Can Hotel Market Sustain 2015 Strength?

MIAMI—For Florida hotels, it's the perfect storm. Hotel values have seen a robust recovery over the last few years, especially in the top Florida markets such as Miami, Miami Beach, Fort Lauderdale, Orlando, and Tampa, according to Rich Lillis, an executive vice president with Colliers International South Florida who advises clients on hotel and resort investment sales.

The question is how long will the hotel market stay white hot? Where does Lillis see the hotel market going in 2016? GlobeSt.com asked that question in the final installment of our exclusive interview series.

"Experts agree that the macro hotel cycle has at least a few more good years of sustained revenue growth, especially in Florida markets," Lillis tells GlobeSt.com. "

"The only small cloud on the horizon is that new hotel development can become a threat to RevPAR growth, as we are already observing in New York City."

The small cloud could become a dark storm that replaces the perfect storm. But it probably won't, at least not in the near-term.

"Miami-Dade County is leading Florida in new hotel development with approximately 6,000 rooms under construction or in final planning," Lillis says. "

"Fortunately, these new hotels are spread across submarkets such as Downtown Miami, Miami Beach, the airport and Aventura."

In other words, developers are using wisdom before breaking ground. As Lillis sees it, if tourism keeps increasing to record highs and the regional economy continues to expand, Miami's new hotel rooms will be absorbed.

Investors should also keep entering the market. "We expect Florida hotel transaction activity will remain strong or even accelerate in 2016," he says, "as capital markets are supporting buyers, while hotel owners look to sell in order to realize gains made in hotel values and to recycle capital."