The Miami Hospitality Market
Market Overview
Miami’s rise as a major cultural and travel destination has been one of the most rapid in the U.S. Once an industrial hub, the city is now a top spot for visitors drawn by its world-renowned restaurants, nightlife, beaches, and music festivals. Leisure travel constitutes a significant portion of hotel demand, with Miami Music Week alone attracting 165,000 attendees to its main event and thousands more to its 260 associated events throughout the week. In addition to music week, Art Basel 2024 set records for both attendance and spending, highlighting Miami’s event-based tourism drivers.
In addition, fans from Latin America and the U.S. have been flocking to see Lionel Messi play for Inter Miami, marking his first time playing for a club in the Americas since 2000. Miami is poised to maintain its growth as a leisure travel powerhouse, supported by data from Miami International Airport showing a 12% increase in passengers between 2019 and 2023. Millennials make up the largest share of leisure travelers to the city, accounting for 40% of total visits. Miami’s strong appeal to younger audiences, both domestically and internationally, suggests that demand will continue to rise in the coming years.
By The Numbers
- Occupancy: 73.7%
- RevPAR: $162
- ADR: $149.21
- Rooms: 67,973
Market Performance
Staffing has become a significant challenge for Florida hotel owners, with many larger hotels unable to book all available rooms on a given night due to labor shortages. As job markets gradually ease from the tight conditions observed in 2021 and 2022, hotel owners are expected to find it easier to hire workers and increase occupancy.
Despite these challenges, Miami hotels are reporting higher RevPAR compared to 2019, driven by sharp increases in ADR in 2021 and 2022. In 2024, key performance indicators are starting to normalize, with ADR down 1.8% year-over-year in August, but occupancy up by 2.3% during the same period. Limited ADR growth is expected to continue into the spring travel season, though occupancy is also projected to rise.
Midscale and economy lodging has seen the steepest decline in occupancy since peaking in 2022, largely due to significant price adjustments in higher-end segments. Luxury hotels have reduced rates to combat easing demand, making economy hotels a less attractive option compared to higher-tier alternatives than they were last year.
Construction
Hotel development in Miami has picked up after the low levels recorded in 2023, with over 3,000 new rooms currently under construction. Projects scheduled for completion in 2024 are primarily concentrated in South Beach, but by next spring, additional rooms will be finalized in Downtown and the trendy Brickell neighborhood. The largest current project is the 800-room Grand Hyatt Miami Beach, slated to open in 2026, which will include retail and convention space. Although construction loans have become more expensive to secure, the Federal Reserve’s recent rate-cutting cycle could encourage developers to ramp up activity over the next 12 months.
Sales
Over $760 million in Miami hotel transactions were recorded in the 12 months ending in September, representing a 25% decrease compared to the previous year, largely due to tighter lending conditions resulting from Federal Reserve interest rate hikes. However, as the Fed’s rate cutting cycle begins, deal volume is expected to increase in the coming months. Despite the decline in sales, average room prices have risen 20% since 2022, reflecting investors’ confidence in the performance potential of these assets. Notable sales this year include The RitzCarlton Key Biscayne, North Bay Inn Miami, and Regency Miami Airport.
