Recession cools the sizzle at Miami Beach luxury hotels

MIAMI — Even the hottest of hotels can't avoid the cold-hard reality of a recession.

Bookings plunged 20 points this spring and summer at the Delano, the most high-profile hotel on South Beach and a magnet for celebrities and tourists hoping to spot stars. Its sister hotel three blocks away, the Shore Club, saw its per-room revenue plunge a startling 40 percent.

The grim numbers reflecting bookings from January to June were revealed in the second-quarter earnings report from Morgans Hotel Group, the Delano and Shore Club's corporate parent. They confirm the beating being delivered to South Florida's most expensive hotels amid a steep decline in corporate getaways to resort destinations and vacationers willing to splurge on luxury stays.

Morgans CEO Fred Kleisner cited the Miami market as a reason for the company's tough second quarter, which produced a $10 million loss.

"In Miami, the summer business trends are challenging,'' Kleisner told analysts in a conference call. "Leisure vacationers are hesitant to book. Miami has traditionally enjoyed high demand from South American countries in the summer. We have seen a moderation in that trend as well.''

Even so, of the 12 hotels Morgans runs across the country -- mostly chic and expensive properties -- only the Morgans New York posted better results than the Delano's.

But the steep declines at a market leader like the Delano illustrates the larger forces battering hotels in South Florida and across the country.

"This is not a South Beach or Miami Beach issue,'' said Scott Berman, who heads the hospitality and leisure division for PricewaterhouseCoopers. "I'm seeing it all over the country. One market is worse than the next.''

The report from Morgans, a publicly traded company, offers a rare look into the economics of leading South Florida hotels. Because Morgans only runs a dozen properties, it must reveal the financial particulars of each one.

Unlike the average Miami-Dade hotel, which has cut rates 14 percent this year, the Delano resisted discounts during the travel downturn.

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