08 Jul2013

Spotlight on The Sunshine State (Steve Taylor, Hunter Hotel Advisors)

The state of the hospitality industry in Florida is strong, particularly in the trophy locations.  Miami, the Florida Keys and other waterfront destinations are thriving markets, and have recovered well beyond the downturn realized in the late 2008 - 2011 time period.  Greater Miami's occupancy through May 2013 was up to 82.5% from 80.6% the prior year.  With ADR at nearly $204, RevPAR increased by 12.3% over the same period to $168.22. 

Northwest Florida's Emerald Coast's performance has generally increased on an annual basis since December 2010, but this drive-to destination is much more susceptible to bad weather and fluctuations month-to-month are more prevalent.  This is in contrast to Miami's more internationally visited location.  Orlando's visitor volume has been trending upward since 2010, but this market's performance is not as stellar as Miami and the Keys.  A 2012 / 2011 comparison indicates RevPAR increasing by less than 3%.  

The hospitality real estate sector is also strong and active.  Hunter discussed the state of the real estate market with three leading industry participants with broad expertise in distinct geographic areas in Florida.

Richard Millard,chairman & CEO of Trust Hospitality (formerly Tecton), indicated that in the high barrier to entry South Florida market, it has become a seller's market. "What people are paying is scary; two years ago you could buy something at a reasonable price.  Now prices are higher than I've ever seen and I'm including 2006 - especially on the beach," said Millard. 

Bob Kumar, an owner/operator with multiple properties on the Emerald Coast, has successfully bought properties over the past few years due to banking relationships, but it's now becoming more difficult and is now very much a seller's market.  "In the Panhandle, owners are holding onto their properties.  Things are good and they see stability for three to four years," said Kumar. However, he cautions that there are always ups and downs, and fortunes can turn quarterly. 

Central Florida's deep discounting days are over according to Ajit Nana, senior vice president of Avista Properties in Orlando.  Whether an area becomes a buyer's or seller's market depends on the region.  Orlando / Kissimmee still have exterior corridor product that should come down in price or be redeveloped and the Daytona area still has "a lot of eyesores."  Tampa and Clearwater continue to do well in general.  Large buyers want good product.  "Banks have loosened up and interest rates are still historically low.  But that can change quickly," said Nana. 

Every market has a story and has its unique strong and weak points.  The adage is that everyone has their price, and the market adjusts to the level that buyers are willing to pay.  It's much higher in some places, but bubbles have popped before.  As with any major investment, dedicated and professional guidance is the best solution to navigating changing market conditions.    

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