Miami Hospitality Scene Heats Up In Biggest Boom Ever

<B>Miami Hospitality Scene Heats Up In Biggest Boom Ever</B>

By Rowland Stiteler

There was a time just three short years ago when the most pleasant thing William Talbert saw when he looked out the window of his Miami office was an emerald bay filled with tall-masted sailboats. Now he sees something he likes a lot better: construction cranes. That's because Talbert is president and CEO of the Greater Miami Convention & Visitors Bureau and the city is in the midst--not at the end, Talbert insists--of its biggest hotel construction boom in 30 years.

Analysts said the hotel industry in much of the nation is moving toward being overbuilt, but Miami still is building away, with some 8,000 rooms coming online in a three-year period between the beginning of 1999 and the end of 2001.

"In February, we had the third highest average daily rate of any market in the country--after New York and San Francisco--and we still enjoyed an 80 percent occupancy rate. I think that says something about the direction this market is headed in," Talbert said.

Average daily room rate in Miami in the first quarter of 2000 was $131.34; the annual ADR for 1999 was $108.03, according to Smith Travel Research. Upscale properties, like the three Ritz-Carltons Miami has underway simultaneously (<I>BTN,</I> March 6), have made a lot of local headlines, but Talbert said the current construction boom is more diverse than the headlines would indicate. "It involves almost 150 hotels, in all price ranges and in all sections of the city," he said. "That's the beauty of the boom we've got going in Miami right now, there's something in it for everybody."

The projects range from small, budget properties, such as the 45-room Red Roof Inn that opened last year near Miami International Airport, to the 825-room Loews Miami Beach Hotel, a $135 million project that most analysts credit with starting the hotel boom.

"It's been analyzed a lot over the past couple of years, but the conclusion is inescapable: Before the Loews, we hadn't had a major new hotel built in Miami Beach in 30 years," Talbert said. "Now, literally every hotel site in Miami Beach is taken and millions are being spent refurbishing historic hotels from one end of the island to the other. The boom is undeniable."

This fall, the ideal companion property for the Loews opens up adjacent to it on Miami Beach. The $64 million, 442-room Royal Palm Crowne Plaza Resort will be significant to the convention and trade show business because of its proximity to the Miami Beach Convention Center, the largest convention facility in South Florida.

"Having an 850-room headquarters hotel open up near the convention center was huge," said Talbert. "But a lot of your bigger groups are looking for a 1,000-room convention headquarters hotel. This fall, with the 442-room property next door to the 850-room hotel, you get a synergism that helps the convention center realize its potential."

And it's not just strategic properties like the Miami Beach convention hotels that are fueling the momentum in Miami's convention industry. "The 8,000 rooms we will have added by the end of next year will put us up above the 50,000-guest room plateau in this market, a hotel inventory increase of more than 20 percent in about three years," Talbert said. "That has its implications in terms of the size of the citywide conventions we can support with that inventory. So in the scheme of things, economy hotel rooms near the airport become as much of a part of the equation as high-ticket hotel rooms on the beach."

Talbert said other hotels in the middle to low end of the price spectrum that recently have opened or will be opening in Miami include a 121-room Hampton Inn recently completed in West Dade County, a 147-room Hampton Inn & Suites set to open in June near the airport, a 109-room Extended Stay America scheduled to open in July in West Dade County, a 151-room Homewood Suites opening in September near the airport and a 125-room Hampton Inn set to open in December in south Dade County.

Meeting planner Mona Meretsky, president of Fort Lauderdale-based Comcor Meeting & Event Production, said that while the hotel construction trend in Miami covers the price spectrum, the upscale properties are the most important element of the trend. "Before the Loews came along," she said, "Miami had plenty of budget properties and it was not a mystery as to whether they could work in this market. We needed something like the Loews to come along and show the viability of bringing much-needed high-end properties to the marketplace."

The next step in the upscale hotel parade will come in November, with the opening of the $85 million, 329-room Mandarin Oriental in the Brickell financial district. With a total capital investment of more than $258,000 per guest room, the property will be one of the most upscale hotels the city ever has seen, with everything from five-star dining to an unobstructed view of Biscayne Bay. By contrast, the Loews total construction cost averaged out to about $164,000 per guest room.

"It's going to be only the second Mandarin Oriental built in the U.S.--the other is in San Francisco--and I think that's just another indicator of the trend in Miami, the world class hotel developers are voting with their check books and I think we are going to see more of it."

Industry analyst Jan Nichols, director of consulting for the Miami office of Hotel Valuations Services International, said the high occupancy levels in Miami represent the key factor that makes construction funding available in South Florida while it is getting tougher to find in other markets. "When you've got high occupancy rates," he said, "it's going to open doors. It's difficult to argue with success.