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 2017, and those planned for 2018, are centered in these three submarkets. Despite a 4.7% increase in demand against a 3.2% increase in supply, increases in market-wide average rate (ADR) in 2017 were muted, with year-end ADR coming in slightly under $189. The lack of growth in ADR in 2017 was due to the market being focused on continuing to absorb the healthy increases in supply that occurred between 2014 and 2017 (+12.6%). Market-wide occupancy registered 76.6% in 2017,in line with the average annual occupancy of 76.8% achieved between 2011 and 2016. Results for first-quarter 2018, which includes the peak tourist season, show strong and improved metrics compared to the same period in 2017, with increases in all metrics, which should positively influence annual performance for 2018. Small increases in occupancy are expected to occur between 2018 and 2020, with market-wide occupancy reaching about 78% by 2020. With occupancy fairly stabilized, and demand growth anticipated to be generally aligned with new supply growth, modest increases in ADR are expected over the next few years.
A strong and diverse mix of room-night demand generators in the commercial, leisure, and meeting and group sectors provide the underlying strength to the Miami-Dade County hotel industry. Miami Beach is a major domestic and international leisure destination; the Miami International Airport handles 44 million passengers a year. In addition to its extensive cargo operations, Port Miami is the largest passenger-cruise destination in the world. Moreover, Miami serves as the "Gateway to the Caribbean and Latin America," with robust banking and import/export activities. Room-night demand grew 4.7% from 2016 to 2017, as certain challenges present in 2016, such as the Zika virus scare, the continuing recession in Brazil, and the strength of the U.S. dollar in relation to certain foreign currency exchanges, have subsided or are no longer present. The full reopening of the newly renovated Miami Beach Convention Center in August/September of 2018 will result in the return of a significant amount of meeting and group room-night demand to the market area. While partially open throughout the past 26 months of construction, the facility has not been completed booked for two years because of the construction. Upon its full reopening, the convention center will contain 1.4 million square feet of space, including a 60,000-square-foot grand ballroom and a 20,000-square-foot glass rooftop ballroom.
While new hotel room supply continued to be added during 2017, we do note that some existing supply has been temporarily removed from inventory as renovations are completed due to damage sustained by Hurricane Irma. Overall, hotel room supply increased 3.2% in 2017, with most of the new hotel openings being centered in the beach, airport, or Downtown/Brickell submarkets. While additional openings are slated to occur in these three major submarkets in 2018, some other submarkets will also welcome new supply additions, including Coral Gables, Doral. and Aventura. As of year-end 2017, total hotel supply was reported at approximately 57,000 rooms. Depending on the timing of certain openings, new supply additions in 2018 are forecast to represent about 4% of supply. A slowdown in the rate of growth in supply is expected over the next few years.
There were eleven transactions of operating hotels in Dade County in 2017; total sales volume was $304.7 million (1,929 hotel rooms), for an average per-key price of $158,000. Six of the eleven transactions involved properties located near the beach, while another two hotels were located in the Downtown/Brickell submarket. Most of the sales activity among the eleven transactions took place between $100,000 and $400,000 per room.
* 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.