REPORT FROM MIAMI—Thanks to its tropical waterfront location, rich cultural offerings, diversified economy and improved infrastructure, Miami has emerged as a world-class city. Global visitors and multinational businesses are flocking to Miami—and the hotel market is no exception.
An exhilarating transformation is afoot, with the arrival of global hotel brands, especially from Asia and Latin America, and unique niche products. The local hotel market and summer temperatures have converged: Miami is hot.
A bit of history
Miami is widely considered the birthplace of boutique hotels, many of which showcased Art Deco architecture and highlighted the importance of art and design for the city. In more recent years, in 1995, Ian Schrager opened the Delano on South Beach, which is one of the most popular designer hotels in Miami.
In 2002, Miami’s art and design culture further blossomed with the first Art Basel Miami Beach, bringing the art world to South Beach, and decisively adding the cachets of “art city” and “design city” to Miami’s global tourism brand. Miami’s ascent in the global art world continued in 2006 with the opening of the Arsht Center, the second-biggest performing arts venue in America, which spurred a series of downtown revitalization projects.
In 2009 and 2010, however, like the rest of the United States, Miami’s economy, real estate and hotel markets experienced significant declines. Nevertheless, an influx of well-educated and wealthy international immigrants, visitors and investors—particularly from Latin America, Europe and Asia—has revived the local economy, enriched its culture and attracted global hotel brands to Miami.
Influx of global brands
New Asian and Latin American globally-branded hotels are bringing cutting-edge design, curated experiences, global customer bases, lifestyle, and innovative product and service offerings to Miami.
Asian Brands
Over the past few years, Asian brands have been successful in penetrating Miami. Examples include established luxury projects such as: the Mandarin Oriental in Brickell and the Setai in South Beach, as well as such lifestyle projects as the Metropolitan by Como Resort and the Nobu Hotel and Restaurant at the Eden Roc—both in Miami Beach.
Besides offering renowned service levels and appealing spa and wellness amenities, Asian brands are also well-known for their inspired food-and-beverage offerings; these have made significant forays into the Miami market.
World-renowned Asian-themed restaurants, such as Nobu, Mr Chow, Hakkasan, Zuma and Katsuya, have become dining hot spots, part of the “see-and-be-seen” scene in Miami. Many of them are located within premier luxury and boutique hotels, such as the W South Beach, the Fontainebleau and the SLS South Beach.
Iron Chef Masaharu Morimoto also soon will arrive to South Beach with a Miami flagship restaurant at the Shelborne Wyndham Grand.
Besides award-winning restaurants, Asian hotel brands continue to enter Miami with several lifestyle projects in the pipeline, including Hong Kong-based Swire Hotels’ East hotel at Brickell CityCentre, which signals the brand’s first U.S. hotel; and Malaysia-based Genting’s Resorts World Miami, a proposed mixed-use development.
Several Asian hotel brands also have entered feeder markets in the Caribbean to benefit from brand-building efforts in the Florida marketplace and cross-sell their other resorts.
For example, Resorts World opened a luxury casino in Bimini Bay, the Bahamas, while it works on its ambitious project in downtown Miami. Singapore-based Como Hotels cited that the proximity to Parrot Cay by Como in the Turks and Caicos Islands made its first U.S. project in Miami Beach attractive because guests traveling to the Caribbean already had to stop in Miami.
The growth of Asian hotel brands in Miami will inevitably lead to greater market awareness as well as visitation by Asian tourists and companies looking to reach Latin America and the Caribbean.
However, to improve and maximize profits from this cross-pollination, Miami-area tourism officials cite the need for direct passenger air service to East Asia, including countries such as China and Japan. In June 2014, Miami successfully began new direct air service from Miami to Qatar, improving access to visitors and investors from the Middle East and West Asia. (Interestingly, in January 2014, Doha, Qatar-based Al Rayyan Tourism Investment Company purchased the St. Regis Bal Harbour Resort in Miami, creating improved linkages between these two regions.) Similar new direct air routes should be introduced from Asia to Miami, which is indeed possible, thanks to the proliferation of long-haul aircrafts like the Boeing Dreamliner.
Undoubtedly, these new Asian brands, flights and investments are opening new markets, bringing global customer bases, and increasing Miami’s sophistication and visitor appeal.
Latin American brands
Latin American hotel brands also have proliferated in Miami as they, too, follow their customers here.
According to the Greater Miami Convention and Visitors Bureau, more international visitors came to Miami in 2013 than domestic visitors, a first in history, and this trend will continue through the medium term, as key Latin American markets contribute to visitation growth.
The influence of Latin Americans continues to grow. Historically, many Latin American immigrants came to flee a political crisis or escape turbulent economies in countries like Venezuela or Argentina; however, the latest influx of creative types, entrepreneurs, business owners and international investors on the lookout for businesses and properties—including in the hotel space—has turned Miami into a year-round destination.
As a result, prominent Latin American hotel brands, such as Argentina’s Faena Hotels and Fen Hotels, and Chile’s Atton Hotels, will soon enter Miami to capitalize on the rising importance of Latin American travelers and brand followers to the destination.
Indisputably, the upcoming Faena District and its Faena Saxony Hotel will be a true game changer in the competitive Miami hotel scene due to its sheer scale, encompassing four city blocks in Miami Beach, and its multifaceted programmatic elements, such as a luxury condominium, arts center, bazaar, park, marina and gardens.
Miami’s Faena District will attempt to replicate the success of Alan Faena’s Puerto Madero restoration area in Buenos Aires, Argentina. This Miami project certainly will benefit from South American cutting-edge design, curated programs, and distinctive product and service experiences. Argentina’s Fen Hotels project in Bay Harbor Islands also will help open a new submarket and drive leisure tourism to Miami.
Additionally, Chile-based Atton Hotel’s upcoming Miami project in Brickell will be its first property in the U.S. and will capitalize on the brand’s business and leisure traveler client base who seek a mid-priced, full-service experience with Latin American flavor. Atton has several other hotels in Chile, Peru and Colombia, and continues to grow from regional integration.
Ultimately, the Faena, Fen and Atton brands will offer intraregional travelers brand familiarity, and differentiated products and services, which also appeal to global and U.S. travelers.
Emerging niches and revived submarkets
Beyond the influx of global brands, Miami is experiencing growth with unique niche products and revived submarkets, which are further diversifying Miami’s hotel offerings.
In recent years, multimillion-dollar redevelopment projects, like the Fontainebleau Resort and the upcoming Faena Saxony Hotel, are pushing South Beach’s flair northward. As a result, other innovative luxury lifestyle resort redevelopments on Miami Beach have been reinvigorated, such as the 1 Resort & Residences, Edition Resort and Thompson Resort.
These resort projects are anchoring real estate developments and incorporating art, fashion, design and luxury retail brands into their programs. Notably, a new Four Seasons Resort was recently announced in Miami’s Surfside submarket, and other progressive projects are being planned in Miami’s Edgewater and Midtown areas.
Another emerging niche in Miami and South Beach is the mid-priced branded lifestyle concept, such as the Aloft and AC Hotels, backed by Starwood Hotels & Resorts Worldwide and Marriott International, respectively.
Furthermore, leading international lifestyle brands, such as Fasano and Emiliano from Brazil and Cheval Blanc and Byblos from France, have Miami on their radar screens. Successfully penetrating the Miami market will continue to drive global visitation and transformation of the city.
Ultimately, however, these potential newcomers to the Miami market face numerous challenges, such as expensive land prices and development costs, protectionist approval boards and oversupply concerns.
Indeed, Miami’s hotel market landscape is changing with new visitors and innovative products. As global brands eye and vie for entry, the “Magic City” continues to raise the bar—especially within the hotel space—in this highly-coveted world-class destination.
Jonathan Kracer is Managing Principal of Sion Capital LLC, a hospitality and real estate consulting and investment firm focused on the North American, Latin American, and Caribbean regions, with offices in Miami and Mexico City. Mr. Kracer is a recognized expert on the hospitality sectors of South Florida, Latin America, and Mexico. Mr. Kracer’s columns primarily cover hotel asset-related subjects, with a particular emphasis on cross-border topics related to the U.S. and Latin America. He can be reached via email at info@sioncapitalco.com. More information about Sion Capital LLC can be found at www.sioncapitalco.com.
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