The Miami Beach hotel sector is experiencing a strong resurgence since the recession, but several industry experts say the market still has ample room to grow.
Hotel developer Robert Finvarb and Hersha Hospitality Trust executive Robert Hazard discussed the upside of the Miami Beach hotel market during a panel discussion at Wednesday’s Marcus & Millichap’s Commercial Real Estate Forum: Florida, held at Florida International University’s North Miami campus. South Florida real estate veteran Seth Gadinsky and Kimpton Hotels executive Tom Riley also participated in the panel, which was moderated by Lifestyle Media Group editor-in-chief Kevin Gale.
The pace of growth in the city’s hotel sector is currently 4-to-5 percent ahead of Manhattan, according to Hazard, senior vice president of acquisitions and development at Hersha. Hazard’s company owns the Courtyard Miami Beach Oceanfront hotel.
Yet the South Beach area of the city needs a “dose of reality” when it comes to room rates, Hazard said.
“The pricing is pretty much out of control,” he said. “There is no market for it.”
Momentum in the city’s hotel market has shifted in favor of the mid-Beach section, where developer Alan Faena is working on the massive Faena Miami Beach mixed-use project that spans several blocks along Collins Avenue.
Faena’s development should “bring a whole new group of people” to mid-Beach, Gadinsky said. “That’s an exciting neighborhood for a jet-setter crowd.”
Finvarb, who is currently developing the AC Hotel by Marriott near the Faena site, noted even traditional hotel operators like Marriott are trying to capitalize on the area’s edginess. Marriott is partnering with developer Ian Schrager on Edition Miami Beach, the first United States version of the brand.
“I’ve worked with Marriott for 12 years,” Finvarb said. “The only way the Marriott can get cool is to acquire cool.”
One sector trend to monitor is the transition from local to “more sophisticated” hotel operators in the city, according to Gadinsky.
“There’s a gap of quality operators in Miami Beach,” he said. “Some of the spaces are beautiful and completely under-utilized.”