This article originally appeared on CoStar Insight. It has been republished here with permission.
New Year’s Eve 2023 in Miami was an even bigger party than the previous year.
Miami recorded the highest New Year’s Eve hotel occupancy among Florida’s three largest hotel markets and was the only one of the three markets to experience an increase compared to the prior year. Occupancy in Miami was 84.6%, up 4% from 81.4% on New Year’s Eve 2022.
The increase in occupancy in Miami countered the expectation that New Year’s Eve 2023 falling on a Sunday would underperform relative to 2022’s Saturday night event.
On the other hand, occupancy in Orlando and Tampa followed expectations. New Year’s Eve occupancy in Orlando was 83%, down 4% from 2022, and occupancy in Tampa on the last night of 2023 was 78%, down 7% from 2022.
The calendar shift likely contributed to a steeper drop-off in occupancy from Dec. 31 to Jan. 1 than the prior year. Occupancy rates always fall off dramatically on Jan.1, but with New Year’s Day 2023 falling on Sunday, and many workers having Monday off, some trips were extended an extra day.
New Year’s Day this year fell on Monday, and the holiday was the travel day for many. Orlando occupancy declined 24% from Sunday night, Dec. 31, 2023 to Monday night, Jan. 1, 2024, compared to an 18% drop-off the prior year. Occupancy fell even more sharply in Tampa, where the drop-off was 38% versus 21% the prior year. By comparison, Miami experienced a mild 14% drop in occupancy from New Year’s Eve to New Year’s Day, essentially the same as the 13% decline the previous year.
All three markets experienced a year-over-year decline in average daily rate, or ADR, and revenue per available room, or RevPAR. Miami ran the highest ADR on New Year’s Eve, $414, down 9% from $457 in 2022. Orlando had the smallest ADR decline, down 2% to $279, while Tampa recorded the lowest ADR at $198, down 10% and the largest decrease from the prior year. RevPAR also trailed prior year levels in all three markets.
Declining ADR was consistent with the trend in South Florida throughout 2023. ADR in Miami declined 5% in 2023 and trailed prior-year levels every month from January through November, but a 1.6% increase in December offered some hope that rates are stabilizing.
Miami and many other beach destinations experienced dramatic increases in ADR during 2021 and 2022, when international travel and cruises were limited. However, pricing power disappeared in 2023 due to increased competition for domestic leisure travelers as travel patterns normalized from the disruptions caused by the pandemic.
A key question for Florida’s hospitality industry in 2024 is whether pricing power will return. Particularly in South Florida, market participants are watching to see if ADR has settled at sustainable levels with some opportunity for growth, or if there are further declines are to come.
Interested in reading additional insights on the Miami CRE market? Download the March 2024 issue of BID Magazine, spotlighting South Florida.