The Miami hotel market comprises eleven distinct submarkets located throughout Miami-Dade County. The Miami Beach hotel inventory accounts for approximately one-third of the total hotel rooms in the market and serves a major portion of the tourism industry enjoyed by the county. Together, the beach submarket, the airport submarket, and the Downtown/Brickell submarket comprise over 60% of the hotel room supply. Not surprisingly, most of the new supply increases in 2016 were centered in these three submarkets. Despite a 1.4% increase in room-night demand in 2016, the healthy market-wide occupancy of 77.8% achieved in 2015 registered a decrease of just over two percentage points, ending 2016 at 75.6%. The decline in the market-wide occupancy rate was a result of supply increases and a drag on demand growth. Average rate declined approximately 3%, ending 2016 just below $190. The modest declines in both occupancy rate and ADR produced a RevPAR decline of 5.6% in 2016. Nonetheless, the Miami market metrics for 2016 still represent the strongest in the state, and continue to outpace the national hotel market by wide margins.
Miami-Dade County benefits from a diverse group of room-night demand generators. Miami’s geographical position has earned it the nickname of the “Gateway to the Caribbean and Latin America.” Significant demand generators include domestic and international tourism; the import-export business; banking; the Miami International Airport, which serves 44 million passengers per year; and PortMiami, which handles the largest number of cruise passengers in the world. As previously noted, room-night demand grew at 1.4% from 2015 to 2016, after experiencing a compound annual average growth between 2012 and 2015 of 2.6% per year. Unfortunately, the temporary closure of the Miami Beach Convention Center for renovations and the temporary designation of certain Zika zones within the county in 2016 all had a negative impact on room-night demand growth. Moreover, the strength of the U.S. dollar had an impact on foreign visitation, which held especially true for the loyal Brazilian visitor, who continued to experience a difficult economic recession.
In 2016, 20 new hotels opened in Miami, adding 2,176 rooms and bringing the total hotel room inventory to 53,407 rooms. A little less than half of the new hotel room supply entering the market in 2016 was focused in the upscale product quality tier. These new hotel openings represented a supply increase of 4.2% over 2015. Prior to 2016, the compound annual average growth in supply between 2012 and 2015 was 2.0% per year. While supply increases are expected to continue in 2017, an overall slowdown in the supply growth rate is anticipated over the next few years.
Excluding portfolio transactions and partial interests, 18 transactions of ongoing hotel operations occurred in Miami-Dade County in 2016, with about half of the transactions in Miami Beach. Except for the W Miami (former Viceroy) and the InterContinental, the mainland transactions were primarily focused on midscale and upscale product that traded in the range of approximately $100,000 to $280,000 per room. A mix of hotel product types were sold in Miami Beach, with the smaller Art Deco hotels primarily transacting between $265,000 and $460,000 per key. Oceanfront transactions in 2016 ranged from $600,000 to $700,000 per room. Total transaction volume for the county in 2016 was $1.421 million, down from the 2015 volume of $1.941 million, but still above the 2014 volume of $1.235 million.
* Although the HVI cannot tell you what a particular hotel is worth, it does provide excellent “big picture” data, indicating which market areas are experiencing positive trends, and thus may present good investment opportunities. The HVI for the U.S. is a measure of the strength of the lodging industry as a whole and, specifically, the hospitality investment market. The HVI for the various identified markets can provide a basis to evaluate and compare different geographic regions. For more insight on the limitations and applicability of the HVI, please read the message on the HVI home page by clicking on the graphic at the top of this page.