South Florida Hospitality Market Report
Miami
Market Overview
Miami is a popular tourist spot for both domestic and international travelers. While the local attractions might benefit the economy, Miami hotels continue to work towards improving the challenges that have brought down KPIs in 2023.
Miami By The Numbers
- Occupancy: 73.3%
- ADR: $220.31
- RevPAR: $161.37
- Rooms: 67,481 | Last 12 Months | Source: CoStar Group
Market Performance
Miami hospitality has shown improved performance in 2024. RevPAR experienced a 1.9% decline during the end of May 2024 due to a 2.8% decline in ADR and a flat 0.9% dip in occupancy. Nearly 1,200 rooms are scheduled to open in 2024, more than double the 423 that opened in 2023. Increased competition for domestic travelers has eroded pricing power as the industry resets from the pandemic’s impacts. International travel by U.S. residents surged in 2023. Weekend ADR declined 8% in 2023, and weekday ADR declined 4%. RevPAR is projected to grow 3%, with occupancy up 1% and ADR rising 2% for the calendar year 2024.
Construction
There are currently 21 properties, with approximately 3,600 rooms, under construction in Miami, equaling 5.4% of the market’s existing room inventory. Several upscale properties are under construction in Miami. The 160-room Gale Miami Hotel & Residences recently opened, while the 150-room Thompson South Beach is scheduled to open in Q3 2024. In final planning, over 1,200 rooms are set to open in 2025, along with 5,000 rooms in 2026.
Sales
While the market continues to see a few significant sales, the number of trades in Miami has slowed over the last year due to rising interest rates and tighter lending standards. There were 29 trades in the last 12 months through February 2024, compared to 46 in the previous 12-month period.
Fort Lauderdale
Market Overview
Fort Lauderdale’s market tourism industry is a crucial economic driver, attracting visitors from all over the world with its extensive network of canals, beaches, and other diverse attractions. Although Fort Lauderdale has faced some challenges in the last year, the market has an opportunity to bounce back, with new builds expected in 2025 and 2026.
Fort Lauderdale By The Numbers
- Occupancy: 72.2%
- ADR: $180.32
- RevPAR: $132.57
- Rooms: 39,502 | Last 12 Months | Source: CoStar Group
Market Performance
Hotel performance in Fort Lauderdale declined in Q1 2024 due to increased competition for domestic travelers and slow economic growth. RevPAR slowed at the beginning of last year and ended with less than 1% growth compared to the same period in 2022, due to flat ADR and occupancy growth throughout the year. Group occupancy in Luxury and Upper Upscale hotels fell by 25% in March, leading to an overall 1.2% decrease in occupancy rates compared to 2023. However, transient occupancy experienced a robust 7.4% growth in March after a slower start in January and February. Despite a 2.4% increase in group ADR, transient ADR declined by 5%, resulting in a 3.2% decline in combined RevPAR for all segments.
Construction
There are currently 21 properties, with approximately 3,600 rooms, under construction in Miami, equaling 5.4% of the market’s existing room inventory. Several upscale properties are under construction in Miami. The 160room Gale Miami Hotel & Residences recently opened, while the 150-room Thompson South Beach is scheduled to open in Q3 2024. In final planning, over 1,200 rooms are set to open in 2025, along with 5,000 rooms in 2026.
Sales
Hotel sales in Fort Lauderdale slowed over the last year although two notable trades during Q1 2024 averaged $2.9 million. There are 25 trades by the end pf 2023; typically, that number is around 35 trades annually.
Palm Beach
Market Overview
Palm Beach is one of Florida’s most affluent counties, with a population of over 1.5 million and personal incomes exceeding the state average by over 60%. Hospitality has faced headwinds in the last 12 months but is working to overcome them by staying active in the supply segment.
Palm Beach By The Numbers
- Occupancy: 67.1%
- ADR: $252.10
- RevPAR: $169.24
- Rooms: 19,533 | Last 12 Months | Source: CoStar Group
Market Performance
The Palm Beach submarket has experienced minimal growth in Q1 2024 following decreased RevPAR in 2023. Twelve-month RevPAR for May declined 5.7% through March 2024, ADR was down 1%, and occupancy was down 4.3%. There are 350 rooms under construction, which are projected to be available within the year 2024. The supply surge has led to a reduction in the occupancy rate, and rooms slated to open in 2024 are expected to limit further gains in occupancy. In Q1 2024, group occupancy in luxury and upper-upscale hotels declined slightly to 0.2%, while transient occupancy declined to 2.8%. Group ADR grew 9.8%, while transient ADR was flat at 0%.
Construction
A robust construction pipeline in 2022 resulted in more room openings in 2023, and this pattern is expected to persist through 2024. If development projects progress as planned, hotel construction in Palm Beach might speed up. Over 1,000 rooms currently in the final planning stages are set to open in 2025 or 2026.
Sales
Higher interest rates and lending standards have minimized hotel trades, as there have yet to be any in 2024. The slowdown in sales activity has translated to a decrease in the sales price. Trades in 2023 averaged $11.5 million, well below the 2022 average of $15.2 million.
Florida Keys
Florida Keys By The Numbers
- Occupancy: 67.1%
- ADR: $252.10
- RevPAR: $169.24
- Rooms: 19,533 | Last 12 Months | Source: CoStar Group
Market Performance
In the last year, the Florida Keys has experienced a sizable loss of pricing power. RevPAR and ADR fell from January 2023 through March 2024, with declines over 12-month periods of 3.4% and 2.8%, respectively. As travel patterns normalize back to pre-pandemic levels, the Florida Keys is expected to grow 7.2% in ADR and 6.7% in RevPAR in 2024. REVPAR $169.24 ROOMS 19,533 In March 2024, RevPAR decreased by 5.7%. However, March 2024 provided some relief and a ray of hope for the market’s recovery. RevPAR significantly increased by approximately 4% year-over-year, driven by a modest 1.5% increase in ADR and a 2% growth in occupancy levels compared to March 2023.
Construction
The Florida Keys is one of the smaller hospitality markets in the United States, with around 11,000 rooms. Due to limited land availability and high development costs, the rate of development remains relatively low. One notable project to look out for in 2024 SALES is the 110-room Valhalla Island Resort, which began construction in June 2022. The market-controlled development of the Keys can be attributed to the Rate of Growth Ordinance (ROGO) and environmental protection.
Sales
Higher interest rates and lending standards have minimized hotel trades, as there have yet to be any in 2024. The slowdown in sales activity has translated to a decrease in the sales price. Trades in 2023 averaged $11.5 million, well below the 2022 average of $15.2 million.
