Economy of the Florida Keys

The Florida Keys is one of America’s prime vacation spots. But, strangely, the economy these is a mess. It looks like a third-world country. The entire string of islands has a “keysy” feel. This means laid back and painted lime green, peach, and yellow. In general it has a feel similar to the Bahamas or coastal Mexico. In spite of the fact that thousands of people travel there for vacation every year and many conferences are held on the islands, the economy is predominantly poor. There are a few luxurious resorts mixed with many mid-range resorts. But very low quality, low cost hotels and restaurants dominate the islands. I have vacationed there at least 8 times and always find it difficult to find a nice hotel or a good place to eat dinner.

What is wrong with this economy? I think they have failed to open the Keys to mid-range hotel development. Instead, a great deal of the precious land they have to offer has been consumed in two ways. The first is the “old keys”. These are the low class hotels, trailer parks, boat ramps, greasy spoons, and dive shops that took over the islands in the 1950’s and 1960’s. The second are the very high-class vacation homes and condominiums.

The first draw fishermen and divers who are traveling on a budget. They want to practice their sport, drink beer, and eat their catch. These people can only support lower cost attractions. They are more likely to eat in a bar, fast food, or a greasy spoon. They require support in the form of boat ramps, fishing tackle, taxidermy, and boat rental.

The second take the most precious resource that the Keys have and build a luxury home on it. The construction of these homes pulls in the tradesmen who make very small salaries for their work. Once completed, the homes then become vacation spots for the rich people who own them. These people spend 1 to 4 weeks in them each year. The rest of the time these homes are unoccupied. This state requires some grounds maintenance and security to maintain the property.

Neither of these classes of “businesses” in the Keys generates a really vibrant economy. They do not put the resources of the islands to use for either production or significant consumption. When all of land is sold for luxury homes, that land does not produce anything. Because the owners are seldom present, it also accounts for little consumption. Therefore, once sold and developed, the Keys lose a resource and gain little in return.

The Keys would have a much more vibrant and rich economy if they would use their resources for production or higher-end consumption. There is little aquaculture in the Keys. They do not farm sea plants or fish there. Both of these would create businesses that could bring a constant stream of outside revenue into the islands.

They should also invest in attractions that would bring down a higher-class of vacationer. They need more mid-level hotels and activities for these people to participate in. These hotels could generate twice the room rates of the current low-end properties that dominate the islands. The customers would also be able to afford more expensive activities. This would allow the creation of malls and entertainment venues. The property for these would have to be transformed from the existing low-end hotels and restaurants.

I think Las Vegas, Orlando, and Phoenix would be good models for the Keys to look to for their future style. Each of these has attempted to create a strong economy based on tourism. However, all three have the significant advantage of nearly unlimited real estate to work with. In Orlando when one area becomes rundown or has an outdated style, the business people simply move to open territory and create an entirely new experience. Kissimmee and Church Street Station are part of the old Orlando that has been pushed aside and replaced with Downtown Disney and Universal Citywalk.

The Keys may be locked into their low-end vacation status. The resource may be committed such that there is no way to redevelop them into a new experience. There is nothing particularly wrong with that. The biggest downside is that most of the residents of the Keys have few opportunities to advance themselves. They must remain content to captain an old snorkel boat or serve in an old hotel where there is little or no chance for financial advancement.