Miami’s hotel market experienced a rise in occupancy over the last six monthsMarch 27, 2018
Miami’s hotel market experienced a rise in occupancy over the last six months following devastating hurricanes that tore through the Keys and the Caribbean, rendering those destinations off limits to vacationers.
An analysis from hotel research firm STR tracked that growth from September through February, looking at occupancy, revenue per available room and demand. And as those storm-battered islands continue to rebuild, tourism has started to return, siphoning some of that gain from Miami’s hotel industry, the data shows.
In early September, Hurricane Irma battered the Caribbean islands of Barbuda, Saint Martin, the Virgin Islands and others, eventually making landfall in the U.S. on the island community of Cudjoe Key in Monroe County.
The Florida Keys took the brunt of the damage from Irma, sparing Miami-Dade, Broward and Palm Beach counties from major structural damage. And only 10 days after hitting the Keys, Hurricane Maria reached Puerto Rico, causing widespread devastation.
Since then, a number of hotels in South Florida reported increased bookings.
“There’s definitely a domino effect and South Florida is a beneficiary, even though we have some rooms out of inventory as well,” said Scott Berman, principal at PricewaterhouseCoopers. From a group bookings perspective, “Puerto Rico’s loss is our gain,” he said.
Markets like Hawaii and Arizona are also picking up group business that would have typically gone to some of the islands hit by hurricanes last year, added Berman, who heads the hospitality and leisure division at PwC.
Berman is bullish on the Miami hotel market this year despite the challenges the industry is facing, including a growing supply of short-term rentals. “We’re by no means complacent, but I think generally there’s an upbeat tone amongst the hotel community,” he said.
In the Miami region, occupancy, revPAR and demand saw double-digit increases in the immediate months following the storms. In October, occupancy was at 74.5 percent, up 11.2 percent from the previous year. That month, revPAR, which is typically used to gauge the market’s health, rose 13.4 percent to nearly $121. Demand also jumped by 11.2 percent.
Since then, that boom has slowed down. STR’s most recent data shows occupancy for the first two months of this year increased 5.3 percent to 84 percent. RevPAR is up 15.8 percent to nearly $207, and demand rose more than 5 percent compared to the first two months of 2017. Revenue jumped 15.6 percent to nearly $668.5 million.
Outside of the boom caused by the hurricanes, Jan Freitag, STR senior vice president, is expecting “an OK year for Miami hoteliers” in 2018. The Miami market’s revPAR averaged $144 in 2017, up only 0.7 percent.
“We expect the fourth quarter performance that lifted results in Miami to not be repeated going forward and it will make comparables in Q4 2018 very hard,” he said.
The Caribbean, meanwhile, has slowly been coming back. In the beginning of 2018, occupancy there fell about 2 percent to 70.6 percent, revPAR dropped 2.7 percent to $169, and revenue declined by 3 percent to $2.5 billion.
The Keys are also still experiencing a decline in demand into the new year, according to STR. About 28 percent of the area’s 11,000 hotel rooms remained closed as the holiday season got under way.
Cheeca Lodge & Spa, a 214-key, 27-acre resort in Islamorada, is expecting to reopen on Friday after completing $25 million in renovations and repairs from damage caused by Irma. When it opens, about 66 percent of Islamorada’s 1,300 rooms will be back online following the hurricane.
Article from The Real Deal South Florida