400 Mandalay Ave - Hilton Clearwater Beach Resort & Spa
The Tampa Bay area is experiencing a significant rise in property insurance costs, especially in the hotel industry, due to the increasing risks posed by hurricanes and severe weather events. These increases in insurance premiums are heavily impacting the operating expenses of hotels, particularly those in the upper-upscale and luxury categories. The following case studies highlight how this trend is unfolding across various properties in the region. Figures are per hotel room.
1. Hilton St. Petersburg Bayfront
Address: 333 1st St S, Saint Petersburg, FL 33701
Property Insurance Costs:
2022: $1,134.51
2023: $1,422.82
Increase: 25.4%
Other Key Operating Expenses:
Real estate taxes: $784,484 (2023), $793,702 (2022)
Utilities: $1,002,545 (2023), $877,138 (2022)
2. Marriott Tampa Westshore
Address: 1001 N West Shore Blvd, Tampa, FL 33607
Property Insurance Costs:
2022: $1,447.41
2023: $2,424.33
Increase: 67.5%
Other Key Operating Expenses:
Real estate taxes: $1,853.66 (2023), $1,675.96 (2022)
Repairs and maintenance: $1,775.41 (2023), $1,998.64 (2022)
3. Bilmar Beach Resort
Address: 10650 Gulf Blvd, Treasure Island, FL 33706
Property Insurance Costs:
2022: $3,666.67
2023: $4,321.21
Increase: 17.9%
Other Key Operating Expenses:
Real estate taxes: $2,625.39 (2023), $2,351.52 (2022)
Utilities: $4,133.33 (2023), $3,836.36 (2022)
4. Hampton Inn & Suites Largo
Address: 100 E Bay Dr, Largo, FL 33770
Property Insurance Costs:
2022: $1,103.17
2023: $1,902.82
Increase: 72.5%
Other Key Operating Expenses:
Real estate taxes: $2,022.92 (2023), $1,933.67 (2022)
Repairs and maintenance: $1,856.63 (2023), $1,494.36 (2022)
Performance of the Luxury & Upper Upscale Market
Despite the rising costs of property insurance and other operating expenses, the luxury and upper-upscale hotel market in Tampa Bay maintains a strong performance. The key performance indicators for this market are as follows:
Occupancy: 66.6%
ADR (Average Daily Rate): $187.85
RevPAR (Revenue Per Available Room): $125.02
While these performance metrics are solid, the increasing burden of insurance and other costs poses a challenge to maintaining profitability. Hotel operators in the Tampa Bay area will need to continue adapting to these rising expenses to sustain their financial performance amid these growing risks.
MMCG is an analytical company, conducting feasibility studies for Hotel, Motel, and AirBnB properties. Planning a similar project and looking for a hotel feasibility study? Contact us today at (628) 225-1110 or at info@mmcginvest.com
October 12, 2024, by Michal Mohelský, J.D, principal of MMCG Invests, LLC
Sources: MMCG Database, Financial statements from active CMBS loans
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