000 rooms over the next two years.
Conrad, Four Seasons and Gale Boutique Hotel will open new hotels in Fort Lauderdale over the next three years. A new Norwegian Air flight from Paris to Fort Lauderdale airport will be added next month.
“We’re riding this wave of positive growth,” said Media Relations Director Jessica Savage of the Greater Fort Lauderdale Convention & Visitors Bureau. “We have all of this development to look forward to.”
Brazil’s economic and political status may be shaky, but Cecilia Orbegozo of Hampton Inn believes that its economy will improve within the year.
“It will come back and they’ll remember who was there in the bad times,” Orbegozo said. She is traveling next week in partnership with Visit Florida to the World Travel Market Show in Sao Paulo.
*In both charts, the 2015 numbers are preliminary. Source: Visit Florida