Hersha Hospitality Trust is rebranding its Courtyard Cadillac Miami Beach Hotel under Marriott’s luxury chain banner, Autograph Collection Hotels. Neil Shah, Hersha’s president, revealed his company’s plan during a hospitality luncheon on Thursday hosted by Marcus & Millichap.
Before a small crowd of hotel executives and industry players at the Miami Hilton Airport, Shah said the Cadillac — an art deco building at 3925 Collins Avenue completed in 1940 — will go from being a two-to-three star hotel to a four-to-five star hotel with the switch. That means the property will be able to better compete with other luxury properties in Mid-Beach such as Faena Hotel Miami Beach and the Miami Beach Edition.
“With Courtyard, we had a great run since 2011,” Shah said. “But we were hitting a rate ceiling. We were outperforming most hotels in our set, but not the next set up.”
The real estate investment trust Shah leads bought the Cadillac in 2011 for $95 million. The 356-room hotel underwent a 20-month, $25 million renovation, including a new 93-room tower that was completed in 2014. Shah said the interiors of the Cadillac’s rooms will be renovated as part of the Autograph Collection rebranding, but he did not disclose how much the company will spend.
Hersha also owns five other hotels in South Florida, including the Ritz-Carlton Coconut Grove and the Residence Inn Coconut Grove in Miami, and the Parrot Key Hotel and Resort in Key West. The company is building a new 135-key hotel in Coral Gables’ Merrick Park neighborhood.
Shah said the Parrot Key suffered extensive damage from Hurricane Irma and will likely remain closed until mid-January. “A lot of hotels are still closed,” Shah said. “Some have reopened and are basically serving first responders and contractors. But 20 to 30 percent of the inventory will likely be shuttered through the end of the year.
The last two years have been tough on the hospitality sector following years of record growth, Shah said. “[Revenue per available room] saw a decrease of 3 percent between 2016 and 2017,” he said. “The closure of the Miami Beach Convention Center had a very significant impact, as did Zika, on group business.”
Shah joined a panel of leading hotel sector experts that included John Lancet, a senior managing director in the Miami office of HVS; Jeff Kolessar, senior vice-president of development for GF Management; and Pete Nichols, vice-president of Marcus and Millichap’s national hospitality group.
Kolessar shared Shah’s assessment of the hotel sector. “Certainly the market has slowed from when you were seeing 7, 8 and 9 percent RevPar annually,” Kolessar said. “Today, we are taking a step back. We are drilling back on every single line item and looking for opportunities to renegotiate deals to cut expenses.”