During the South Florida Hotel Market Connections event held a few weeks ago, HVS executives shared observations and data on hotel value trends in Miami-Dade, Broward and Palm Beach counties.
Strong revenue metrics achieved in the Miami-Dade hotel market over the past few years have contributed to a strong ramp-up in transaction prices and values. For example:
The Miami-Dade hotel market, perhaps best known for its cosmopolitan and extravagant properties, is witnessing healthy values for luxury tier assets, with mainland values at $400,000 per key and up, and with oceanfront values ranging from $700,000 per key to well over $1,000,000 per key.
Despite some new supply additions taking place in both the Upscale and Upper Midscale quality segments, these tiers also show noteworthy values as well: Upscale hotel values on the mainland typically range between $150,000 and $200,000 per room, with Upper Midscale hotel values typically ranging between $115,000 and $160,000 per room. Beach located properties in these quality tiers achieve even higher values.
Miami-Dade also boasts a specific, and quite popular, hotel type - the South Beach Art Deco Hotel. These properties are trendy boutique-style hotels primarily located in the National Historic District that were built during Miami’s rich Art Deco era. Many of the Art Deco hotels are trading between $220,000 to $360,000 per key depending on location, room count, condition, etc.
Broward County’s hotel values have also been on the rise. This is an area where tourism has boomed during the past few years, thanks in part to the continued expansion of the Ft. Lauderdale International Airport and the flourishing cruise industry at Port Everglades. Consequently, strong transaction prices have come as no surprise, with many oceanfront luxury hotel values between $550,000 to $650,000 per key, and beach located Upper Upscale hotel values trending in the $270,000 to $350,000 range.
In Palm Beach, most upper upscale hotels are trading between $165,000 and $250,000 per room, and most upscale/ upper midscale are trading between $100,000 and $144,000 per room.
Brokers for CBRE, HFF and JLL feel that peak values are still ahead of us. HVS agrees, but we suggest for investors to be cautiously optimistic while keeping an eye out for new supply which may impact the performance of a variety of submarkets.