News for the Hospitality Executive |
by Allison Fogarty
January 30, 2013 Tampa Bay’s lodging market accelerated
sharply in 2012
abetted by the much touted Republican National Convention in late
August.
Although media-fueled speculation about the path of Tropical Storm
Isaac
threatened to put a damper on the festivities, hoteliers throughout the
region
(no matter what their politics) were cheered by the sight of convention
delegates flooding into the region during a traditional occupancy
crater. In
Hillsborough County alone, RevPAR in August 2012 was up almost 55
percent on
the prior year. Across the bay, Pinellas hotels also benefited, as
RevPAR was
up 27 percent over 2011. The Tampa Bay regional lodging market is
comprised of four
counties – the northern suburban counties of Hernando and Pasco,
Hillsborough
which includes the City of Tampa, and densely populated Pinellas County
which
includes St Petersburg and Clearwater, and a large swath of Gulf of
Mexico
beachfront. Hillsborough and Pinellas represent about 50 and 42 percent
of the
region’s rooms inventory, respectively. In 2012, according to Smith
Travel
Research statistics, the regional hotel market finally approached 2007
RevPAR
levels, ending the year at 63.1 percent occupancy at an average rate of
just
over $100, finally absorbing the supply of rooms completed during the
bust. A
number of properties have not survived the downturn, and while some
properties
fell into the hands of lenders, a few of the older and poorly
maintained properties
closed, resulting in a slight decrease in supply in 2011, and no net
increase
in supply in 2012. Demand during the same period increased by 9.2 and
4.4
percent, respectively. In Tampa, the long-shuttered luxury Floridan
Palace Hotel
re-opened after an extended renovation during the summer, and on
Clearwater
Beach, the Pier House 60 Marina Hotel opened on the site of the late
Port Vue
Motel. With RevPAR’s on the rise, there has been a
decided uptick
in hotel sales activity in 2012, as involuntary owners worked to clear
their
books, and some investors’ rejigged portfolios. In Pinellas County,
more
non-real estate owned sales occurred in 2012, according to county
records, than
in the prior three years combined. Prices ranged widely from $17,000 to $118,000
per key and averaged $62,000 per room. Across the bay in Tampa,
transaction
activity remained sluggish with sales mainly limited to REO or
portfolio sales.
Over the next year, we expect continued
improvement in the lodging
market. Although 2013 convention activity will be soft, prospects may
be better
than the figures demonstrate, as convention planners continue to be
very
conservative with their hotel blocks, and frequently pick up more rooms
than
initially booked. In addition local hotel sales executives have noted,
and
frequently bemoaned, the trend of convention attendees to book outside
the
block, often through OTAs. Hoteliers are (very) cautiously optimistic
about the
prospects for 2013. Most seem to believe that provided the government
does not
precipitate another economic downturn, the prospects for the year are
positive,
and expect increases in business and leisure travel to make up any
softness in
the convention market. As a result, Pinnacle Advisory Group forecasts a
3.0%
increase in RevPAR in the Greater Tampa Bay region. Development interest in the Tampa Bay market
has revived,
with three limited and select service properties under construction,
and five
properties recently announced and in various stages of the planning
process. A
115-unit Hampton Inn on Clearwater Beach received CDD approval earlier
this
month and is slated to go before the City Council shortly. In Tampa, an
aloft
has been announced for a site along the Hillsborough River and plans
for the
conversion of the old federal courthouse into a 110-unit Le Meridian
are well
underway. Two additional projects have also recently been announced as
part of
mixed use developments: a proposed 350 unit hotel within an office
complex near
the University of South Florida’s Center for Advanced Medical Learning
and
Simulation which expects to draw more than 30,000 health professionals
to the
City annually for training, and a proposed project at the riverfront
site of
the shelved Trump Tower. All four Tampa projects are located within a
short
distance of each other in downtown Tampa which has historically boasted
the
highest RevPAR among the Hillsborough County submarkets. Recovery is well underway in the Tampa Bay
region, and
employment levels have increased at rates well above the rest of the
country
during the past year. Developers have taken note, and although some
lodging submarkets,
most notably North Tampa, continue to post RevPARs below national
averages
partially due to a large supply of older product, the region as a whole
seems
poised for a growth period. About the
Author
Since 1991, Pinnacle Advisory Group (www.pinnacle-advisory.com) has provided advice and analysis on the full spectrum of hospitality properties throughout the US and Caribbean: hotels, resorts, conference centers, mixed use projects, convention centers and exhibition centers. Pinnacle’s services include development counseling, appraisals, acquisition due diligence, asset management and litigation support. Our clients include leading hotel companies, REITs, universities, major banks and municipalities. We specialize in providing personalized advice on complex projects, carefully tailoring our services to each client’s individualized needs. Please visit our website at: www.pinnacle-advisory.com |
Contact: Allison R. Fogarty Pinnacle Advisory Group 3030 North Rocky Point Drive Suite 150 Tampa, FL 33607 (813) 350 7969 [email protected] |