Florida Hospitality Market Report

Market Overview

The tourism industry in Florida is flourishing, establishing itself as a highly desirable location for travelers and tourists. Florida’s renowned theme parks, beautiful beaches, and extensive attractions create a diverse and lively hospitality scene. Additionally, the hospitality sector plays a crucial part in the state’s employment landscape, with the leisure and hospitality industry representing a significant portion of the job market. Ongoing growth, investment, and the state’s marketing initiatives have solidified Florida’s status as a premier travel destination for both domestic and international visitors.

Florida Highlights

• In January, the Upscale Doubletree by Hilton Rocky Point Waterfront in Tampa changed hands for a total of $75.9 million, equivalent to $261,000 per room key, marking the highest sale price recorded in 2023 thus far in the Tampa market.
• Jacksonville’s robust RevPAR growth in 2021 and 2022 drew the interest of investors to the market, leading to an increase in both sales activity and sale prices in recent years.
• The projected outlook for Miami’s RevPAR for the remainder of 2023 is a decrease of approximately 8.0%, with both ADR and occupancy rates expected to decline by around 4.0%.
• The reduced rate of expansion in Fort Lauderdale’s room supply will alleviate some of the strain on occupancy rates, particularly as demand growth diminishes.
• Orlando’s room supply, ranking as the second largest in the nation, surpassed its previous record and now exceeds 136,000 rooms.
• The pipeline for developments in the Panhandle market is expected to remain active over the next few years. There are over 1,000 rooms currently under construction, set to open in 2024.

Tampa Market Performance

Tampa’s hospitality industry experienced a 7.0% increase in RevPAR during H1 2023, attributed to a 7.0% rise in ADR. The most significant RevPAR growth occurred in January and February but began to slow down in Q2 2023 due to a slowdown in ADR growth. The primary source of growth in 2023 has been the group segment, while the transient leisure travel that fueled Tampa’s performance over the past two years has weakened. Year-to-date transient occupancy rates are lower than those of 2022, and there has been a rapid deceleration in transient ADR growth during the first half of this year.

Inventory growth in Tampa is set to speed up for the remainder of 2023 after a slowdown in 2022. In 2022, fewer than 700 rooms were added, which was the smallest number since 2015. However, it’s anticipated that around 1,100 rooms will be introduced by year-end 2023.

Despite the impact of increased interest rates, sales performance in Tampa remained relatively stable during H1 2023. From January to June, a total of 33 hotels changed ownership, and this pace is expected to surpass the market’s pre-pandemic average of approximately 55 hotel transactions per year.

Jacksonville Market Performance

From the start of 2023 through June, Jacksonville’s hospitality market experienced a 4.0% growth in RevPAR, driven by a 5.0% rise in ADR. Most of the increase in RevPAR is linked to the expansion observed in January and February. However, there has been a deceleration in ADR growth in recent months, leading to RevPAR falling behind the levels seen in 2022, primarily due to reduced occupancy rates.

Currently, there are 1,400 rooms in development in the Jacksonville market, which accounts for 4.6% of the existing room inventory. The pace of development is anticipated to decrease significantly after 2023. In 2024, approximately 400 rooms, currently under construction are expected to become operational. Additionally, three projects in their final planning stages, comprising a total of 270 rooms, intend to commence construction this year and open in 2024. Around 15 projects totaling more than 1,800 rooms are in the final planning phase, targeting an opening date in 2025. However, some of these projects may face delays due to the higher construction costs and limited availability of construction loans. Florida

Miami Market Performance

Miami’s hospitality industry has faced substantial difficulties in 2023, resulting in a decline in KPIs. RevPAR, for instance, saw an almost 8.0% decrease up to August, primarily driven by a 6.0% drop in ADR and a 2.0% decrease in occupancy rates.

There are currently nine properties in the Miami metro area that are actively being constructed, totaling around 1,500 rooms, accounting for 2.3% of the city’s existing room supply. Four hotels, comprising approximately 650 rooms, have either already opened or are projected to do so by the end of 2023.

Although sales activity has decreased in 2023, the prices of transactions have risen. In 2023, hotel trades have had an average value of $35 million, which translates to $315,000 per room key. Furthermore, Luxury and Upper Upscale properties represented a larger portion of the trades in 2023, accounting for nearly 25%, whereas in 2022, they comprised only about 10% of the trades.

Fort Lauderdale Market Performance

RevPAR for the period up to June 2023 registered a 3.0% increase compared to the corresponding period in 2022. This growth was driven by a 2.0% rise in ADR and a 1.0% increase in occupancy rates. The primary factor contributing to this growth is the recovery of the group segment, which is gradually rebounding from the impacts of the pandemic. However, transient occupancy and ADR experienced a decrease of approximately 1.0% each.

Fort Lauderdale currently has 1,400 rooms in the construction phase, accounting for 3.6% of the existing room supply in the market. The largest ongoing construction project is the Omni Fort Lauderdale Hotel, boasting 800 rooms and scheduled for an early 2026 opening.

In H1 2023, sales volume amounted to approximately $921 million, primarily attributed to the Diplomat Beach Resort, which constituted 90% of this total.

Orlando Market Performance

Orlando’s hospitality sector saw substantial expansion in Q1 2023. After experiencing a significant surge in January and February, the growth in RevPAR slowed considerably, with an increase of less than 1.0% in May and subsequently declining in both June and July.

Currently, there are 4,500 rooms under construction within the Orlando market. This is an increase from approximately 2,200 rooms at the start of 2022 but falls significantly short of the over 9,000 rooms that were under construction in 2020. The rooms under construction in Orlando account for 3.2% of the existing room inventory.

In 2023, the average sales price per room key is around $113,000, increasing from the 2022 average of approximately $96,000 per room key.

Florida Panhandle Market Performance

In 2023, the Florida Panhandle’s key performance indicators have shown little to no growth. ADR for the year up to June remained largely stable compared to the same period in the previous year. However, RevPAR witnessed a decline of approximately 2.0%, primarily due to reduced occupancy rates.

The hotel development in the Florida Panhandle encompasses 1,800 rooms currently under construction, accounting for 3.9% of the market’s existing room supply. The most significant hotel opening in 2023 was the Embassy Suites by Hilton Panama City Beach Resort. This Upper Upscale property, consisting of 255 rooms, opened its doors in Q2 2023.

Sales activity in the Florida Panhandle has decelerated in 2023, with 14 properties changing ownership from January to July.