(Credit: Rhonda Vanover)
"It's a combination of both the economy and the competition among nightlife organizers," says Michael Gardner, CEO of Headliner Market Group, which promoted events for Karu and Y. "There are many clubs currently in Miami and only so many people who go out, causing less demand. With the economy on the decline, people are not going out as much. And if they do, they are frequenting the places they are familiar and most comfortable with."
To survive, Gardner says, some clubs are offering free admission, lowering bottle prices and cutting promotions. Meanwhile, the operators of low-key watering holes such as America's Backyard in Fort Lauderdale say the downturn hasn't hit their businesses as hard as it has their high-end competitors.
"There aren't too many clubs to just chill and get silly with your friends anymore," argues Garry Smyth, director of marketing and sales for America's Backyard. "There are a lot of clubs to go show off, and those places don't tend to last as long as fun, familiar, low-threshold party bars.
"I've been in the club business 20-plus years," he adds, "and the fun, party bars like America's Backyard are recession-proof. Mostly everyone has $20 in their pocket to come let loose, get some drinks and forget about the $4 gas prices for a little while."
However, clubs that rely on bottle service for a good chunk of their revenue are seeing their business wane. Eden Bauer, director of marketing for Pangaea Lounge and Gryphon Nightclub at the Seminole Hard Rock Hotel and Casino, says clubgoers' behavior is changing. "Instead of going out both nights on the weekend," she explains, "they're choosing one or the other, our Saturdays being the stronger party. On Friday, a lot of people show up but they don't spend as much or stay as late as they once did."
Since this past December, the managers of Pangaea and Gryphon have been tightening budgets and searching for ways to put the bad economy to work for them. "We're actually launching a new campaign called Stay Local," Bauer says. "We're going into the local market knowing that people can't afford to buy plane tickets and things like that right now. We're coming up with a new marketing campaign saying, 'Gas prices are skyrocketing—stay local,' to remind everybody that there's a playground right in their own back yard."
These clubs are also embracing local businesses such as car dealerships. "We'll invite all of their clients to come in and host a cocktail party for the dealership and then offer them free drinks," Bauer says. "That's kind of the incentive to get people here, and they'll stay and spend money afterward. So it works out for us and it works out for them."
Bauer says she feels fortunate that her clubs are located at the Hard Rock and not in Miami. "There are too many clubs going after the same exact market," she argues. "They're all targeting the same exact person. If I were to open a club in South Beach, I'd want to have a niche. Snatch and Suite, when they opened, had the whole theme and the girls in the little shorts and the bull in the window. That was cool, and they did really well with that. But eventually, that got old and they were just another club."
Venues that offer live music also have been taking financial blows. Music promoter Steve Rullman, who hyped events for City Limits in
Rumors are swirling on local nightlife blogs about Studio A, the Miami venue that has hosted concerts by
Louis Diaz is the marketing manager for Space and its sister club, Parkwest Nightclub and Rehab Bar in downtown Miami. He believes people are overreacting to the recent spate of club closings. "Every year, another 15 [clubs] will open doors, and out of 15, only three will stay open until next year," he asserts. "The hospitality industry is like that; it's very treacherous. Nightclubs are always opening and closing. Those are the dynamics."
Diaz doesn't blame the closing of the much-hyped Karu and Y on the economy. "You don't put $30 million or whatever it was into a nightclub venture," he says. "I mean, the overhead on that monster of a venture, there's no way you can keep that afloat, especially in Miami. There's not the market for that. There's no way you're gonna generate half a million in business on a weekly basis when you're competing against us and 20 other nightclubs. Those are vanity properties. They didn't even make it to the second year."
Diaz admits, however, that clubgoers aren't spending as they once did. "There is no such thing anymore as what it used to be eight years ago, when four guys would go to a club and would have to buy five bottles," he says. "Nobody is doing that anymore. Not even the real VIPS are willing to do it because they're more conscious about how they spend their money."
Relying on tourist season is also out. "We always joke that the season starts next week," Diaz says. "Actually, it never started this year. There was no season. You didn't feel that boom from tourism."
Even though tourists do visit Space, Diaz boasts that the club's survival doesn't depend on tourism. "We've developed a loyal, local clientele and we survive off that," he says. "We do great with our locals alone. We cater to dance-music fanatics and our niche is big DJs. We know our market and can forecast sometimes when it's gonna go a little bit down. So we basically push a little bit harder. But we're not taking any measures out of the ordinary."
Diaz isn't worried about any long-term effects the current economic climate may have on the nightclub business. "Human beings need entertainment and they need to socialize," he says.
Bauer agrees. "At the end of the day, liquor, we think, is a recession-proof business," she says. "People will drink when they're happy. They'll drink when they're sad. They still want to party, even though they're not paying their bills on time."
Contact the authors at jcox@citylinkmagazine.com and cdougher@citylinkmagazine.com.
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