More hotel rooms create rate pressures

Market watchers see a continuing bright outlook for Miami-Dade’s visitor industry in the coming year, with a possible dip in some room rates as new hotels come online.

The hotel industry in greater Miami ranks in the top five for occupancies and room rates relative to its peers (such as New York, San Francisco, Boston and Honolulu), said Scott Berman, industry leader of the hospitality and leisure consulting practice for PwC. He said the performance figures for 2014 show an 80% occupancy in Miami-Dade County with rates increasing $10 a night.

“That means eight out of 10 rooms in the county sold every night with tourists being turned away some days,” he said. Taking into account the months when tourism is slow here, Mr. Berman said, those numbers are robust and bode well for the year ahead.

“It’s difficult to deliver occupancies of over 80%,” he said. “Based on the performance of 2014, I see continued room rate growth.”

There’s new supply coming online in the coming year and beyond, Mr. Berman said, and “new players” tend to put pressure on room rates.

“Some rate growth may be muted by the new supply, but that’s normal,” he said. “Competition has always been the Achilles heel, but this market has been resilient. There are monetary dips to absorb the new supply but, overall, we have had very few failures.”

James C. Anderson, director of sales and marketing for Dream South Beach, says he believes the supply growth for 2015 will be greater than the demand growth and it will take a bit of time for the demand to catch up with the supply.

“We have not seen a supply growth like this in a long time,” he said. “Many hotels will be very aggressive with their rates to steal share, knowing the new inventory that came online in the fall 2014 and first quarter 2015 will be offering more affordable introductory rates as they establish themselves in the market.”

Final numbers for 2014 aren’t out yet but, based on indicators, it was a record year for tourism, said Rolando Aedo, senior vice president for the Greater Miami Convention & Visitors Bureau.

In February, the Greater Miami Convention & Visitors Bureau will be announcing 2014 was a record year. That follows multiple record years, Mr. Aedo said, which is always difficult to uphold.

“With any attraction, the way to sustain it is to add new elements of discovery,” he said. “Miami is putting emphasis on all of our neighborhoods like Little Haiti and Little Havana. People want to see those authentic neighborhoods.”

Interestingly, Miami has more international tourists (51%, compared with 12% for the entire state) than domestic (49%). That makes the tourism mix unique, Mr. Aedo said. “Our tourists stay longer and spend more money.”

That, in turn, creates more jobs. Mr. Aedo pointed to 1 Hotels & Residences in South Beach, which is to open in February. The hotel hired 1,000 employees, 80 of whom are managers earning $75,000 and more per year.

“We had 50 months of sustained job growth, and this industry generates a lot of it,” he said. “We project the job growth will continue in 2015.”

Occupancy in 2014 was 78.6% for the entire year and surveys and analysts forecast occupancy will rise at 1.5% to 80% in 2015, Mr. Aedo said. The average room rate for 2014 was $184.31, 5.4% higher than in 2013 and number four in the nation. In 2015, Mr. Aedo said, the industry is predicting a rise of 6.2% to $195.67 per night.

More people are coming to Miami, he said, and 2015 will see additional visitors. That’s good not only for the hotel industry but the general economy, as sales and tourism taxes help fund Miami’s sports and sports.

For 2015, Mr. Aedo says he believes there will be more international visitors from Latin America as well as Germany and England, the number one and two markets, respectively. He also sees the LGBT customer as a key market, particularly after the recent announcement of same-sex marriages that will bring destination weddings and generally encourage visits to this community.

Miami-Dade can be carved into a number of submarkets, Mr. Berman said. Those include Miami Beach, Coral Gables, Airport West, West Dade, South Dade, Brickell and downtown – all of which have their own profile and visitor outlook for the next 12 months.

“There’s always an anomaly somewhere so you can’t really compare them,” he said. In general, though, Mr. Berman said the hotels serve three major geographies, all converging on Miami-Dade from Europe, Latin America and the US.

That’s what makes Miami-Dade’s hotel industry so successful, Mr. Berman said. “We draw consumers from three different geographies. If one catches a cold, we can pull from the other two.”

Two other important factors for positive visitor growth in 2015 that Mr. Berman sees include the lower fuel prices, which he said will inspire tourists to take a vacation, and the proliferation of the cruise industry that’s a strong demand generator.

Brett Orlando, area managing director for Thompson Miami Beach, also sees increased demand for 2015.

“Thompson Miami Beach is coming off a tremendously successful opening in the fourth quarter of 2014. We were able to capture a significant amount of attention regionally, nationally and internationally that will propel us into the first quarters of 2015,” he said.

From there, Mr. Orlando said, Thompson Miami Beach intends to continue a strong marketing push that combines a variety of tactics and strategies.

“Our goal is to maintain communication with target markets, sharing news and updates that reinforce who we are from the brand level to the property level and highlight how that distinguishes us in the market,” he said. “Additionally, we are extremely focused on our local market. We understand the importance of the community that surrounds us and strive to make them a priority. We brought together a group of amenity partners that would resonate in Miami and feel authentic. We also extend perks such as $5 valet parking.”

For 2015, Michelle Anseeuw, director of sales and marketing for Eden Roc Miami Beach, foresees a slight drop in international travel due in part to the dollar being stronger and the international guests’ acquisition power being lower.

“Brazilian economy is not as strong, so we are forecasting softer tourism from this market in particular,” she said. “We do anticipate for the US /domestic tourism to be higher, given the price of gas and the higher disposable income available to many, including families. Given this fact, key vacation timeframes such as long weekends, and summer, should see an uptick on domestic USA tourism.”