April 28, 2017
This article appeared on BusinessObserverFL.com on April 28
“Five-Star Fancy” by Kevin McQuaid
Despite an abundance of investment and construction of new hotel rooms in the Tampa Bay area over the past four years, a key area lodging analyst believes the region could land a new five-star lodging property.
Lou Plasencia told a mid-April development forum hosted by the Westshore Alliance that there might even be an “announcement in the next 12 months” about a new luxury hotel being developed in the area.
Five-star hotels, as ranked by Forbes Travel Guide, are reserved for upscale brands such as Ritz-Carlton, Four Seasons, Mandarin Oriental, St. Regis, Waldorf-Astoria and InterContinental. Each features an array of amenities and services that command top average daily room rates within the hospitality industry.
“When you look at luxury hotel rates in the Tampa market, we’re getting close to parity with other major markets throughout the U.S.,” Plasencia says. “Tampa has really come into its own; it has led Florida in (revenue available per room) growth for years now. If I’m an institutional investor, the Tampa area is somewhere I want — and need — to be.”
The Plasencia Group CEO adds, too, that such an addition could even be of an elusive so-called “six star” hotel, a level of opulence of which only a few exist worldwide.
Dubai’s Burj Al Arab and the Emirates Palace Hotel, in Abu Dhabi, are often cited as examples of six- or seven-star hotels because they feature in-room butlers and other similar amenities, though neither property uses the enhanced star feature in its marketing.
Within the Gulf Coast region, Forbes has designated the Ritz-Carlton, Naples; the La Playa Beach & Golf Resort, in Naples; the Ritz-Carlton Sarasota; and the Sandpearl Resort, in Clearwater, as five-star properties, among others.
The potential for a new, luxury hotel in the Tampa area comes amid a boom in new room construction and investment across various price points throughout the Gulf Coast since 2012, fueled largely by tourism gains.
Clearwater and Sarasota, for instance, each have more than 1,000 new rooms under construction, and the Tampa area is on tap for more than 1,700 new keys. More than 1,000 new hotel rooms have been added in the Tampa area over the past five years.
In Westshore, a pair of new hotels — a 180-room Marriott Autograph Collection property and a 175-room AC Hotel Tampa Westshore — are under construction.
In all, Westshore — an area that comprises land around Tampa International Airport and the International Plaza shopping mall — already contains 35 hotels with more than 7,000 rooms; in excess of 13 million square feet of office space; more than 250 restaurants; and more than 2,000 apartments built since 2009 alone.
But if the area does land a five-star lodging property, it likely wouldn’t contribute as much to supply as other hotels, including the Westshore product being built.
“The more upscale the hotel, the smaller a property they tend to be,” says Kent Schwarz, executive vice president of commercial real estate brokerage firm Colliers International’s hotels practice.
“Most of the true five-star properties tend to fall in the 100-, perhaps 125-room range.”
He also contends that while a new luxury hotel could come the area, it might be connected to a larger residential project or be part of a mixed-use development.
“If it were to anchor a high-end condominium project, for instance, I think that would make a lot of sense,” Schwarz says. “The Ritz-Carlton, Sarasota is a really good example of that.”
Plasencia also says the fervent hotel investment activity that has been a hallmark of this decade’s commercial real estate recovery will continue in the Tampa area for at least the balance of this year.
“We expect at least four major hotel transactions above $20 million in the Tampa Bay area in 2017 as the region gains even greater prominence on the real estate investment scene,” Plasencia told the roughly 200 people who attended the Westshore Alliance forum.
“Westshore will lead the Bay area.”
Already in the past two years, nearly two dozen major hotels have traded hands, led by Host Hotels & Resorts’ $214 million deal for the Don CeSar resort in St. Pete Beach the sale of the 521-room Tampa Hilton downtown, for $101 million in June 2016.
Plasencia’s predictions regarding sales come as hotel revenue per available room — a key industry metric — in the Tampa area has made gains against statewide and national figures.
Tampa area RevPar, as it is known, has risen for five consecutive years, Plasencia notes, as has occupancy and the average daily rates hotels are able to obtain from customers.
But 2017 also will mark the first year nationwide since 2010 that hotel supply has outstripped demand, a trend that is expected to continue into next year, he says.
In Westshore, however, alliance Executive Director Ann Kulig says business will continue to exceed the balance of the region and the U.S. economy.
“Our office vacancy is low, and retail vacancy is extremely low,” says Kulig of the district. “Thing are really humming. We’re seeing pretty steady growth throughout sectors.”