Southwest Florida’s Lodging Outlook: Don’t Lose Hope

Season has arrived in Southwest Florida, but like so many other traditions, it doesn’t look quite the same as it did one year ago. While our roads are busier than they were a few months back, our annual winter influx of visitors and residents hasn’t quite reached the levels we saw in 2019 or even early 2020.

Tourism, hospitality and lodging have long been the primary drivers of our region’s economy. The last year has definitely been the most challenging for these intertwined industries. Lodging, in particular, has struggled across the world. And while Southwest Florida has seen its share of difficulties in the hotel industry, our region is actually one of the brighter spots in the nation.

When the COVID-19 pandemic essentially shut down the U.S. economy in March, travel plans were first on the chopping block. An April 2020 survey by ValuePenguin and LendingTree showed that nearly half of all Americans canceled our summer travel plans because of coronavirus concerns. The impact on the lodging industry was immediate. Cushman & Wakefield data reveals that nationally, hotel occupancy was at a mere 33.5% in the second quarter of 2020, compared to 70% occupancy over the same period in 2019.

Road trips were the preferred travel option for most Americans, who likely sought socially- distanced vacations at destinations close to home. Hotels located near highways and recreational destinations had stronger performances than urban lodging and conference destinations.

Southwest Florida benefited from the road trip trend in 2020. Situated within a few hours of three of the nation’s largest metro areas, and with an abundance of socially-distanced outdoor activities available, visitors from across the state turned to our area in search of open beaches and a change of scenery. According to the Tourist Development Council, in-state visitors to Collier County in October 2020 increased 60% over October 2019. Lee County has seen a similar trend. A recent News-Press article, citing data from Arrivalist, noted that 70% of Lee County’s visitors since the pandemic began have come from other parts of Florida.

Nationally, hotel construction and sales have slowed, and while many lodging establishments are still being built, most have pushed back their opening dates until travel is more active. This was not the case for Fort Myers’ long-awaited Luminary Hotel & Co., which opened in September. Our area shows little intent to slow down, with five more new Lee County hotels in the works for 2021, averaging more than 110 rooms each. Local developers appear to be banking on a rapid recovery of the tourism market.

The exception is in Port Charlotte, where Allegiant Airlines halted construction of its massive waterfront resort, suspending construction in mid-2020 and ending a loan agreement to develop the destination. The resort was expected to lure travelers from the 40+ cities with nonstop flight access to Punta Gorda, but Allegiant recently stated that it has no plans to put more capital into the project until late 2021.

A full recovery for our tourism and lodging industry will be slow, even while the COVID-19 vaccines are providing hope to lodging owners and travelers alike. Nationally, the lodging industry isn’t expected to see a full recovery until late 2023 at the earliest, but here in Southwest Florida, we’re already seeing signs of hope. Alaska Airlines, Allegiant Airlines, United Airlines, JetBlue Airways and Southwest Airlines have all either added routes to our region’s airports or have announced plans to do so in the very near future. While many northern states are still partially shut down because of the pandemic, Florida’s open economy may serve as a potential beacon for vacationers from these destinations, sparking a faster-than average recovery in the tourism and lodging industries.

Property owners with land or buildings suited for lodging or hospitality should not lose hope in the face of the pandemic, nor should commercial property owners in any other asset class. Tourism in Southwest Florida is expected to recover much more quickly than the nation as a whole, thanks to in-state travelers who are sustaining Southwest Florida’s tourist economy.

We sometimes bemoan Southwest Florida’s dependence on tourism for the health of our economy, and certainly we felt the sting in mid-2020. However, a quick projected rebound in lodging and hospitality will generate tourism dollars in our region and create demand for commercial property in all asset classes.

To take advantage of this projected trend, contact the professionals at Cushman & Wakefield Commercial Property Southwest Florida. With extensive local market knowledge and best-in class data and analytics, Cushman & Wakefield is your go-to team for commercial property decision-making. Contact us by calling 239-829-5400 or reach us using the form below.