Tuesday, September 23, 2008

Keys Living - A commentary

I heard from an insider at Hyatt's timeshare sales operation here that the giant vacation rental company is closing down in Key West, moving staff to Las Vegas, and vacating the several sales booths they control on Duval Street. What is to become of the time-share buildings at the waterfront between the Westin Hotel and Truman Annex, and on South Roosevelt Boulevard along the Atlantic isn't clear. There have been foreclosures already on some of those. I'm unclear on who actually controls the properties, and whether the Hyatt folks manage them for existing owners. The Spottswood name pops up as having a remaining interest in the operations, although they have largely vacated their interests in any of the units, built over the last ten to fifteen years.

Sales staff, including "catchers" on the street lure visitors to the sales room staffed with licensed real estate agents, by offering a variety of "gifts", free meals, trips, admissions and the like. These people were compensated well, with commissions of $1,000 to $2,000 a week possible. The catchers were the first to take the hit, as tourism declined and sales dwindled in the face of a glutted market and plunging values (just like in the real world). The reward for an "up", a visit to the property persuaded by a street agent, was cut from $100 to $50, even as the task of getting prospects to take the tour grew harder and harder.

The same individual also told me of big layoffs among the off-premise canvassing community, the companies that staff and operate the ubiquitous sales booths along Duval Street and at the waterfronts. Most are operated under the flag of one of the major day-sailing operations, Sebago, Fury, Liberty and others.

If things really are as bad as my correspondent led me to believe, this will hit the economy here with a storm surge worse than Wilma. September is the month in Key West when businesses live off their savings, waiting for Fantasy Fest, still five weeks away and then "season", usually beginning around Christmas and ending at Easter/Passover. That's why the Poker Run bump was so important. It helped businesses to catch up on bills and funded the savings account for the quiet time between now and the end of October.

We celebrated our 46th wedding anniversary by having dinner at Louie's Back Yard last night. One doesn't expect a crowded restaurant anywhere in Key West on a Monday night in September. That was Louie's. There might have been a dozen tables occupied during the two hours we were there, but just barely. It was a beautiful night, the service was excellent and the food delicious, but the wait staff was doing a lot of standing around.

It's something that we watch, what's happening in the tourist economy here because it is the main driver of the overall economy. A few of our tenants are workers directly in the tourist economy, and they're experiencing difficulty in keeping current on their rents. Others are in the construction trades; they've seen a lot of work dry up as major development projects get completed and new ones get delayed.

I'm not a gloom and doom pessimist. I believe that economies, like everything else, evolve, and that those who are adaptable evolve along with them. But that begs the question: what will Key West evolve into? Conch Scooter ruminates on this meme in a posting yesterday, titled Keys Living.

What's the next best thing to a California bowl of granola? Scooter has the answer. Read it here.


Singing to Jeffrey's Tune said...

Wasn't there a similar downturn in the 1990's? I thought from reading your blog you were in Key West during the 1990's? How did it recover from that downturn?

I still think many places in FL could benefit from becoming knowledge workers (mine in SWFL included). Perhaps there could be some collaboration between FKCC and some software producing entity for niche products (say reservation software or something akin in tourism). If lots of people work in that industry, they should know some pain points that could be remedied by technology perhaps?

Just an idea.

Anonymous said...

And with Monroe County doing everything to impact the Navy's ability to do its job down here, you gotta wonder if the Navy will pull out and truly leave Key West a ghost town. Thank goodness the military and federal government are still here to provide a little stability.

madjacks of key west said...

Greetings from the Hill

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an oldfart and thirtythree year
Honorary Conch by Jerry...

Saying Hello and Thank You.


Anonymous said...

The Navy isn't pulling out. But then most people don't realize that the Navy isn't the only thing alive on base. The contractors, the other branches of the military, the DOD personnel and the GS employees all make a fine living here without relying on the stale tourist economy. There are a lot of us quite happy to see the downturn in tourism on the island as we don't make a living from them!

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