With Miami’s hotel revenue soaring to 24% higher than pre-pandemic levels last year, networking coalition Commercial Real Estate Women Miami (CREW) gathered some of the industry’s top women leaders last month to home in on what’s working for the city’s tourism business – and what’s not.
Moderated by Mabelle Perez, director of hotels and hospitality for commercial mortgage lender Berkadia, CREWs “Miami’s Hospitality Market: No Reservations About It” took place at the Mayfair House Hotel & Garden in Coconut Grove Aug. 16, 2023. More than 65 enthusiasts and professionals attended the luncheon and forum.
Here’s the lowdown on what was covered.
Reasons for Growth
(Courtesy of Lisa Morales)
More than 65 industry professionals gathered Aug. 16, 2023, for a luncheon and forum on hospitality trends, an event hosted by Commercial Real Estate Women Miami.
It’s no secret Miami is on the rise, but perhaps panel speakers Kristina D’Amico, Wendy Kallergis and Tanya Zapata Sutcliffe know best just how far the city’s reach is extending.
“It’s the only place in the United States that you have great shopping, great food and access to the water,” said D’Amico, senior vice president of global consulting firm HVS’ Miami office and director of the Caribbean region. “So, Miami is really looked at as that true world city, and now with more headquarters moving here and such a big international banking presence, the Miami hospitality industry is really going to grow.”
Part of that growth, she said, is thanks to the city’s ability to recover with greater rapidity than other areas in the U.S. Quite controversially, Miami opened its doors while the rest of the world was still grappling with COVID-related lockdown restrictions. That business-centric approach – as well as Miami’s natural outdoorsy appeal – helped the city bounce back from and even thrive through the pandemic.
(DiplomatResort.com)
Corporate companies are booking hotels in and around Miami with large meeting spaces for team-building activities, such as this sizable banquet hall at The Diplomat Beach Resort Hollywood.
In fact, she said, the city’s growth in hospitality was so significant in 2022 that tourism rates are beginning to stabilize this year.
One would hardly notice that, though, especially as Miami continues to ride a sports-induced high. In 2023 alone, the Miami Heat made it to the NBA finals, the Florida Panthers made it to the NHL Stanley Cup playoffs and Argentine soccer legend Lionel Messi completed his transfer to MLS franchise Inter Miami FC.
“The conversions of successful sports teams and high-profile athletes in the city can have a significant impact,” said Kallergis, president and CEO of the Greater Miami and the Beaches Hotel Association. “It’s happening right now,” with sports fans and tourists leading to increased hotel bookings, transportation services, restaurant patronage and more.
(TerraGroup.com)
A rendering of what will become the new Miami Beach Convention Center Hotel.
Plus, says D’Amico, it’s not just the fans that help the industry. More effective are the very players that need to practice, play and stay in the city.
“Now you’re getting better sports teams coming to Miami that need to be housed, and where are the sports teams staying? They really only want to stay at the top echelon hotels here, so hotel owners are able to charge a lot of money to host a sports team,” D’Amico said.
Hotels like the Four Seasons Hotel Miami in Brickell are at times booked in entirety for a single sports team in a weekend, and according to Zapata Sutcliffe, that demand is even spreading inland to areas like Doral.
Working From Home … or Hotels?
Zapata Sutcliffe, an associate in acquisitions for Driftwood Capital, notes how COVID-19 changed the landscape of how people work and, ultimately, how they choose their stays. She says work areas, including desks, chairs, strong Wi-Fi and sizable lobbies are all becoming important as companies remain remote.
(WaldorfAstoriaDowntown.com)
A rendering of the 100-floor Waldorf Astoria Hotel & Residences Miami tower.
D’Amico has also noticed that larger units, suites with kitchenettes and connecting rooms are becoming more popular as professionals are leaning toward bringing their families with them more often on work trips. Extended-stay hotels like the Embassy Suites by Hilton Miami International Airport and Residence Inn by Marriott are performing well for those looking to blur the lines between their professional and at-home lives.
In addition, Zapata Sutcliffe says, companies are booking meeting spaces more frequently for team-building exercises now that offices aren’t as consistently in use. The Diplomat Beach Resort Hollywood, with more than 209,000 square feet of meeting space, and the Fontainebleau Miami Beach, with approximately 107,000 square feet, have found success due to the new trend.
Kallergis also notes that the Miami Beach Convention Center is “busier than it’s ever been.” In January, London-based contractor Balfour Beatty announced that it won a contract to complete the 800-room Grand Hyatt Miami Beach Convention Center Hotel with developers Turnberry and Terra, which D’Amico says is a key component.
Trouble in Paradise
The news wasn’t all sunshine and rainbows, however. Spoiling the market right now are soaring property values and skyrocketing insurance rates, seen statewide but most persistently in Miami.
(Courtesy of Inter Miami)
Miami’s tourism has increased in 2023 thanks to strides in the sports industry, such as Argentine soccer legend Lionel Messi’s move to Inter Miami FC.
“Even if you have equity to put into projects, the financing landscape is very challenged right now,” said D’Amico. “As we’ve all seen with interest rates that have kept going up, it’s a lot more difficult in the hotel space because there’s not as many lenders in the hotel space historically, and now after COVID there’s even less.”
As a result, developers have had to rely on nontraditional lending sources. Additionally, mixed-use buildings with office and commercial spaces have gained popularity in recent times as an alternative source for revenue, says D’Amico. By the same logic, hotel-branded residences allow developers to sell off condominiums to help pay for the hotel. Waldorf Astoria Hotel & Residences Miami, coming to downtown, and Rosewood the Raleigh Miami Beach, reopening in 2025, are doing just that.
“You’re seeing the interest of people buying second homes in Miami, especially internationally, but if they can put that in a rental program and have someone else service them and they get a check every month, they’re happy as can be,” said D’Amico.
What about the series of travel advisories from civil rights groups cautioning people to stay away from Florida? Despite a series of ongoing conference cancelations across the state, tourism officials are loathe to acknowledge any meaningful impact so far.
What Heat?
Finally, despite sitting in the cool air conditioning of the Mayfair’s dining hall, it wouldn’t be a forum on Miami if the speakers didn’t mention extreme heat – although attendees let out gasps of astonishment when the speakers revealed that, to tourists, Miami’s not as hot as you’d think.
D’Amico was just as surprised as the audience was when she began speaking to industry leaders about a record-breaking August. Those high rates in tourism were in part due to Middle Eastern countries bringing their business to Miami. Sure, the Magic City’s hot, but not by their standards. While locals suffered temperatures that hardly made it to the triple digits this summer, the heat index in the Middle East reached 152 degrees.
“The heat is immaterial for them,” said D’Amico.
Typically, she said, the summer months constitute an offseason in Miami’s hospitality industry, while November through April consistently draw in Northerners looking to escape the cold. It was hardly expected that someday the tables would turn, bringing people to Miami to escape the heat.
It looks like the Magic City is well on its way to becoming the year-round destination it always said it would be.