Jul. 23--With the opening of the Ritz-Carlton in Key Biscayne Thursday, Miami-Dade moved one step closer to becoming a luxury hotel haven. By 2002's end, eight new top-tier properties -- plus dozens less deluxe -- will have opened in two years, a hotel building boom that rivals New York's of the early 1980s and San Francisco's 15 years ago. 
 

Given the economic slump and occupancy dips in luxury hotels nationwide, the $1 billion influx of properties seems ill-timed, even rash. But the financial titans backing these projects insist that while initially many of their rooms may stand empty, their hotels will fill a void and bring a new set of high-end travelers to Miami.

The Ritz-Carlton, Key Biscayne 415 Grand Bay Drive Key Biscayne, Florida

"If you look at the gateway cities, the Hong Kongs, the Londons, the New Yorks, Parises and San Franciscos, Miami is the one most under-served in terms of deluxe hotel product," said Stephen Owens, president of Swire Properties, which owns Brickell Key and three-quarters of the Mandarin Oriental. 

"Raising the bar in the grand luxury market is much easier to do with several flags of quality. In time, it will actually be beneficial to us all. People don't normally go to one city because of one hotel." 

Impeccable service and ultra-luxe interiors distinguish five-stars, which are determined by the ExxonMobil travel group, from less tony hotels. Bathrobes must be plush and "thirsty," sheets have a minimum 300-thread count, the furniture must be custom-made. Tubs and countertops are usually marble. Concierges are available 24 hours and address each guest by name. Room rates vary, but in Miami, usually start at $300 a night. 

Given the economy's tailspin, and consequent slump in business travel, now does not seem the best time to open luxury digs. But the class of traveler that frequents Ritz-Carltons, Mandarins and Four Seasons properties are among the world's most well-off. While not immune to the economy's ills, they are more insulated than most to its hiccups. 

"Most people that have the wealth to pay these rates are not so affected by job layoffs and cutbacks in corporate travel," Owens said. 

At the Mandarin, for example, the $4,500-a-night presidential suite is booked 50 percent of the time. Owens expected it to rent at $2,800, just once a month. 

Five-star developers, and industry watchers, believe clients like the Mandarin's are part of a much larger jet set, and that Miami's new clutch of top-tier hotels will draw national and international travelers who previously passed the area by. 

"We see our competition really as Naples, Palm Beach, Boca Raton, Laguna Niguel [Calif.], all the resorts in the U.S. and Caribbean," said Sherwood Weiser, head of GB Hotel Partners, the investors who put $140 million toward the Ritz-Carlton Key Biscayne. "We're not competing with Brickell Avenue or Coconut Grove." 

But Brickell Avenue, home to a Mandarin, J.W. Marriott, and by November 2002, the Four Seasons, will likely compete with itself. 

The rate at which luxury hotels are opening in Miami is unusual, and investors, analysts and hoteliers expect it will take years for the 2,000 new high-end rooms to be filled. 

"The normal rule of thumb in the hotel business is we reach the stabilization period the third year of operation," said Richard Millard, CEO of Tecton Hospitality, a hotel management firm. 

"In this case we don't know because there has never been a number of this quantity." 

Some predictions are more dire. "You can't add that kind of supply to any market and immediately expect it to do great business," said Chase Burritt, an analyst with Ernst and Young. "I don't see how we can get through this whole thing without a struggle." 

At the ground level, hoteliers concede that having so much high-end product sprout up in such a short time span is less than ideal. 

"Should everybody be coming here at the same time? Of course not," said Naveen Ahuja, regional vice president of Starwood, the company that manages the 1,000-room Diplomat hotel in Hollywood. Slated to open in early 2002, the hotel is shooting for four-star status and expects to attract high-end business groups. "But we are not in any alarming situation. This is a growing region of the world, and occupancies are still running very high." 

For middle-tier hotels, already smarting from occupancy drops, the new high-end properties will likely suck business away, at least in the short run. 

"Initially they'll be hurt," said Raoul Leal, executive vice president of Tecton. "Five stars are offering discounted rates, but in the long run, it gives the city ability to attract a higher-tier business traveler." 

Still, it is widely expected by industry watchers that the new product will be absorbed. 

"The market in greater Miami has been so strong that it has given all the new entrants confidence that there is a luxury market to tap into," said Scott Berman, an analyst with PricewaterhouseCoopers. "We have to keep in mind that we had so little new hotel development for the past 30 years." 

The Ritz-Carlton has put its full weight behind the purported marketability of top tier hotels in the region. 

Along with Key Biscayne's, two other Ritz-Carltons are scheduled to open within the year, one in Coconut Grove this fall, the other in South Beach early next year. 

Phil Keb, Ritz-Carlton's vice president of development, said Ritz clients tipped the company off to Miami's burgeoning market, and the Ritz realized they were likely missing out. 

"There were indicators our customers were traveling there, and we got lots of requests asking when we would be there," Keb said. "That went on for a number of years." 

Keb said each Ritz venue will cater to a different market. Key Biscayne, a seaside resort crafted to resemble a Colonial sugar plantation, "hits the core, traditional Ritz-Carlton customer," Keb said, whereas he expects Coconut Grove to attract the business traveler. South Beach will be a new market for the Ritz, Keb said, a "hipper, more happening [clientele] who don't fit in with the mainstream customers." 

Though Ritz-Carlton's decision to build a trio of hotels in close proximity was made in better economic times, Keb said the company went into the transactions with open eyes. 

"We don't build for a two-year cycle. We're looking toward a 25- to 30-year horizon," he said. 

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(c) 2001, The Miami Herald. Distributed by Knight Ridder/Tribune Business News.