MIAMI—North Dakota may be the best-performing state in Marcus & Millichap’s Statewide Hotel Property Index, but Florida isn’t too far behind. And Miami is helping to lead the charge.
According to M&M, tourism surged in Florida in 2011. And the addition of 114,000 jobs in the state sparked a 12.5% jump in in-state travel. Florida ranks fifth on M&M’s list, but is separated from second place by less than two percentage points.
“People are getting more confidence in the economy and hotels are benefitting from that,” Bernie Wolfson, president of Hospitality Operations, which operates six hotels in Florida and one recently opened Hampton Inn in Downtown Miami, tells GlobeSt.com. “Our hotel in Miami is performing very strong and our other five hotels in South Florida have seen gross revenues increase significantly over the past two years.”
Of course, Miami has always been a destination resort town. Wolfson also notes a resurgence in South Florida’s cruise business, which he says drives more hotel traffic since travelers typically spend a day or two in a local hotel before or after the cruise. But not only do tourists flock to Miami for vacations, global businessmen are landing in Miami for business.
Marcus & Millichap reports commercial and regional banks have eased into lending on strong assets for qualified borrowers with solid balance sheets. According to the firm, loan terms start at five years, with 20-year amortization schedules and LTVs that typically vary from 55% to 60%. Interest rates are falling in the high 4% to 5% range.
“There’s no new construction of properties that are solely hotels in Miami,” Wolfson says. “Land gets so expensive that developers have to incorporate hotels with office and retail and multifamily. There’s a very large project called Brickell Citicenter. But it’s mixed use. Still, that’s helping the attitude of the climate because this shows the confidence developers have in Miami.”