How Art Basel Miami Beach’s cancellation will impact real estate
Art fair is a major generator for South Florida hotels, restaurants and overall economy
Art Basel Miami Beach usually generates $5 million in revenue for Miami-Dade’s largest hotel, the iconic Fontainebleau resort. The 1,500-room property is always sold out during the first week of December, as visitors flood the area, said executive Philip Goldfarb.
But this year, Art Basel is canceled due to the coronavirus pandemic, Switzerland-based Art Basel announced on Wednesday. The renowned art fair has taken place each year in Miami Beach since 2002, generating tens of millions of dollars in economic activity. It will return to Miami Beach in 2021.
The fair, held at the Miami Beach Convention Center — which is currently operating as a temporary hospital — is a major generator of revenue for hotels, restaurants, retail and even luxury and commercial real estate, in addition to spinning off a number of other art shows, including Design Miami and Art Miami.
Each year, Art Week results in the highest occupancy and room rates for hotels. Last year, the average daily rate reached $281 per night during the first week of December with an 85.5 percent occupancy rate, according to data from the hotel research firm STR. During the pandemic, occupancy has reached highs of about 45 percent. For the week ending on Aug. 29, occupancy in the Miami region was about 34 percent, STR data shows.
The cancellation on Wednesday, though expected by many, is a blow for the region, which has been struggling to stay afloat in recent months. As Miami-Dade County’s Covid-19 positivity rate has begun to trend downward, restaurants’ indoor dining rooms were allowed to reopen at 50 percent capacity this week. Miami-Dade Mayor Carlos Gimenez is expected to make an announcement soon regarding allowing banquet halls to resume operations.
Miguel Pinto, president and broker of Apex Capital Realty, said the cancellation has already led to galleries and artists canceling their weeklong leases for commercial spaces in high-traffic areas during Miami Art Week. After Art Basel made its announcement, one client canceled a lease of a commercial space in Wynwood, he added.
“For the hotels, if you’re already limping into December and now this happens, it could be the kiss of death,” Pinto said.
The fair attracts art collectors from all over the world, major brands and companies that rent out event spaces and hotels, as well as developers marketing their projects. The impact is felt among all kinds of businesses, from catering to valet and parking.
“Art Basel represents the genius of creating a demand generator that has become very important to the overall economics of the hospitality industry in the county,” said Scott Berman, a principal at PricewaterhouseCoopers, who leads the hospitality and leisure practice for the firm.
Before it began, that period of time, between Thanksgiving and Christmas, were the slowest weeks of the year for Greater Miami.
“Not everybody is going to make it to the other side of this,” Berman said. “I think it’s going to be a prolonged event in terms of who survives and who does not.”
Still, he believes it won’t be “one event that’s going to make or break the year” for hotels.
Some hotels have waited to reopen until September or October, including Faena Miami Beach, the Betsy South Beach and the Vagabond.
The 130-room Betsy hotel, at 1440 Ocean Drive, has been closed since late March with plans to reopen Oct. 30. Owner Jonathan Plutzik said he was disappointed but not surprised at the cancellation of the art fair. The Betsy will continue to showcase art galleries, virtual and in-person art events
Plutzik said the coming months will still bring visitors who want to flee the cold winter. South Florida is “always attractive, but doubly so in a Covid-concerned world,” he said.
Andres Asion, broker and owner of Miami Real Estate Group, said that the impact of Basel’s cancellation depends on what other galleries and fairs decide to do. The art-filled week typically kicks off the high season for high-end residential real estate.
“Many people have the misconception that Art Basel is everything. I think we will have a good amount of people still visiting us come November, December and January,” Asion said, adding that it would be a “huge missed opportunity to basically not do anything that week.”
Restaurant broker Felix Bendersky, owner of F+B Hospitality, said restaurants and bars are looking ahead to 2021. The inventory of available second-generation restaurants is getting snapped up, he said.
“It would have been great to get that little bit of income to pay some bills, [but] everybody knows that 2020 is a wash,” Bendersky said.
Hotelier and developer Avra Jain was surprised that Art Basel pulled out of the December show, but is hopeful that smaller fairs will continue. The Vagabond is planning to reopen Oct. 1, and the brand Selina plans to open out of Jain’s former Gold Dust motel the same day.
“I think the hospitality industry was looking forward to this being part of the relaunch going into season,” she said. “It’s a little bit of a setback.”
Goldfarb, president and CEO of the hospitality division of Soffer’s Fontainebleau Development, which owns the Fontainebleau Miami Beach, said the first week of December would normally be a blackout period for any discounted rates or packages. But this year, the hotel will be offering value-added spa and dining packages. The hotel is clawing its way back.
For recent weekends, the Fontainebleau has exceeded 50 percent occupancy. “Half full is pretty good,” Goldfarb said. “But we’re two times larger than the next hotel in Miami Beach. It’s a lot to fill.”
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