Miami has long been known for its white sand beaches, high-energy nightclubs, and Latin-infused culture. More recently, the Magic City has become even more captivating, from its burgeoning celebrity chef scene to its contemporary art boom. Leisure accounts for 75 percent of total visitation, but demand has increased outside of the beach areas, especially as the business community has taken off in downtown neighborhoods like Brickell.
In the last few years, Miami has seen an influx of international travel, largely from Latin America, which has been extremely positive for the marketplace, explains Rick Adams, EVP and COO of Chesapeake Lodging Trust, which acquired The Royal Palm in Miami Beach for $278 million in March. Excess demand is compressing even further north into the Palm Beach area, says Caroline Robichaud, an associate at PKF Consulting USA. “The capacity Miami is running at is giving people the ability to drive rates as well,” she adds.
Although Miami experienced only 7 percent revenue per available room (RevPAR) growth in 2014 while the U.S. hotel industry’s RevPAR increased 8.3 percent, the market saw a 9 percent boost in 2013 versus 5.4 percent nationally. “We did see some more recovery of the lower-priced hotels nationally last year, which probably drives that overall growth as well,” Robichaud says. High RevPAR is attracting strong interest from a new mix of investors, Adams says. “There’s been both institutional and private equity coming into South Beach and reinvesting back into that market. That’s an element that was missing from Miami for a very long time.”
Supply continues to gain momentum on the heels of major hotel openings in late 2014, such as Thompson Miami Beach and Miami Beach Edition. Notable projects that came on line in June included AC Hotel Miami Beach, Hyatt Centric South Beach, and Aloft South Beach, with Nautilus, a Sixty Hotel, and The Hall, a Joie de Vivre property, not far behind.
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STRAIGHT TALK ON MIAMI
As owners and operators of Menin Hospitality, Jared Galbut and Keith Menin have intimate knowledge of the Miami market. Since 2005, the two cousins have built an eclectic portfolio of upscale lodging, lifestyle restaurants, and nightlife venues in South Florida and Chicago. Here’s why Galbut thinks Miami offers a ton of opportunity.
- “The culinary scene in the past three to five years is night and day—you have some of the best chefs in the world down here. We just got a world-renowned museum, PAMM, which has really added to the city. Wynwood, a new district in Miami that embraces the arts, has really blossomed. You have the Design District with high-end retailers. We now have multiple facets of entertainment.”
- “There are so many different demographics moving down here, so as a result, the hotel scene has really expanded. People want to be here more, and there’s more to do.”
- “Once the Miami Beach Convention Center gets renovated, it’s really going to add on another strength to the city. We’re going to be able to capture more high-end conventions.”