Zika Risks Jeopardizing Florida's $90 Billion Tourism Industry
Analysts have already said that Zika will hurt tourism in Puerto Rico, and now Florida may be next.
Stephen Anderson at Maxim Group LLC says that restaurants, especially those near the Miami area, could be in the line of fire. "We are concerned about a potential spread of locally-borne Zika virus outside of a small area in Miami," he writes. "Including ancillary hospitality-related industries, tourism is a $90 billion industry in Florida, with $24 billion generated in Miami-Dade County alone."
That's not a small number. In determining which restaurants will see the largest impacts, Anderson says that family dining brands as well as more upscale names could be hit hardest on the back of any potential slowdown in tourism. Limited-service dining chains, by contrast, "can take some solace in the fact that they are less dependent on travel-related traffic (and more dependent on weekday and employment-related traffic) than their full-service dining peers."
Some of the companies that could be at risk according to Anderson include Steak ‘n Shake (Biglari Holdings Inc.) which has 15 percent of its U.S.-based units in Florida, Bloomin’ Brands which has 18 percent, and IHOP (DineEquity Inc.), Denny’s, Cracker Barrel Old Country Store and Bob Evans Farms, Darden Restaurants and The Cheesecake Factory, which all derive around 10 percent of their business in the state.
Many of these names are equity-market underperformers this year.
While analysts are citing Zika as a risk, it's interesting to point out that none of the publicly traded firms, such as The Cheesecake Factory Inc. and Darden Restaurants Inc. mentioned Zika in their most recent earnings calls. For now, questions on the virus and its impact have mainly been confined to the travel industry, with TripAdvisor Inc., Marriott International Inc. and Delta Air Lines Inc. all mentioning the virus recently.