It’s a small (hotel) world

From left: Suzanne Amaducci of Bilzin Sumberg, Aloft South Beach and Francisco Levine of Atton Hotels
From left: Suzanne Amaducci of Bilzin Sumberg, Aloft South Beach and Francisco Levine of Atton Hotels

As Miami draws more international tourists, it’s also attracting hotel developers from around the world.

Chilean Hospitality Company Atton Hotels is building a 225-room hotel in Brickell, the city’s financial district. Hong Kong-based Swire Group has the 263-room EAST Hotel under construction as part of the $1 billion Brickell City Centre mixed-use project. Both hotels will be the first in the U.S. for their brands.

Meanwhile, Malaysia’s Genting Group is planning about 500 hotel rooms for its waterfront parcel in Downtown Miami. Genting paid $236 million for the former Miami Herald newspaper’s headquarters in 2011. It scaled back plans for the site after its proposal for a massive casino resort failed to pass the state legislature, but still plans to go ahead with a luxury mixed-use development that it says will include a five-star hotel.

Other projects in various stages include Aloft South Beach, a 235-room hotel in Miami Beach by JMH Development that topped off last month; the redevelopment of Casa Moderna into a ME by Spain’s Melia property, and the proposed transformation of the former federal immigration headquarters on Biscayne Boulevard into a 135-room hotel by a group of Canadian and Chinese developers and investors.

Suzanne Amaducci, a lawyer at Bilzin Sumberg, said Miami is becoming a “sexy location” for new hotel brands.

“We’re seeing international brands wanting to be in the market,” she said. “Hospitality fundamentals are thriving.”

One big driver for hotel developers is Miami’s tourism growth. Last year, Miami-Dade County set a record with 14.2 million overnight visitors, according to the Greater Miami Convention & Visitors Bureau. Year-over-year daily hotel rates rose more than 8 percent, to about $177 a night.

Those visitors also spent about $22.8 billion while in the area.

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“New brands want to be in Miami to introduce themselves to the U.S. market,” said Aztec Group managing director Bo Ashbel. “They’re from Latin America, Europe and some from Asia.”

Francisco Levine, CEO of Chile’s Atton Hotels, said his group saw a strong opportunity in Miami and took action in 2012, just before the recent boom took hold. “We accelerated our North American plan for the chance to buy land,” Levine said. Atton’s $65 million, 12-story property in Brickell is slated to open in 2016.

Levine said Miami outperforms most U.S. markets because of its strong demand, and has a clear advantage with their client base in Latin America. “Miami’s moving up to the next level for travelers; business and pleasure together,” he said.

Atton’s prime target is corporate travelers, who typically provide steady demand. The hotel will have meeting rooms, a restaurant and rooftop bar and pool. “We will provide the Miami experience, for common-sense travelers.” Levine said.

Venezuelan developer William Hammani, who recently relocated to Miami, could be the next to bring a new hotel to the city. Hammani’s Hotelex Brickell paid about $6 million for a 30,000-square-foot site in Miami’s West Brickell neighborhood. No plans for the site have been announced.

Amaducci cautioned that barriers to entry in the market are high for new players, an issue that could continue in 2015. Part of the recent expansion was fueled by the rush for developers to acquire land while they could, as the real estate market began its recovery after the recession, she said. There’s little land available now, and the shift toward building condominiums has driven up the price of what’s left.

“Land prices are high due to competition with condo development,” Ashbel agreed. “The cost of construction is going up, and lenders are still extremely picky about who they will lend to.”

Despite these constraints, growth in the sector remains strong.

“Miami is a world-renowned city where a new brand can perform well and use it as a platform to expand elsewhere,” Ashbel said.