MIAMI—The Southeast is reported strong hotel performance in the third quarter—and the political conventions helped the cause. Across the region, Marcus & Millichap reports a large, deep pool of properties hotel properties to select from—and that selection is sustaining considerable investment activity.
Hotel property prices are rising. M&M reports three times as many economy hotels changed hands over the past 12 months than in the preceding year. Transaction velocity in limited-service and select-service brands each spiked more than 70% over the past 12 months.
“Prices continue to rise from the cyclical lows registered one year ago,” M&M reports. “In the economy segment, the median price rose 6% to $19,300 per room, while the median price for limited-service lags climbed 17% to $24,300 per room. Select-service assets carried a median price of $48,900 per key in deals completed over the past year, 17% more than the median price in the preceding year.”
Robert Taylor of the CBRE Hotels Group in Miami tells GlobeSt.com South Beach is still one of the top markets in the country, along with New York, Boston and Washington, D.C. The barriers to entry are significant. Because Miami is more of a gateway market than a Fort Lauderdale or Palm Beach, the pricing is higher for assets in Miami than the rest of South Florida.
“Everybody wants to come to South Florida because the tourism numbers are skyrocketing,” Taylor says. “There’s been a lot of pent up demand through the recession, both domestically and internationally. South Florida, Orlando and the beaches have been benefiting from strong numbers. Occupancy has been up in the high 70s for some time but now the hotel owners are really able to get some pricing leverage and the rates are going up nicely. Those are the fundamentals that attract investors.”