Jay Gaydosh, Sr. VP & CFO
The primary investment thesis of National Lodging & Leisure’s Florida Fund was that job creation, population inflow and a very business friendly environment would allow our focused hotel type to outperform the market. Well, our thesis was put to the ultimate test over the last 18 months, and we are happy to report that the performance of premium branded limited-service hotels has far exceeded the national market. The consensus is that the overall metrics of Florida hotels outperformed the national statistics and that our targeted brands outperformed other lodging subsectors in Florida.
The following snapshots are from third-party market sources:
Domestic visitation continues to grow from the pandemic lows; international travel growth is flat with a meaningful reversal not expected until late 2022. The “drive to Florida” vacation market has remained strong in our targeted markets.
Performance is steady among Florida’s hotels and resorts. Upside in Average Daily Rates (ADR) remains for many regions across the state.
The full impact of the pandemic on tourism in the United States appears to be impacting Florida less than other markets, particularly the Northeast and West Coast.
Florida’s population growth continues as transplants from the Northeast move south. The impact of the Tax Cuts & Jobs Act of 2017 continues to drive people from the Northeast to migrate to the sunny and tax-friendly state of Florida.
It will be quite some time before our targeted markets experience any meaningful addition of new rooms (no significant new construction). Discounting properties that were started pre-pandemic, we do not expect any major supply increase for at least the next 18 to 24 months.
Inflation is rising which will allow for increased Average Daily Rates (ADRs).
Location is paramount. Certain markets (and specific locations) are thriving while others are not.
Much “noise” as to the dismal state of the industry is in the news. However, our targeted Florida markets are doing well. State of Florida statistics need to be adjusted for Orlando (the House of Mouse) and Miami (offshore money) which will skew the data away from our core business.
The rise of the Bleisure Traveler – Business + Leisure = Bleisure. It’s a hybrid that’s growing in popularity as work-life boundaries blur.
In short, we remain bullish on our investment thesis of seasoned, premium branded limited-service hotels in our targeted Florida markets.