Presented at CREW-Miami’s Luncheon Meeting, February 28, 2019
Suzanne Amaducci-Adams, Partner and Real Estate Practice Group Leader, Bilzin Sumberg Baena Price & Axelrod, LLP
Robert Finvarb, Founder and CEO, Robert Finvarb Companies
Wendy Kallergis, President and CEO, Greater Miami and the Beaches Hotel Association
Keith Menin, Principal, Menin Hospitality
South Florida’s hospitality industry has evolved significantly in the last 15 years. Moderator Suzanne Amaducci-Adams opened by citing two record-breaking hotel transactions in February 2019, both in Miami Beach -- The Raleigh changed hands for $103 million ($1.24 million per room) and 1 Hotel sold for $610 million to a Maryland-based investment trust, having had a half-billion-dollar renovation in 2015. Amaducci-Adams asked panelists, “What makes Miami hot?”
Keith Menin, fourth-generation member of a Miami-based firm with hotels and nightlife venues in Miami and Chicago, said Miami’s weather, water-oriented activities, and shopping make this the best second-home and vacation home destination anywhere. It’s easy to reach from domestic and international cities, and the community’s offerings have matured along with its hotel market. “Miami is sexy and it’s cool.”
Wendy Kallergis, head of Greater Miami and the Beaches Hotel Association (GMBHA), has a finger on the pulse of her organization’s 180 hoteliers and 300 allied members across Miami-Dade. She said that, in the last 10 years, a wide range of options--luxury brands, hotels with European and South American owners, and restored historic boutique properties--have opened here. “People can stay in all parts of Miami-Dade, not only in Miami Beach, business centers, or near the airport,” she said.
Miami appeals to travelers because it’s cool and international, said developer/hotelier Robert Finvarb, who works with major hotel brands. He pointed to Miami, New York, and London as strong markets for the big players, and said that Miami’s cool factor and high-design properties attract people who value experiences over square footage or room service. This shift has led brands to refocus on select service hotels, which are less expensive to operate and thus offer more accessible room rates.
Food and beverage (F&B) drives revenue
As “Brand Miami” has evolved from a tropical getaway to a world-class destination, guests have more options, so hoteliers must work harder to offer something for everyone--an experience as well as a comfortable bed. Hotel bars/restaurants want to draw local patrons as well as overnight guests. In the 1990s, The Delano South Beach was a turning point for this, said Finvarb. Ian Schrager’s whimsical but cheap décor with outdoor drapes and chic common spaces and bars drew cool locals, and themes were copied by big brands. “Today’s customers all want convenience,” he continued. “They want to have a drink, then dinner, without changing location.”
“F&B drives energy and revenue in hotels,” said Menin. “That’s why we design everything from uniforms to décor to attract patrons. In Coconut Grove we want locals; in London we want international travelers – each place draws clientele with its high energy and fun.” Maintaining a particular vibe takes different skills than doing the food, he said. Both are essential but businesses need different teams for each.
Kallergis stressed the fact that Miami’s hospitality design environment is exceptional. “That’s why the 2nd Annual Hospitality Design Awards ceremony is in May at Faena.” Co-sponsored by the GMBHA, AIA Miami, and others, the event recognizes the achievements of Miami’s trend-setting architecture and design professionals.
Social media can be a boon to hotels and restaurants, or the bane of their existence. A guest’s complaint can quickly go viral, but so can positive news aggressively pushed out to targeted audiences. Menin has welcomed the platform, expanding his firm’s social media team from one person to six. The success of celebrity-packed food and wine events has magnified options for worldwide visibility. Menin reported that a photo of Bobby Flay taken during his few minutes at a Miami Beach bar during a recent festival captured 10 million views in three days--at a fraction of the cost of a single Super Bowl ad. “Now the world knows Bobby was here,” he said.
Pressures facing Miami’s hospitality market?
Panelists agreed these include finding and keeping good staff, many of whom are affected by the lack of public transportation and scarcity of housing they can afford. Menin observed that “hotels in South Florida were easy to buy before prices went crazy. Investors now have to dig deeper to find value.” To make the right buy, he recommends having patience for two to three years, and doing careful due diligence. Finvarb said Miami’s current oversupply of hotel rooms leads inexperienced operators to panic and behave like day traders, dropping their rates too quickly and depressing the market. He expects to see opportunities for investors to buy “in five years, but for now distress sales are rare.”
But growing tourism and ever-expanding marketing initiatives mean it’s only a matter of time until the current hospitality supply is maxed out, triggering a strong new wave of real estate investment in South Florida.