Developer Tibor Hollo is about to watch his latest hotel vision rise from the dirt in crowded Downtown Miami.
In June, the president of Florida East Coast Realty plans to start construction on the Sonesta Mikado Hotel Miami, a 252-room mixed-use hotel with oversized rooms and double suites. The project includes 119 luxury residences as well as office and retail space.
Located at 1701 NE 4th Avenue, across from Margaret Pace Park and Biscayne Bay, the 40-story Sonesta Mikado will offer services and amenities, including an upscale restaurant, pool bar and grill, 14,000 square feet of flexible banquet and meeting space, 45,000 square feet of office space, a fitness center and destination spa, and a 12th-floor pool deck overlooking downtown and the Port of Miami.
“Developers that have the capacity to start construction projects are finding now is a good time because material and construction costs are down,” said Robert Geitner, a senior manager for the Miami Downtown Development Authority. “That puts Hollo in a good position to contain the costs of this project.”
The Mikado, designed with a modern Asian theme by Miami’s Zyscovich Architects, takes its name from the Gilbert and Sullivan operetta of Japanese fantasy. The hotel will feature a Far East aesthetic and is scheduled to open in 2011.
Hollo may be one of a handful of developers that can pull together a development in the current economic climate, according to Guy Trusty, president of Lodging & Hospitality Realty in Coral Gables. Hollo, a veteran of the city’s booms and busts, bought the land in the Arts & Entertainment district long before the Magic City began its revitalization. Florida East Coast Realty did not disclose the cost of the land.
“We’re looking at 2011 as the bottom of the cycle for the hotel market. Nobody in South Florida would be in business if the rates keep dropping past 2011,” Trusty said. “Opening a hotel at the bottom of the cycle is about the best time because you don’t have to endure too much pain in terms of low rates and you can ride it up as the market recovers.”
Two of Downtown Miami’s newest hotels, Viceroy Miami and Epic Miami, are feeling the pain Trusty described. Both hotels target business travelers that want a boutique experience beyond the glare of the South Beach lights. But the global recession is causing serious problems for luxury hotels around the country.
More than 51 percent of nationwide respondents to a recent Market Metrix survey said they’ve canceled or changed a trip to reduce costs. The good news is luxury hotel travelers have been the fastest-growing segment of the industry for the past two years. Trusty said Hollo’s timing is good compared to other regional hotel developers.
“Some developers, like the Omphoy Ocean Resort in Palm Beach, were counting on the condo-hotel trend. But the condo business fell out and they were left with a project that runs as a hotel or that was returned to the bank because they couldn’t make it work,” Trusty said. “The Mikado is being built at the right time in the cycle and should open at the right time in the cycle to make it a successful project.”