Hotel investors across the country spent a record $40.5 billion on hotel buys, new projects and new capital in 2015, according to a new STR report.
And Miami Beach was among the top three markets, preceded by New York and San Francisco, in terms of price per hotel room and No.2 behind New York in terms of building cost.
In Miami Beach, hotel rooms sold for an average $660,000 and cost an average $832,000 to build, according to an STR spokesperson. On Wednesday, the Viceroy Miami sold for $64.5 million to a Qatari investment firm, a deal that broke down to $436,000 a room.
“With many markets at record demand levels, adding new rooms to accommodate the growing demand makes investment sense,” Steve Hennis, vice president of consulting and analytics at STR, said in the report. “However, the risk is market timing given the lag time in construction. As we see in many of the oil and gas regions today, new hotels are entering the marketplace at a time when the supply and demand dynamic has inverted, creating a glut of struggling properties.”
The U.S. saw 773 hotels open last year, a 36 percent increase from 2014. Those hotels added 85,000 new rooms to the market. This year, more than 900 hotels with more than 100,000 new rooms are expected to open. In 2016, hotel sales volume is expected to top $25 billion, according to STR.
In Miami, a number of new hotels have opened so far this year, including East at Brickell City Centre, Atton Miami Brickell, Homewood Suites Brickell and the Langford Hotel in downtown Miami. At least 11 hotels with 1,805 rooms opened in the county last year, the majority of which were in Miami Beach.