MIAMI—Denihan Hospitality Group, a Manhattan-based hotel management and development company, recently made its South Florida foray with the opening of the James Royal Palm hotel here. Once known as the Royal Palm Hotel in Miami, Denihan took over the property management.
After heavy redevelopment and renovation, Denihan re-launched the historic hotel in November as The James Royal Palm. It’s the third luxury boutique property in The James brand group.
GlobeSt.com caught up with David Duncan, president of Denihan, to discuss why South Florida—and why now. One of the key strategists behind Denihan’s ambitious expansion plans, which include doubling the company portfolio to 25 to 30 hotels by 2016, Duncan’s role requires him to be aware of the latest commercial real estate trends in order to best position the company in this market.
GlobeSt.com: Over the past four years the city has gone through some tough times, so why did Denihan decide to make its next venture here?
Duncan: Miami is a strong real estate market overall for hotel owners, and was an important growth market for The James brand as it was high on the preference list among James guests. At the time that we were awarded the management contract for the Royal Palm, Miami was trending very positively. The market continues to grow at a significant rate, and the hospitality sector is strong.
GlobeSt.com: Commercial real estate, particularly the hospitality sector, is experiencing incredible growth and development there right now. What do you think are the driving factors behind this?
Duncan: A complete economic resurgence is taking place in Miami. The driving factors are continued improvements in infrastructure, growth from New York and key international markets, such as Europe, the United Kingdom, and South America.
GlobeSt.com: How do you see this trend for Miami continuing to evolve? Will it carry into 2013? What city will be the next commercial real estate and hospitality hotbed?
Duncan: Overall, the Miami market experienced a 12-year high in occupancy levels in 2012, despite considerable new inventory in the market, and STR has forecasted that RevPAR will increase by 6% in 2013.
GlobeSt.com: As a hotel management and development company, what criteria do you utilize when identifying the next urban market to break into? What really sells a location to development and management companies in general?
Duncan: Denihan is focused on key U.S. urban markets with high barriers to entry and specifically, coastal gateway cities. Our growth plan is a customer-driven strategy overlaid with a real estate strategy. Within each market we look at solutions that the environment dictates, not what a brand dictates. The James brand fits exceptionally well into the South Beach Miami market, but the hotel’s design, facilities, restaurants, bars, and cultural programming are all very specific to that environment, it’s never a one size fits all.
GlobeSt.com: Particularly when you know that you have an extensive renovation to complete before the property even opens its doors?
Denihan’s sweet spot is repositioning under-performing hotels by creating unique environments and living spaces on time and on budget, resulting in substantial increases in revenue. Our interests are in alignment with the desires of owners to maximize asset value while delivering value to guests. As a hotel real estate owner for 50 years, we know what margins matter.