By Diana Eastman at Sky Five Properties
Anyone coming to Miami from out of town is going to need a place to stay. Business professionals, families on vacation, groups of friends coming to party, retirees looking for some relaxation and sun, and couples looking for a romantic getaway will all be on a lookout for a suitable hotel to meet their needs and style preferences. Some will choose a charming beachside bungalow, while others will splurge on five-star luxury accommodations with breathtaking views and world-class amenities. The high demand for hotel accommodations in Miami makes it a genius investment opportunity and can be a fast-paced and profitable venture–if done correctly. But there are hotels in every single city across the country, so why should you be investing in condo hotels in Miami? We’re so glad you asked.
Miami is the Top Market for International Travel
Miami ranks fifth in the nation for hotel occupancy, and as the “Gateways to the Americas,” it sees millions of travelers coming in and out of the city each year. The two main sources of demand for hotel accommodations are business travelers and vacationers, so basically, every person that passes through Miami. All those millions of travelers coming to the city will need hotel accommodations during their stay. Many Miami Beach hotels are less than 30 minutes from Miami International Airport, making this area a hotspot for tourists, meaning it’s also a great spot to own a hotel.
The Support for Investors is Unparalleled
Because hospitality is such a hot and profitable business venture in Miami, investors can find a wealth of resources and support in the area to help them achieve their goal of owning a hotel. The city has recently seen an emergence of hotel investment firms, which can offer knowledge, resources and networking opportunities for hotel investors. For those taking the leap and investing in commercial real estate for the first time, hotel investment firms can be lifesavers. Such companies can help analyze hotel listing options, taxes, room rates, occupancy rates and amenities, and since Miami is a hotspot for travel, tourism and hotels, there is abundant support and resources for investors.
Miami Hotels are Layered Investments
With traditional residential real estate, the revenue created by the investment usually comes from one main source. However, when investors make the jump to invest in hotels, they are suddenly earning revenue from multiple venues within the hotel, such as coffee shops, retail shops, restaurants and bars. Hotels in general have the ability to quickly access the market and raise “rent” or room prices much faster than other commercial real estate assets. Hotels in Miami can quickly react to a heightened demand in the industry (Spring Break, Gay Pride, Fashion Week, or the South Beach Food and Wine Festival) and raise room rates quickly to accommodate the improved economic conditions. This allows investors to see a quicker return on their investment.
The Options are Endless
Buying a hotel in Miami is like being a kid in a candy store. There are so many options for all different styles, tastes, and budgets. From classic landmarks that have been part of the Miami skyline for decades, to ultra-modern, almost futuristic hotels that have just been built, the city is a mecca for hotels and investors have plenty of options when it’s time to buy. Last year, Miami welcomed almost 20 new hotels, which created a surge in both revenue and job opportunities for the city. Miami is also home to a variety of different hotel classes (full-service, limited service, budget and extended-stay), which levels the playing field for all kinds of investors with varying amounts of start-up capital.
The different hotel classes also offer different levels of involvement, creating space for investors who just want to sign and receive checks, and investors who want to take a more hands-on approach to their venture. Historically, hotel owners owned the real estate and handled the every day tasks associated with running it, but more recently, investors have let property management companies handle the day-to-day responsibilities. Hiring hotel management companies usually requires little capital investment, and when done correctly, makes a huge difference in how the hotel runs and in turn, how much money is made.
Miami is a city that has mastered the way to successfully adapt and evolve in order to stay modern and on top of the trends, yet has held on to the classic charm that it is so famous for. Real estate in Miami is the same. Hotels will always be a foundational aspect of the city make-up, and the demand for high-end assets is high right now.
The hotel industry has made significant gains in the last year, and has improved in every category, according to an STR Trend Report. In just one month last year, the hotel industry made close to $280 million. The average occupancy level was 81% nightly, an increase of 0.9% from the previous year. The numbers don’t lie, owning a hotel is a booming and profitable industry to be a part of in Miami.
The hospitality sector is such a vital part of the Miami commercial real estate market. From family-owned motels to the Ritz-Carlton, hotels are part of the fabric of almost every Miami vacation. Buying a hotel means putting roots down in one of the most dynamic, attractive, and desirable cities in the nation, and if done correctly, could result in major profit and a life-changing adventure.