October 26, 2018
What’s a hotel name worth?
Quite a lot when it comes to hotel-branded development projects in South Florida, according to panelists at The Real Deal South Florida’s Real Estate Showcase & Forum.
Louise Sunshine, a strategic adviser to the owners of Fort Partners, said the Four Seasons brand adds a minimum of 30 percent in value to its residences. Highlighting the success of the Four Seasons brand, Sunshine said Fort Partners’ Four Seasons Hotel at the Surf Club is about 80 percent occupied with rooms averaging a staggering $1,000 a night, outside of season, and $3,000 a night in season.
Local developers have long turned to branded properties to attract buyers. This has been especially true in the luxury condo market such as Dezer Development’s licensing contract with Porsche Design Group for its Porsche Design Tower in Sunny Isles Beach or the group’s Trump-branded properties.
Edgardo Defortuna, president, CEO and founder of Fortune International Group, who is co-developing The Ritz-Carlton Residences, Sunny Isles Beach and Auberge Beach Residences & Spa Fort Lauderdale, said buyers prefer branded products in part because of the amenities and quality of service.
In South Florida and across the country, the hotel sector is still combating the rise in popularity of Airbnb, the online short-term rental platform. Panelists, said, however, that hotels are able to a provide a quality of service that will always attract buyers.
“It [Airbnb] is impacting us the most at the mid-tier, not in the luxury tier,” said Benjamin Sinclair of the Faena Group, which developed the 169-key Faena Hotel in Miami Beach. But he adds, “It has an impact on the industry, it really does erode rates.”
David Arditi, founding principal of Aria Development Group who is co-developing the hotel and condo project YotelPad in downtown Miami, said unit owners will not have any usage restrictions. “We don’t feel that in this segment we can really fight [Airbnb].’
The 30-story project will have 231 residential YotelPad units and 222 Yotel “cabins” with condo prices starting at under $300,000.
Yet buyers overall like the hotel experience. “Everyone loves the service component [at luxury projects] and we always asked ‘Why is it only reserved for the very high end? Why can’t we bring it down a notch?’” Arditi said.
He said that after surveying the millennial market, the top priority was package delivery, so 24-hour package lockers will be provided at YotelPad.
South Florida will see a big uptick in new hotel openings over the next two years. Nearly 4,200 new hotel rooms and 2.8 million square feet of space will be completed within the next two years in the tri-county area, according to Lodging Econometrics data analyzed by Colliers International South Florida. Of the total, 3,158 keys will be delivered in 22 new hotels totaling 2.1 million square feet, by the end of 2018. That’s a nearly 71 percent increase from 2017 to 2018.
The panelists said they all hope to be in involved in additional hotel-branded projects in the future. “[It’s] a lot more than the lion in the logo and the name on the building,” Defortuna said.