The island chain connecting Miami and Key West has outperformed virtually every hotel market in the United States in recent decades thanks to its ever-improving stock of destination resort hotels, diverse array of unique experiences, surging Florida population and air lift and statutory restrictions that prevent any material additions to new supply. This has translated into sustained RevPAR growth over the past 30 years of 4% (CAGR) while supply only grew 0.7% over the same period, according to STR.
Hurricane Irma, which directly hit the Keys in September 2017, is now a fairly distant memory. The market is fully back online with most hotels freshly renovated and surpassing pre-hurricane performance levels. The insurance market has fully stabilized and is both liquid and competitive today for hotel owners.
HFF is the most active capital markets intermediary in the Florida Keys. This article examines several factors that help explain why the Florida Keys have become the most sought-after market by institutional investors, public REITs and the savviest private capital sources.
The Florida Keys in a Conch Shell
The Florida Keys are an internationally acclaimed resort destination that attracts world-wide interest and visitation. An ecological wonder, the Florida Keys are home to the only living barrier reef in the continental United States and are unequivocally regarded as the “Sport Fishing Capital of the World.” Quite simply, the Florida Keys offer all the benefits of an exclusive Caribbean resort destination yet retain the safety, security and convenience of remaining in the United States.
With the Upper Keys located merely an hour from Miami International Airport, visitors to the Florida Keys enjoy a full array of outdoor activities including scuba diving, deep sea and backcountry flats fishing, boating, water sports and environmental awareness activities. In addition, there are a myriad of dining options available—most of which feature local delicacies such as Florida Keys Spiny Lobster and locally-sourced Stone Crab Claws in season.
The Florida Keys lodging market has experienced diminishing seasonality in recent years due to the region’s proximity to the massive and growing population residing in South Florida which provides for strong shoulder seasons and a very brief downtime. The Christmas holiday through Memorial Day represent the lodging market’s primary season, when “snow-birds” from the Northeast, Midwest and Europe flock to the tropical oasis. From Memorial Day through Labor Day, the market experiences a minor shoulder season, where performance remains strong with the bulk of the demand coming from “drive-to” guests located throughout Florida as well as some Europeans on summer holiday. September and October provide resorts with a brief respite—a great opportunity to target senior travelers and small groups—as the market gears up again for the rush of demand during the Thanksgiving and Christmas holidays.
Not Just High Barriers – Impossible Barriers to Entry
In 1992, Monroe County adopted and implemented legislation known as the Rate of Growth Ordinance, or “ROGO.” This legislation laid the legal framework for the county to regulate development of both commercial and residential properties. The original basis for ROGO was to significantly limit any development in the Florida Keys to ensure that the entire population could be safely evacuated in a hurricane. In recent years, ROGO has been expanded and championed by conservationists as well.
As it relates to transient uses such as hotels, ROGO has essentially capped the number of transient development rights (“TDRs”) at the amount of existing hotel rooms. In other words, ROGO does not allow any new density of hotels throughout the county. To build a new hotel, a developer must first acquire and demolish existing hotels then use those TDRs to build their new project. TDRs can be transferred with certain geographic restrictions as well as bought/sold on the open market.
In addition to ROGO, the Florida Keys are designated as a county of critical environmental concern. This requires all major projects to be reviewed and approved at both the county and state level, which can significantly complicate and delay the entitlement process. For waterfront sites, as are most hotels, there are often federal approvals required as well. It is not unusual in the Keys for development approvals to take 5 to 10 years or longer.
Furthermore, the Florida Keys have extremely onerous employee housing requirements for hotel development, wetland mitigation requirements and a land development code that typically limits density at no more than 12 hotel rooms per acre. Simply put, investors in Florida Keys hotels do not lose much sleep at night when it comes to contemplating new supply.
Florida Keys Lodging Market Performance
The Florida Keys comprise one of the strongest and most exciting domestic lodging markets in North America. If compared to Smith Travel Research’s top 25 hotel markets the Florida Keys would be the No. 2 RevPAR marketing in the U.S., trailing only New York City in 2018.
Hotel investors have an affinity for this market, not only for its high rates and occupancies, but for its resistance to economic and environmental disturbances thanks to the virtually impossible barriers to entry that control new supply. The Florida Keys had strong and rapid recovery following both the 2008 to 2009 financial crisis and 2017 land fall of Hurricane Irma. During the 2008 financial crisis, United States RevPAR declined by almost 18% while the Florida Keys saw only half of that decline due to a stable occupancy.During the entire financial crisis, the Florida Keys lost a mere 60 bps in occupancy versus U.S. decline of 860 bps. As a lower-hassle alternative to the luxury resorts in the Caribbean and Latin America, with lower accessibility costs and a broader appeal (including the majority of Americans who do not have a passport), occupancy not only stayed stable, butincreased +3% year over year in 2009compared to 10% decline for the country.
The resistance to economic and environmental disturbances may also be attributed to the Keys enduring appeal to a very wide range of income, activity, and age profiles. Accessibility to the Keys has never been easier – you can drive there, with or without your boat, motorcycle or RV. The Keys have largely benefited from the growth of Miami and South Florida and is easily accessible to 12 million Florida residents.
Ownership and Transactions Controlled by Elite Lodging Investors
The Florida Keys are among the most sought-after institutional hotel markets in America as a result of high RevPARs, impossible barriers against new supply and rarity of transactional offerings.
The landmark resorts in the Florida Keys frequently surpass pricing of $1 million per room and are closely held by the “who’s who” of public and private REITs, international private investors and family offices and blue-chip private equity firms (please contact HFF for sales comps).
During the first week of April 2019, the industry’s most respected public REIT analysts toured the Florida Keys market and published research and feedback consistent with the public market’s view that the Florida Keys are amongst the most desirable lodging markets in the United States.
In the Jeffries’ article “85 Degrees Without a Passport,” David Katz, Khoa Ngo and Erik Hellquist reported:
“Key West embodies sustainable demand drivers and growth opportunities. Specifically, the market is a "bucket list" destination, benefits from cruise line passengers revisiting the market at a later date, benefits from increasing direct flights out of the NYC, Chicago, Dallas and Atlanta areas, is supported by Florida drive-in guests, remains attractive for European, Asian and South African tourists and is just recently adopting ride-sharing (Uber, Lyft) services.”
In Baird Equity Research’s Real Estate-Hotel REITs Key West Property Tours: Not All Markets Are Created Equal report, similar sentiments were echoed:
“We expect Key West to generate above-average RevPAR growth over the next several years, especially as leisure travel trends remain solid, supply growth remains near zero and the island continues to recover post-Hurricane Irma. Economic trends throughout Florida are quite healthy, which bodes well for drive-to business to Key West; increased airlift to the market should support solid demand overall.”
While the REIT analysts commented specifically on the Key West market, their feedback is true for the entire Florida Keys. While Key West is the largest submarket among the Florida Keys, Key Largo and Islamorada have an added advantage of proximity to Miami and the international air lift into South Florida. Marathon, located in the middle Florida Keys, is also enjoying strong growth as market-wide latent demand fills several recently renovated and redeveloped properties.
Noteworthy properties in the Upper Keys:
- Bungalows Key Largo (Mile Marker 99)
- Playa Largo, Marriott Autograph Collection (MM97)
- Bakers Cay Resort, Hilton Curio Collection (MM96)
- Postcard Inn (MM84)
- Cheeca Lodge (MM82)
- Amara Cay (MM80)
Coming out of the coronavirus crisis, with much of the world opening slowly or not at all, Florida's hotel demand was as high as ever, so room rates went up, they said.Which of the Florida Keys is the best to stay? ›
- Key West – Key West is best for culture and history lovers. ...
- Key Largo – If your dream morning is spent underwater, Key Largo is for you. ...
- Big Pine Key – Big Pine Key is where to head for a tranquil holiday. ...
- Marathon – Marathon is known for its fantastic coastline.
Key West is an island, so many goods like groceries and clothing cost more than the national average because of transportation costs. Key West is also small, with a population of 24,000, so finding a place to live can be expensive and competitive. Key West is the second most expensive city in Florida.Where do celebrities stay Key West? ›
Casa Marina is located on the southern edge of the island and has its own private beach—something few Key West hotels can claim. It also enjoys a rich history, hosting a roster of celebrities and politicians in its nearly 100 years.Why are hotel prices in Miami so high? ›
Miami Is Now The Most Expensive Out Of 7 Summer Destinations
As less people traveled and hospitality leaders were forced to scale back operations, Florida's leading tourist destination saw hotel overnight prices increase by 55.6%.
Booking Airbnb ushers in double the space, better discounts, and amenities. In some instances, you can pay equally as much for a hotel as you would an Airbnb.What is so special about the Florida Keys? ›
One of America's most unique motor journeys, the scenic 110-mile Overseas Highway combines ocean views, 42 bridges, natural wonders and history like no other place. Each region of the Keys has its own unique character, worlds away from big cities and theme parks.What makes the Florida Keys so special? ›
The Keys encompass four national wildlife refuges, two remote national parks, 10 beautiful state parks, and the Florida Keys National Marine Sanctuary. The sanctuary provides protected waters surrounding the entire subtropical island chain, including the continental United States's only living coral barrier reef.Is it worth staying in Florida Keys? ›
Absolutely, yes! There are a thousand and one reasons to take some Florida Keys tours or just wander around and explore the Keys for yourself. The Florida Keys are one of the most popular vacation and retirement spots in the entire country – and with good reason!What is the big deal about Key West? ›
Key West offers a variety of water activities, including deep-sea fishing, dolphin-watching, and scuba diving. On land, Key West is known for its colorful nightlife and bar scene. Among the historic landmarks found in Key West are the Ernest Hemingway House and President Harry S. Truman's Little White House.
Key West, the last of the Florida Keys, is a wonderful place to visit. Whether you plan on staying for the day, week or year, it's a great place to relax and enjoy yourself. It is the southernmost city in the continental USA and is famous for its beaches, coral reefs, and laid-back atmosphere.Is Key West for rich people? ›
According to the Bloomberg index, the median home value in Key West is $381,000 — with 11.3 percent of the homes valued at more than $1 million. It's not the first time Key West has been a national leader in wealth.What famous guy is known in Key West? ›
Ernest Hemingway, author
Perhaps Key West's most famous resident, the American author left his mark on the island with his house-turned-museum, choice watering holes, generations six-toed cats and his love for fishing, all celebrated every July during Hemingway Days.
The priciest neighborhoods in Key West are The Meadows, Old Town, Casa Marina and Truman Annex.What famous people live in the Florida Keys? ›
- President Harry S. Truman. ...
- Ernest Hemingway. Hemingway is perhaps Key West's most famous resident. ...
- Judy Blume. Another famous author to have a home in Key West is Judy Blume. ...
- Jimmy Buffett.
The Kardashian-Jenner family is known for its real-estate savvy, and this gem of a property is no exception. Located in the Hilton Bentley, the penthouse includes hotel amenities such as concierge services, housekeeping, and two restaurants, plus access to the hotel pool and beach club.Is Miami becoming unaffordable? ›
“We have become the most unaffordable place in the country,” Levine Cava said, noting that's “what's different now.” As a first step, the county mayor announced the Building Blocks Program, an effort to use $13.4 million in federal funding for Miami-Dade's emergency rental assistance program to help tenants struggling ...Why are hotels cheaper the longer you stay? ›
Because guests stay for a longer period of time, extended stay hotels typically offer discounted rates. They often feature a home-away-from-home style and will often be referred to as apartment hotels or serviced apartments.What is the cheapest month to stay in Florida? ›
The cheapest times to visit
You can find terrific values on hotels and activities in the fall (Sept. 1 to right before Thanksgiving) and spring (from mid-March through mid-June, except for Easter and spring break weeks).
If you're looking for a cheap hotel in Florida, you should consider visiting during the low season. You'll find cheaper accommodations in Florida in September and August.
- Cape Coral.
- Fort Walton Beach.
- Vero Beach.
From beautiful beaches and world-famous sport fishing opportunities to the beautiful scenery and sunny, tropical year-round weather – the Florida Keys are definitely a place that should be on your vacation 'Bucket List'!How long will Florida Keys last? ›
By 2025, Some of the Florida Keys Could Be Submerged Due to Rising Sea Levels. One of the most terrifying aspects of global warming is the fact that our planet could be engulfed by its own oceans within the next few years — and unfortunately, it's already happening to low-lying parts of North America.What is the most popular key in Florida? ›
Key West. Easily the most famous of the Florida Keys, there's a reason why Key West is the most popular destination in the Keys. With everything from gorgeous historical buildings (like Hemingway's Home) to bumping nightlife and great food, a stop here is a no-brainer.Why are the Florida Keys called keys instead of islands? ›
When explorer Juan Ponce de Leon charted the islands of the Keys in 1513, he called them Los Martires (meaning “the martyrs”) because he thought they resembled men in distress. The more popular name, simply the Keys, is derived from the Spanish word Cayo (“small island”).How would you describe the Florida Keys? ›
The Florida Keys is a 125-mile-long chain of islands that begins just south of Miami. The coral and limestone islands are linked by 42 bridges — one almost seven miles long — over the Atlantic Ocean, Florida Bay, and the Gulf of Mexico.Which Florida key is the safest to live? ›
The Islands of Marathon have virtually no crime or traffic congestion and thus is seen to many as the best place to live in the Florida Keys.Is Key West nicer than Miami? ›
Compared to Miami Beach, Key West is much more laid back. The focus is less on looks, and much more on letting loose and enjoying life. In Key West, the evening's festivities begin nightly at sunset, when people gather in Mallory Square for the nightly sunset celebration.Is Miami or the Keys better? ›
If you want to have a more laid-back, island experience and explore quirky museums, head to Key West. If you prefer big cities with countless attractions and busy streets, Miami is your choice. After visiting each, we can tell you the main differences between Key West and Miami.What celebrities own homes in Key West? ›
- 1) Hemingway House. Ernest Hemingway fell in love with both the natural beauty of the island and the atmosphere at Hog's Breath Saloon. ...
- 2) Margaritaville Flagship Restaurant. ...
- 3) Robert Frost Cottage. ...
- 4) Truman Little White House. ...
- 5) Audubon House. ...
- 6) Key West Memorial Sculpture Gardens. ...
- 7) Jimmy Buffett - Shrimp Boat Studio.
In the Lower Keys, from Key West to Big Pine Key, 122 unsheltered homeless were found this year, compared to 102 in 2018. In 2017, there were 143 people. The rest of the unsheltered Keys population varied. In Marathon, which represents the Middle Keys, this year 74 were found compared to 53 last year.What country owns Key West? ›
The Conch Republic (/ˈkɒŋk/) is a micronation declared as a tongue-in-cheek secession of the city of Key West, Florida, from the United States on April 23, 1982. It has been maintained as a tourism booster for the city.What should you not do in Key West? ›
- Don't Drive in Key West. ...
- Don't Think Duval Street Has All the Restaurants. ...
- Don't Let Prices Scare You Off. ...
- Don't Forget These Key West Essentials: ...
- Don't Feel Bad Taking a Trolley or Train Tour. ...
- Don't Miss Sunset in Key West. ...
- Don't Expect Sandy Beaches.
The two worst times to visit Key West are the winter and during hurricane season. Key West is a winter hot spot since many people live in areas where season changes are significant.Can you see Cuba from Key West? ›
“ The problem is that the earth, being round, curves and Cuba, which is about 90 miles from Key West, falls below the horizon when you look towards it from Key West. It means that regardless of how great your eyesight is, and how clear the day is, there is no way you can see Cuba from anywhere in Key West.Who is the richest person in the Florida Keys? ›
Multi-billionaire Thomas Peterffy maintained his title as Florida's wealthiest person, clocking in with a net worth of $17.5 billion.Do any celebrities have homes in the Florida Keys? ›
Renowned business and political figures have enjoyed homes in the Sunshine State for more than a century. Famous residents from that sector include Presidents Harry Truman (Key West) and Richard Nixon (Key Biscayne), author Ernest Hemingway (Key West) and Donald Trump (Palm Beach).What does Jimmy Buffett own in Key West? ›
His business empire caught on in 1985 when he opened Jimmy Buffett's Margaritaville restaurant and gift shop on Duval Street in Key West.What are people born in Key West called? ›
In Key West, conchs are people born in Key West. You're not considered a conch by simply living in Key West; but if you've been a local for at least seven years, you may be considered a “freshwater conch” in some circles.Did Jimmy Buffett ever live in Key West? ›
So imagine my surprise when I read the following on page 77: "For much of the 70s, Buffett lived in a second-story apartment at 704 Waddell Street. Today the house contains several luxurious condominiums that are rented out to up-scale tourists." Whoa!
Jimmy Buffett's Margaritaville Cafe is a Florida beach bar located in Key West. Discover this great Florida beach bar.Where Does Oprah live in Key West? ›
The new condo development on Fisher Island is currently asking $48 million for its penthouse.What is the most luxurious part of Florida? ›
Located in South Florida, Palm Beach is the most expensive place to live in the entire state. Palm Beach is known for its upscale estates and boutiques, as well as its world-famous beaches.Where do celebrities stay in Key Largo? ›
Cheeca Lodge & Spa
If you want to do Key Largo in style, Cheeca Lodge & Spa is hands down one of the best hotels in the Florida Keys. Known as the “Queen of the Florida Keys,” Cheeca Lodge has long been a getaway for A-list celebrities.
While Key Largo is undoubtedly the prettiest of all the Florida Keys, it's also one that's home to plenty of activities for the avid beachgoer.Where is Millionaires Row in the Keys? ›
Islamorada Millionaire's Row | 87961 Old Highway.Why are hotel prices so high at the moment? ›
Hit hard by the Covid-19 pandemic, the hotel industry has bounced back alongside the larger travel industry thanks to pent up demand, delayed trips and increased consumer savings. That hot market has led to rising room prices, something major hotel chain executives say will not subside soon.Why do Florida hotels charge a resort fee? ›
Resort fees are usually charged to cover amenities like wifi and gym access, but they're not optional and you have no choice but to pay them even if you choose not to use the amenities they cover.IS Key West worth it? ›
Is Key West worth visiting? If you're looking for a multi-purpose destination - lively nightlife, exceptional water-sports, Old Town atmosphere, plus plenty of literary and political history - then quirky Key West should suit you down to the ground.What is the off season in the Florida Keys? ›
The fall (September–November) is the low season in Key West, and room rates can drop by 50 percent or more. The hot, storm-prone summer months also see lower prices, and you'll find decent discounts in April and May after the winter crowds thin out.
Hotel rates — like airfare and pretty much everything else — are largely based on supply and demand. Due in part to the ongoing skills and labor shortage, room supply is not keeping up with pent-up demand.Will hotel prices go down in 2022? ›
Sunday, October 2, 2022
A new American Express Global Business Travel report suggests hotel rates worldwide will increase again in 2023 thanks to pent up demand for in-person meetings. They expect the rate of increase to be lower than in 2022 due to the economic climate.
Rather, hotel pricing is determined by any combination of the following factors: location, seasonality, demand, star rating, amenities, value of services and other hotel competition. Even things like increases in flight searches to a particular destination or good and bad weather can have an impact on hotel prices.What is the busiest time in Florida? ›
President's Day (late February), Spring Break, Easter, Memorial Day weekend, July 4th weekend, Labor Day weekend, Thanksgiving, Christmas, and New Year's Eve/Day are some of the busiest times of year for Florida. Remember: If school's out, you're sure to run into crowds and higher prices.What city in Florida has the lowest cost of living? ›
The cheapest place to live in Flordia is Jacksonville. It's also one of the largest cities in the United States. Jacksonville is located right at the top of the state, close to the border between Florida and Georgia.
Late May through June is the period when severe storms are most likely. Hail, damaging winds, and waterspouts are common, in addition to heavy rainfall and frequent lightning. July through early September is when the rainy season peaks.Can I refuse to pay resort fees in Florida? ›
While many hotels claim their resort fees are mandatory, that's not necessarily true. Guests can take a stand against paying these surcharges.Do Florida residents have to pay hotel tax? ›
Florida's 6% state sales tax, plus any applicable discretionary sales surtax, applies to rental charges or room rates paid for the right to use or occupy living quarters or sleeping or housekeeping accommodations for rental periods six months or less, often called “transient rental accommodations” or “transient rentals ...Can you refuse to pay resort fees in New York? ›
Can you refuse to pay resort fees in New York? Yes, you can refuse to pay resort fees in New York. Resort fees are in violation of New York's Unfair Trade Practices Law and many Attorneys General are currently investigating hotel resort fees for being deceptive and misleading.