Hotel Construction Rebounds Report Says
Written by Claudio Mendonca on May 5, 2005
By Claudio Mendonca
Hotel development is rising after a few slow years, according to a national firm that tracks real estate for the lodging industry.
"Miami is entering a new lodging cycle because the national economy is beginning to improve again," said Amy Hauck, director of marketing communications for New Hampshire-based Lodging Econometrics. "Hotel occupancy is in tandem with the flow of how the national economy is performing."
Eight hotels are to open in Miami-Dade County this year, adding 1,221 rooms. Due to open are The Victor, the Regent, the Sanctuary and the Setai – all on Miami Beach. In addition, Le Meridien, Sole Ocean Resort and Fantasy on Ocean are planned for completion on Sunny Isles Beach. Aventura expects the Rosewood.
Miami-Dade hotel completions may slow next year with only two hotels opening, adding 298 rooms, according to the firm’s Lodging Development Forecast and Trends Report. The upward hospitality trend for Greater Miami will continue in 2007 and 2008, according to the report, when 12 hotels with more than 2,100 rooms are planned.
Ms. Hauck said the industry has a cycle that runs parallel to the economy, especially if business travel expenditures rise. She said the upward trend could last until 2010 with hotel construction reaching its peak toward the end of the decade.
Nationwide, Lodging Econometrics is forecasting 127 hotels with more than 16,600 rooms to open this year in the 25 top markets. Miami-Dade ranks eighth nationwide in number of rooms.
Victor Lopez, Hyatt Hotels’ vice president of field operations, said a lack of land for construction of new hotels is the industry’s biggest problem.
"If there were more space, we could certainly create more demand," said Mr. Lopez, who heads three facilities for Hyatt in South Florida. "The problem is that new hotels can only be built by tearing down other buildings."
Local hotel consultant Scott Brush said a growing trend is to renovate older buildings and convert them into condo-hotels or residential condominiums. "Value of land is so high that is takes longer to make a profit out of hotels," said Mr. Brush.
Hotel developers look at cost per built room. Mr. Brush said that for a beachfront property, developers are paying $50,000 per room for land. At the same time, a non-beachfront, full-service hotel goes for $20,000 per room and an economy property is valued at about $10,000.
William Talbert III, president and CEO of the Greater Miami Convention & Visitors Bureau, said the hotel-condo concept will continue along with renovations.
Mr. Lopez said the condo-hotel boom won’t last long. "When constructing condo-hotels, returns are quick, but it is cyclical," he said. "It is going to get to a point of saturation. You can only go so far."