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The Palms, Shvo’s Miami Beach hotels, and Hard Rock Café lay off hundreds
South Seas and Richmond Hotel, purchased by Michael Shvo and his partners last year, shut down permanently
The Palms Hotel and Spa, Circa 39, South Seas and Richmond Hotel in Miami Beach, as well as the Hard Rock Café in Miami, Hollywood and Key West laid off 673 employees.
The Palms Hotel and Spa, owned by the Krause family, laid off 230 employees, according to a WARN notice filed with the state. The beachfront hotel, at 3025 Collins Avenue, has 251 rooms. The Krause family also owns Circa 39 hotel, at 3900 Collins Avenue, which laid off 44 employees. Both layoffs are classified as temporary, notices show.
Highgate Hotels permanently laid off 45 employees at South Seas, at 1751 Collins Avenue, and the Richmond, at 1757 Collins Avenue. Both properties are owned by developer Michael Shvo and his partners Bilgili Holdings and Deutsche Finance America, which together paid nearly $140 million for the hotels last year. Shvo previously said the pandemic led to laying off the employees earlier than anticipated. He and his partners plan to redevelop the site, along with the adjacent Raleigh Hotel.
Additional WARN notices released by the state show that the Hard Rock Café Miami at 401 Biscayne Boulevard in downtown Miami furloughed 132 employees. Hard Rock Café Hollywood at 1 Seminole Way furloughed 183 employees, and the Key West location at 313 Duval Street furloughed 39 employees. All the furloughs were expected to last from April 13 to April 27.
South Florida’s hospitality industry has been hit hard by coronavirus, as many hotels have been forced to shut down. Earlier this month, Florida Gov. Ron DeSantis issued a statewide stay-at-home order, requiring all non-essential businesses to shutter. The order followed previous decisions by individual counties and municipalities, including in some cases, ordering hotels to close.
By the middle of April, Miami hotel occupancy dropped to 20.3 percent, down from 65.6 percent from March 8 to 14, according to the hotel data provider STR. Revenue per available room fell to $20 from $146, during the same time period.
Earlier this month, WARN notices revealed layoffs at SLS South Beach, Rosetta Bakery, Zuma, Miller’s Ale House, JW Marriott Marquis Miami, Boulud Sud, the JW Marriott Miami, Nobu in Miami Beach and Miami International Airport restaurants. In addition, South Beach Hotel Group, led by longtime Miami Beach hotelier Alan Lieberman, laid off over 700 employees at most of its hotels.
The hotel industry is also facing over $4 billion in debt payments on commercial mortgage-backed securities loans, including the $975 million CMBS loan for Jeffrey Soffer’s Fontainebleau Miami Beach. CMBS loans are often deemed riskier than conventional loans.