LTC 335-2023 HOTEL AND SHORT-TERM RENTAL MARKET STUDYMI A MI BEACH
OFFICE OF THE CITY MANAGER
LTC#
LETTER TO COMMISSION
T O :
F R O M :
D A T E:
S U B JE C T :
T he H on o rab le M a yor D a n~el er a d M em bers of the C ity Com m ission
A lin a T . H uda k, C ity M ana r
Ju ly 25, 202 3
HOTEL AND SHORT-TERM RENTAL MARKET STUDY
T h is Le tt e r to C o mm ission (L TC) is in respo nse to C ity C om m ission R esolution No. 2022-32032, w hich
d ire cte d the C ity A d m in istratio n to enga ge an inde pe ndent consult to conduct a hotel ro om and short-
te rm ren ta l m arket stud y, an a lyze the num be r of ho tel ro om s and short-term rentals in the City, and
illu strate the im p a ct on re sid ent qua lity of life and enviro nm ent. A s part of the study, the A dm inistration
w a s ask e d to id enti fy 1) th e tota l num b er of existing hotel ro om s in M iam i Beach; 2) existing short-term
ren ta l un its fo r tra nsie n t re ntals in the M iam i Be ach; 3) hotel developm ent pro jects currently under
co n stru c tio n in M ia m i B ea ch; an d 4) ho tel developm e nt pro jects fo r w hich land use applications have
bee n su b m itt e d fo r C ity of M ia m i Bea ch P lann ing D epart m ent review .
O n Feb ru ar y 9, 20 2 2, at the reque st of C om m issio ne r Kristen R osen Gonzalez, the City C omm ission
d isc usse d eng ag ing a co nsu ltant fo r a hote l m a rket study. T he C ity C om m ission sought a greater
und e rsta n d in g of the current an d pro je cted state of the C ity's current hotel ro om s and short-term rental
m a rket to re gu la te the tou rism in d ustry w itho ut co m p rom ising residential qualify of life and preserv ation
of the e n viro n m e nt.
T he Ad m in istratio n issue d a Req ue st fo r Le tters of Interest (R FU ) to the City of M iam i Beach pre-
q u a lifie d list of fo u r ( 4 ) eco nom ic de ve lopm ent consultants requesting advisory serv ices fo r a hotel and
sh o rt -te rm ren ta l m a rket study . T he RFU su bm issio ns w ere due on M arch 18, 2022. O n M arch 18,
2 0 2 2, th e Ad m in istratio n re ce ived no respo nse s to the R FU . A fter an inquiry , it w as determ ined that the
poo l of co ns u ltan ts preferre d to have access to existing/secondary M iam i Beach data to analyze, versus
sou rcin g /pro d u cin g the prim a ry da ta (a s directed in the R FU ) and then pro viding an analysis.
A ccording ly, the A dm in istratio n pivoted and colle cted available data to issue a new Invitation to Q uote
(IT Q ) fo r M iam i B e a ch H o tel and S hort -term R ental M arket Study. T he scope of serv ices included
a c ce ss to in te rn al an d extern a l da ta co m p ile d and/or colle cted by the C ity to analyze the hotel and short-
te rm re n ta l m arke t in clu d in g , but no t lim ited to , list of hotel and short -term rental Business Tax R eceipts
(B T R s), da ta pro vid e d by C ity depa rt m e nts that reg ulate developm ent appro vals and enforce BTRs
(P la nning /P olice /C ode C o m p lia n ce), w e b se rv ices tha t m onitor hotel and short -term rental developm ent
a n d utiliz a tion , in clu d in g A irD N A, and the G reater M iam i and M iam i Beach C onvention and V isitors
B u re a u [GMCVB]).
T he qu o tes w e re du e on A ug ust 5, 202 2. T he Adm inistration received one response from Daedalus
A dviso ry S e rv ice s (D a e d alus), and thereafter eng age d D aedalus to analyze the M iam i Beach hotel and
sh o rt -te rm re nta l m arke t.
335-2023
L TC - H ote l an d Short -Term R ental M arket S tudy
July 25, 2023
Page 2 of 5
The study was submitted in June 2023. The approach of the study included:
1) assessing economic and tourism trends - measuring the economic drivers that support
additional tourism flows, which stimulate the growth in hotel rooms and short-term rentals in the
Miami Beach market;
2) assessing comparable cities - Nashville, San Diego, Tampa, New Orleans, and Ft.
Lauderdale;
3) developing a comparison of hotel rooms and short-term rental capacity amongst the
comparable cities (data drawn from Census, Bureau of Labor Statistic, Bureau of Economic
Analysis, CoStar and AirD NA); and
4) evaluating current Miami Beach tourism market conditions and assess possible policy
responses for hospitality industry.
The study considers Miami Beach's economic structure, changes to population, and the likely outcomes
from limiting or expanding hotel development. It assessed national, state and local economic trends to
understand if tourism drivers are likely to continue (e.g., post pandemic changes to tourism supply and
demand and available talent and wages in the hospitality sector).
Data Outcomes
There are current 66,366 hotel rooms in the Miami metro market. Miami Beach has the largest share of
hotels room- nearly 33% of the Miami area total.
36%
Other
15%
Airport
23,941
Greater Miami 16%
Downtown
66,366
32%
Miami Beach
21,606
trcludes. Surfside / Bal Harbor,
l O 550 Giove I Key Biscayne, Coral
r Gables Central and So uth Dade.
sacs Aventura l Sunny Isles and Dor al
10,871
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L TC - Hotel and Short-Term Rental Market Study
July 25, 2023
Page 3 of 5
Looking at Miami area hotel projects in various stages of development, planning and/or construction,
Miami Beach has 13% (2,248 rooms) of the total pipeline of hotel rooms.
Pipeline of all hotel projects, by area, planned or in construction.
Greater Miami
Hotel Room
Pipeline
17,614
20.,000
18.000
16,000
18%
14.,000
12.000 49%
3,203
10.000 8,580
8,000
6,000
4.000
13%
2,248
9%
1,529 -
4%
680 - 4%
653 - 4%
621 - 1%
100
Source. Srrit h Travel
Research + Daedalus
While 2,248 Miami Beach hotel rooms are in various stage of construction and planning, but only 612
are planned for or in the vertical construction phase during 2023-24.
More hkely to be bolt - l - I
sf l
2.000
Miami
Beach
Hotel Room
Pipeline
2,248
r
More uncertai nty arou nd the project's delivery
L
4x! 1,025
612
279
278
1%
26
149
307
7
1.00
12%
1000
Source. Smith Travel Research
{'ST· DMd's
Final Panning in Construction Planning Deferred Unconfirmed
Conti med, Under vertical construction under Contr act Ac tity n the project Potential projects that
Controt projects on the physical projects wtere has stopped but may remain urconfirmed
where construction building has begun. construction wilt begin resure within the at this tmne. SIR i
wt begin in more than This, does not include within the net 12 rest 12 months. unable to verity the
13 moths. const ruction on any months. existe nce of these
ubgrode rut res projects
3
L TC - H otel and Sh ort -Term R ental M arket Study
July 25, 2023
Page 4 of 5
Collective hotel pipeline figures, by year, illustrate that the distribution of hotel rooms over time, with
2025 representing the delivery peak, may yield an additional ~4% of total hotel room inventory for that
year.
Approximate Hotel Room Delivery Over Time
Shown by Current Planning/ Construction Status
Miami Beach 2023 2024 2025 2026 2027 2028 2029 Unknown
Total 2,248 168 669 983 240 76 0 0 112
Final Planning 1,025 0 225 800 0 0 0 0
In Construction 612 168 444 0 0 0 0
Planning 278 0 C 76 90 0 0 0 112
Deferred 26 0 0 0 0 26 0 0
Unconfirmed 307 0 0 107 150 so 0 0 0
Source: Smith Travel Research (STR)+ Daedalus
Hotel room construction in Miami Beach for 2023 and 2024 reflect an addition to inventory of just over
3%. The long-term U.S. national average for hotel room inventory growth is 2%.
Hotel rooms under construction as a percentage of total hotel room inventory
6%
3%,
2 98%
3.01%
I
0 < 2 5$ g
3 ? z
3 5
9g 3£ g=
£ 5± 5 s" 35
4 £
5
b'see..
Long term average hotel room construction growth rate
1111 I 1111111111 11111111 I ■• = 5 2£4° s £31495545 =4515££ u 29 £ 0 £3 3 £ 3zg? 3 34£iii&4 2 i;ii? i ± 5 55&2~ 35 s 3 $?5s+; ? $&z 2 3 · + 15 £ 0 ;° + K £
5 3 5 3 %
i
4
L TC- Hotel and Short-Term Rental Market Study
July 25, 2023
Page 5 of 5
Looking at comparable cities is key. To do so, Daedalus created a multi-factor assessment model to
identify five (5) cities that could be considered as comparable to Miami Beach for the purposes of
analyzing short-term rental trends.
Assessment factors
Tourism share of em ploymen t
- _J
Hotel room inventory __ l
City population size
Geographical distribution J
facto
Results
1 Comp Set Cities
- Ft Lauderdale
- Tampa
- Nashville
- New Orleans
- San Diego
Tourism offerings 7
Comparable cities - hotel rooms versus population, the ratio of hotel room inventory to population differs
amongst the cities, with the lowest per capita rates in areas of highest tourism demand. Due to small
population size, the number of Miami Beach hotel rooms to population ratio is the lowest amongst the
cities. Daedalus did a separate exercise of tourism areas with similar population size, in San Diego and
Tampa, and found lower hotel room ratios.
[-
San Diego
Nashville
City
Tampa
Miami
New Orleans
Ft. Lauderdale
Miami Beach
Coranado, CA
Tampa (33602)
· Popula~·on -- lnvento~~
Hotel Rooms Active STRs ,
1,386,932 64,935 9,853
689,447 57,713 7,426
384,959 52,792 4,793
442,241 46,344 11,361
383,997. 42,927 6,638
183,760 38,564 6,428
82,890 21,606 5,852
20,627 12,516 263
16,292 16,248 252
- - ---t
Per capita
Hotel rooms STRs
21.36 140.76
11.95 92.84
7.29 80.32
-I
$
38.93
57.85
4.77 28.59
l 3 84 14.16
1.65 78.43
1.00 64.65)
9.54
8.95
5
L TC - H ote l and Short -Term R ental Market S tudy
July 25, 2023
Page 6 of 5
An analysis of just short-term rentals, in comparable cities, illustrates that the Miami Beach composition
of total hospitality room capacity includes a higher proportion of short-term rentals to hotel rooms than
in comparable cities.
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
.c o
U
Q.)
CD
E
U =
E Q.) 0 0 g g cij C 0 ro E ro Q.) 2 E = 0 6 ro Cl) 5 0 b U C U
:::, 3 U z U D .....I 0
ri z
a Hotel Share STR Share
The study of the short-term rental market contains both legally registered units and units that are
operating without a license. In several comparable cities, the number of unlicensed units is larger than
licensed units. The overall number of short-term rentals is dynamic and can vary significantly throughout
the year as units are introduced and removed based on a number of factors, including, but not limited
to, high impact periods of tourism. The estimated percentage of unlicensed short-term rentals by city is
below:
0%
15.8%
11.5% • •
n1.4% 15.29; 22.9% · f--- - • Bost on, MA
39.7%
42.9% •
40.3% 66% 71.9%
Seattle, WA Los Angeles, CA
• • Chicago, IL
New Orleans, LA • Portland, OR
Columbus, OH
• • Washington, DC •
Miari Beach, FL
San Francisco, CA
100%
96.7
e
Jersey City, NJ
Austun, DX
• Boseman, MT
@Newark. NJ
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L TC - H otel and Short -Term R ental M arket Study
July 25, 2023
Page 7 of 5
The availability of hotel rooms is a key economic engine in Miami Beach, supporting (directly or
indirectly) a range of industries and businesses, from suppliers to hospitality related businesses
(parking, tours, retail, restaurants, etc.). The impact of hotel development and operation are not isolated
to hotel owners and employees, but also impacts the wider Miami Beach economy.
Foo d & drink Bars and restaurants
Educa tion and suppliers
\
~-- training institutes \ :
/ Investors \ Transportation and
\ I parking providers \ I t
Employment /// services : Shop ping & retail Construction (
companies destinations ~ \ .
Travel agencies \ '·· \ ·,.
\ Tourist attractions Mainten an ce & ---- / \ \
service providers \
/ \ I Direct employment \
\
FF&E suppliers Tour operators
The hospitality economy is driven by tourism demand. Where hotel room availability or capacity is
limited, short-term rentals are stimulated to enter the market to absorb the unmet demand.
) rlk
TR capacity grows
to meet the unmet
demand caused by
hotel capacity
limitations
Hotel Capacity
Time >>>
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L TC - H otel and S hort -Term R ental M arket Study
July 25, 2023
Page 8 of 5
Pandemic travel restrictions changed visitation patterns that favored Miami Beach. However, as travel
to international destination returns, a portion of visitor (particularly domestic) demand is shifting toward
other destinations. As Miami Beach demand drops, so will hotel average daily rate (ADR).
Testing and quarantine
restrictions limited
international travel
Miami Beach tourism
demand rose as a domestic
alternative to Caribbean or
other destinations
Miami Beach
No, or limited testing and
quarantine restrictions
: Miami Beach tourism
maintains stable demand
-:- Alternative destinations
(domestic and international)
are drawing a portion of the
prior demand
During the pandemic
t t
Post-pandemic period
Demand ADRS Demand ADRS
Based on the aforementioned, the supply of Miami Beach hotel rooms and construction pipeline reflects
underlying tourism demand and appears to not be out of scale for the Miami Beach population. Without
meaningful reduction in tourism demand, limitations on hotel supply will tend to fuel higher ADRs and
the entry of new (illegal) short-term rentals to the market.
Tourism
Demand
+· STOP - - &
Hotel
Additions
AD RS STRs
Study conclusions:
• The Miami Beach economy remains resilient to shocks -the labor market is recovering by nearly
every major measure, and the employment rate for working age adults is at a 20-year high.
While consumers remain uneasy about inflation, domestic and international travel is expected
to stay strong.
• New hotel room demand is often spurred by increasing travel access through a number of
channels, including discount carriers and social media. Hotels are anchors for Miami Beach
visitors/tourists who seek to experience our destination amenities and culture. Hotels are a
fundamental tourism asset. In Miami-Dade County, for example, visitation remains strong year-
to-date, with nearly a 0.9M increase in total visitors as compared to 2022.
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L TC - H otel and Short-Term R ental M arket Study
July 25, 2023
Page 9 of 5
• Occupancy and Revenue Per Available Hotel Room (RevPAR) signal demand and supply
trends. Currently these indicators show that the Miami Beach hotel supply may be constrained.
Miami Beach continues to be number two after Surfside/Bal Harbour.
• Gross room capacity additions illustrate that Miami Beach is still near the average of national
hotel room additions against comparable cities, indicating that the Miami Beach hotel pipeline is
in-line with national trends.
• As the Miami Beach hotel pipeline continues to grow, Miami Beach must look at the economic
benefits (direct, indirect and induced) that arrive with hotel construction and operation.
• Hotels must be partners with Miami Beach, as in other cities, and must participate in the drive
to reduce any negative community impact of more hotel rooms, by exploring more sustainability
and mobility solutions as an example.
To view the full Hotel and Short-Term Rental Market Study, please go to:
https://www.miamibeachfl.gov/wp-content/uploads/2023/07/Miami-Beach-Econ-Tourism-Oveview-
v22.pdf. If you have any questions please contact Rickelle Williams, Assistant City Manager and
Economic Development Director, at rickellewilliams@miamibeachfl.gov.
ATH/RW/HS
9