|The lobby of the recently renovated Blue Moon Hotel in Miami Beach.
MIAMI—Recognized internationally as one of the top luxury destinations within the United States, sources say the Miami market is heating up, and hoteliers are making moves.
From openings to renovations to heavy transaction activity, Miami is seeing it all this year.
“We are just super busy. Everybody is busy,” said Gregory Rumpel, managing director of Jones Lang LaSalle Hotels in Miami.
For the month of June, Miami, a top 25 market, saw a 2.6% increase in occupancy to 72.6%, an 8.3% rise in average daily rate to $135.28 and an 11.1% growth in revenue per available room to $98.15, according to data from STR, parent company of HotelNewsNow.com.
The market typically doesn’t see this kind of liveliness during the summer months, but there are several things occurring now that are driving the healthy increase in activity, Rumpel said. And the hotel industry is seeing a boom on the leisure front as a result.
For one, the tremendous access Latin American markets have to Miami is playing a major role. “Colombia, Venezuela, Brazil, Chile—they are all becoming a part of the fabric of what happens in Miami,” he said.
As disposable income increases among middle-class Latin American families, travel to the U.S., specifically Miami, is becoming a reality for many of them.
Media attention also is helping boost awareness of what Miami has to offer. The NBA championships, in which the Miami Heat won, gave the city a lot of publicity, Rumpel said. Spanish-language TV stations such as Televisa and Telemundo also are taking to Miami to film their programs, which is helping ramp up interest in the market from their audiences.
But it’s another story for group business, Rumpel said. “Group business still has not recovered. Convention center bookings, more specifically hotels with big meetings space, are not lining up with groups coming down.”
However, Miami hoteliers are holding on to the hope that group business will recover, he said. “That group business is going to come back … and we’re going to get a secondary acceleration in the market.”
Rumpel believes the expansion of the Panama Canal will play a role in the return of group business. One of the ports of entry from China to the eastern seaboard will be in Miami, which will potentially bring a whole new depth of business to the city.
In a time where new construction in most U.S. markets is considered a daring move, hoteliers are taking their chances on Miami.
Marriott International, for example, is in the process of developing the Miami Beach Edition, which is slated to open in 2013. The property will be the third to open under Marriott’s lifestyle luxury Edition brand, which speaks to the company’s confidence in the market.
Los Angeles-based sbe also made its debut with the opening of the highly anticipated SLS Hotel South Beach in July.
While sbe declined to provide comment for this report, the company’s website says executives saw the opportunity to capitalize on Miami’s status as a nightlife capital with the addition of the 140-room property in the market.
The Miami market had an existing supply of 48,321 rooms in the market as of 30 June, according to data from STR.
Renovations are crucial to keep up in luxury-laden Miami, sources said.
“Given Miami’s rise on the international stage, there has never been a better time to bank on the city’s future as a global destination,” said Robert Hill, GM at the InterContinental Hotel Miami.
In fact, the InterContinental itself is undergoing a renovation to solidify its position in the market. “Our ownership is investing millions of dollars through renovations, technology upgrades and other luxury design enhancements,” Hill said.
Other properties that are investing in the form of renovations include the Winter Haven Hotel and Marriott Autograph Collection's Blue Moon Hotel, both of which reopened earlier this month after eight months of renovations; the South Beach Delano Hotel, which completed a $10.8-million renovation in March and is now up for sale by Morgans Hotel Group; and the Hotel Astor, whose owners, according to a report in the Orlando Sentinel, are seeking funds from foreign investors to raise $5 million for a renovation project.
Hot transactions market
On the transactions front, foreign investments are a major part of the activity taking place in Miami, said Suzanne Amaducci-Adams, head of the hospitality group at Florida-based law firm Bilzin Sumberg.
The market is seeing a lot of European money and South American money from private-equity firms, she said.
“A couple years ago, everyone was expanding in Europe and Asia, and now I think people are coming back to the United States.”
European brands are beginning to take notice of Miami, Amaducci-Adams said. Three different European boutique brands, which Amaducci-Adams was unable disclose, are in the process of making investments in Miami.
But that doesn’t mean the domestic real-estate investment trusts and private-equity firms are stagnating.
“There’s been an incredible amount of competition,” Amaducci-Adams said.
Rumpel said he has seen transaction activity within the past year from U.S.-based REITs and private-equity firms including KSL Capital Partners, Hersha Hospitality Group, Pebblebrook Hotel Trust, local investors Jorge Perez and Jimmy Tate, the LeFrak Organization, Starwood Capital Group and Invesco Global.
“It’s an interesting depth to the market we’ve never seen before. It’s not about a recovery, there’s something changing … (in) Miami,” Rumpel said.