Skip to Content.

South Florida’s Hotels Are Open for Business after Hurricane Irma

Thursday, December 07, 2017

Real Estate Indicators by HFF Director Alexandra Lalos in HFF's Miami office.

It’s been three months since Hurricane Irma made landfall in the Florida Keys on September 10, and, with 99 percent of power restored to South Florida by September 19[1], hoteliers in South Florida have been busy with full houses of guests, aid workers, insurance adjusters, displaced residents and more and posting strong RevPAR numbers to prove it.

South Florida’s hotels and restaurants are open for business. While the recurring images of streets-turned-to-rivers and cranes hanging from Brickell high rises painted one picture post Irma, the reality is that moderate winds and little, if any, flooding, caused very minimal interruption, and much of Miami’s hospitality industry was back to work only days later. What we’ve learned from the weeks and months following Hurricane Irma’s march through the state of Florida is that our infrastructure is hurricane-ready and that our human capital is even more resilient.

Post-Hurricane RevPAR Boost

As has been the case in history, hotel performance often improves in a market following the occurrence of a natural disaster due to a decline in supply and an increase in demand resulting from the influx of displaced residents, construction workers, insurance adjusters, government officials, etc. Then there is the issue of other competitive markets to Miami, namely resort markets in the eastern Caribbean, where renovation projects will last well into 2018, funneling much of the would-be high-season business to Miami. As such, Miami’s hotels are forecasting a strong start to the 2018 season going into the holidays and Art Basel.

The table below provides a snapshot into the month of October performance for 2016 and 2017. The third and fourth quarters of 2016 were characterized by a series of events that disrupted demand and travel patterns and were simultaneously plagued by a 4.2 percent increase in supply. The Zika Virus, Hurricane Matthew, the 2016 Presidential Election, the renovation of the Miami Beach Convention Center and unfavorable exchange rates with global currencies led to a 12.6 percent decrease in RevPAR in the month of October 2016. Bolstered by the post-hurricane lift, the eradication of the Zika Virus and the absence of the election this year, October 2017 proved to be a strong month to kick off the 2017-2018 season.

Miami Market Performance – October 2016 versus October 2017

Miami Market Performance – October 2016 versus October 2017

The chart illustrated below, which is an excerpt from a larger chart created by Baird Research, identifies the top five and bottom five performing markets in terms of RevPAR growth by month. From August 2016 to March 2017, Miami was consistently ranked among the bottom five performing markets in the U.S., characterized by a “hangover effect,” which is primarily the result of the Zika Virus. Meeting planners chose to book elsewhere for the 2016-2017 season even though there was and continues to be no local transmission of the virus in South Florida today.

A clear turning point occurs in July 2017, where not only is Miami not a bottom-five performer, it’s actually back to a top-five performing market, and but for Hurricane Irma, MIami would have likely been among the top growth markets in September 2017 as well. Slowing supply growth, evidenced by year-to-date supply growth of 3.9 percent in Miami versus last year when same time supply growth was 4.2 percent, will aid in continued ability to absorb new supply and drive ADR next year.

RevPAR Growth by Month

RevPar Growth by MonthRevPAR Growth by Month

Transit Update

Miami International Airport (MIA) continues to add new flights, solidifying its position as one of nation’s top international airports. On November 1, 2017, nonstop service from Miami to Tel Aviv by EL AL Israel Airlines began, creating the only direct air connection between Florida and Israel. MIA also announced the launch of a weekly Miami-Stockholm service aboard Scandinavian Airlines (SAS) in October, which now gives MIA nonstop access to all five countries in the Nordic region. Frontier Airlines launched eight new domestic nonstop routes for the fall/winter season, five of which were not currently served at MIA.

The new Brightline rail is set to launch by the end of 2017. The intercity express train will service stations in West Palm Beach, Fort Lauderdale and Miami, allowing a nonstop connection between the latter two destinations in 30 minutes.

Royal Caribbean and Miami-Dade County are currently under construction on a brand new world-class cruise terminal at PortMiami. The terminal, which is slated for completion in October 2018, already secured the world’s newest, largest cruise ship, the 5,494-passenger Symphony of the Seas, which is expected to debut in November 2018.

The city of Miami Beach is currently completing over $400 million in projects to install new state-of-the-art pumps and raise the roads in Miami Beach to combat flooding and sea level rise and continue to improve the quality of life for residents and tourists.

Outlook for 2017-2018 Season

The outlook for 2018 is “sunny” now that the storm clouds of Zika, the wave of new supply and hurricane season are behind us. Art Basel, the premier art show of the Americas, will kick off on December 7 and is expected to draw approximately 80,000 visitors to its installations and other Miami Art Week shows. The marquee Art Basel show will occupy the Miami Beach Convention Center (MBCC), despite being in the middle of the massive renovation project. Art Basel recently signed a new agreement with the city of Miami Beach to call the MBCC home until 2023, with a five-year renewal option thereafter.

Hard Rock Stadium will host the Capital One Orange Bowl on December 30, 2017, which drew more than 67,000 fans in 2016. Hard Rock Stadium has been chosen to host Super Bowl LIV on February 2, 2020 and was recently announced as the site of the College Football Playoff National Championship Game on January 11, 2021.

A host of other events listed below will thrust Miami into the national spotlight in 2018, bolstering hotel performance and projecting to outperform last year’s attendance numbers.

Miami’s Key Event Dates

Key Events in Miami

About Alexandra Lalos

HFF Director Alexandra LalosAlexandra Lalos is an director in the Miami office of HFF with more than four years of experience in commercial real estate. She is primarily responsible for institutional-grade hotel and resort property transactions and analysis, including investment sales, debt and equity placement and loan sales throughout North America. Ms. Lalos is a member of HFF’s national hotel group and frequently collaborates with team members across the firm on hospitality engagements.

Ms. Lalos joined the firm in June 2012. Her background includes operational experience in hotels, restaurants and private membership clubs. She is an alumnus of Cornell University’s School of Hotel Administration.

 


[1] Dahlberg, N. (2017, September 19). We know how the 1% without power are feeling right about now. But there's a deadline. Retrieved October 04, 2017, from http://www.miamiherald.com/news/weather/hurricane/article174103191.html





Comments (0)
Back
Post has no comments.
Post a Comment
Captcha Image



Search HFF Advisor

Recent Posts

By Topics

Archive

Back to top.