OCTOBER 2013 CLEARWATER BEACH THE VISION IS REALIZED Kristina D Amico Associate www.hvs.com HVS Miami 8925 SW 148 th Street Suite 216 Miami, Florida 33176
# of Visitors Per Year ('000s) Florida s West Coast FIGURE 1: DOMESTIC AND INTERNATIONAL VISITATION TO ST. PETE AND CLEARWATER BEACH The combined St. Pete/Clearwater Beach hotel market area is located on the West Coast of Florida in Pinellas County, just across the bay from Tampa. This area offers 35 miles of white-sand beaches on 11 barrier islands across the Gulf of Mexico and is anchored by Clearwater Beach to the North and St. Pete Beach to the South. 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 2008 2009 2010 2011 2012 Domestic Visitors International Visitors Source: Pinellas County CVB The St. Pete/Clearwater Beach market is heavily marketed to Midwesterners. Travelers from the Midwest make up approximately 30% of the visitors to the area with travelers from the northeast being the second largest source market. Tourism is dependent on these two source markets as both markets comprise nearly 60% of the total visitation to the area (or nearly 3 million of the 5.4 million visitors in 2012). Interestingly, European visitors make up the third largest source market, accounting for approximately one million visitors per year. FIGURE 2: ST.PETE AND CLEARWATER BEACH SOURCE MARKETS Visitation As a popular destination in Florida, the St. Pete/Clearwater Beach area benefits from strong yearround tourism, especially during the winter months and strong weekend visitation during the summer months. The wealth of natural attractions and recreational attributes within this market area make the tourism sector a strong force for the region. As shown in Figure 1, both domestic and international visitation have steadily increased over the last 5 years with total combined visitation (domestic and international) of 5.4 million in 2012. Both groups are projected to have increased visitation levels in 2013. 13% 19% Florida 7% Southeast 6% Northeast Midwest 24% Canada Europe 31% Source: Pinellas County CVB and Research Data Services, Inc CLEARWATER BEACH THE VISION IS REALIZED PAGE 2
ADR Occupancy % The Macro Hotel Market The combined St. Pete/Clearwater Beach market currently has hotel products to fit the needs of all travelers, ranging from small motels to full-service upscale resorts, such as the Preferred Sandpearl and the Hyatt Aqualea, both located on Clearwater Beach. There are 94 hotels or 11,991 hotel rooms available in this combined market area that report to Smith Travel Research. Figure 4 below shows the occupancy, ADR, and RevPAR for all hotels in the combined market over the last 5 years. HVS projects this market to gain two occupancy points to end 2013 at 72% with ADR at $119, representing a 5.0% increase over the 2012 ADR. Over the last 5 years, the average occupancy for this market area was 72%. Monthly occupancy levels are shown in Figure 3. The market area maintains the strongest occupancies from 72% to 89% from February through August, with top occupancies during March and April, as the area is a popular destination for spring break vacations from Midwest and northeast vacationers. Further examination of the monthly demand pattern reveals that even the lowest demand months still achieve occupancies within 68% of the annual average occupancy, while peak demand months experience occupancies 120% greater than the average. This relatively strong year round demand pattern suggests the existence of unaccommodated demand and argues for the increases in the hotel room supply that are now in the planning stages in this market area. FIGURE 3: AVERAGE MONTHLY OCCUPANCIES FOR ST. PETE/CLEARWATER BEACH 95 85 75 65 55 45 Average Monthly Occupancy Source: Smith Travel Research FIGURE 4: ADR, OCCUPANCY, AND REVPAR FOR ST. PETE/CLEARWATER BEACH $130 $120 $110 $100 $90 $80 $70 $60 $50 2008 2009 2010 2011 2012 2013 F* ADR RevPAR Occ% 73% 72% 71% 70% 69% 68% 67% 66% 65% 64% Source: Pinellas County CVB and Smith Travel Research CLEARWATER BEACH THE VISION IS REALIZED PAGE 3
Clearwater Beach: The Redevelopment Plan In 2001, Clearwater Beach created a strategic vision, called Beach by Design, in order to foster the redevelopment of new hotel stock on Clearwater Beach. In our opinion, there were two key elements in the Beach by Design Plan that contributed to its success: Beach Walk and the creation of a Destination Resort Density Pool. Beach Walk Approximately eight years ago, Clearwater Beach began its redevelopment effort with the introduction of the Beach Walk project. The objective of the Beach Walk project was to revitalize the beach and to have the beachfront become a more pedestrian centric focal point for visitors. As such, the main thoroughfare was realigned and a wide pedestrian walkway was created adjacent to the sandy beach area. The pedestrian walkway or Beach Walk runs for approximately a half mile, beginning just south of the city Pier 60. Beach Walk has created a more open, pedestrian friendly beach experience that brings a high level of foot traffic past the various hotels, shops, and restaurants within Clearwater Beach. Given the relatively compact nature of Clearwater Beach (approximately 4.5 miles long by 0.5 miles wide) and the pedestrian friendly aspects of the Beach Walk project, most tourists are not dependent on the use of a car during their stay, which is a distinguishing factor relative to most other beach destination markets on Florida s West Coast. The pedestrian friendly and pedestrian busy vibe has become a defining characteristics of the town and has made Clearwater Beach a sought after destination for visitation and development. It is clear that the Beach Walk redevelopment plan has significantly increased the appeal of Clearwater Beach. Recent awards include the following: Clearwater Beach was ranked in the Top 10 list of Best Beaches in the United States by USATODAY in 2013, Conde Nast Traveler recognized Clearwater Beach as the Best City Beach on the Gulf of Mexico, and the Travel Channel has declared Clearwater Beach the Best Activity Beach in the United States. Clearwater Beach was also recognized in the Trip Advisor Traveler s Choice 2013 Top 25 Beaches in the United States. Hotel Density Pool As part of the Beach by Design Plan, the city of Clearwater Beach also created a Hotel Density Pool. This pool was created to incentivize resort destination hotel development allows hotel zoned parcels to exceed their density permitted as a right under zoning by applying for additional hotel development units from the pool. Currently, the pool contains a total of 947 hotel units still available for new hotel development. Several recent hotel developments that have benefitted from the hotel density pool included the Preferred Sandpearl (2007), Hyatt Regency Aqualea (2010) and Pier House 60 (2012). Additional new development is in the planning stages, where most of these planned hotels will also avail themselves of the hotel density pool. Over the last 20 years, Clearwater Beach has transitioned from Gulf Coast Beach towns of mom and pop independent motels and hotels to a beach town of nearly all nationally recognized branded hotels. It is clear that this transformation was the result of the Beach by Design Plan. Clearwater Beach Hotel Inventory: The Big 6 On Clearwater Beach, there are currently six hotels that have more than 200 rooms. These hotels are all fullservice upper upscale to luxury hotels and include the Hilton, Marriott, Sheraton, Preferred Sandpearl, Hyatt, and Wyndham Garden. These six combined hotels total 1,732 rooms. The Sandpearl and Hyatt, some of the newer hotels in the Big 6, comprise 28% of the Big 6 inventory. Figure 5 on the following page shows the occupancy, ADR, and RevPAR over the last 5 years, as well as HVS forecast for year end 2013 occupancy and ADR, for this set of six hotels. Most of the Big 6 have reported over 50 fill nights per year, with many other days running occupancy levels in excess of 90%. Similar to the greater market area, and to even a larger degree, the Clearwater Beach hotel market metrics clearly indicate the presence of unaccommodated room night demand. CLEARWATER BEACH THE VISION IS REALIZED PAGE 4
ADR Occupancy % FIGURE 5: BIG 6 OCCUPANCY, ADR, AND REVPAR Future Development Plans $230 $210 $190 $170 $150 $130 $110 $90 $70 $50 2008 2009 2010 2011 2012 2013 F* ADR RevPAR Occ% 78% 76% 74% 72% 70% 68% 66% 64% Thanks to Beach Walk, the Hotel Density Pool, and multiple recent awards, Clearwater Beach has become a highly sought out destination for hotel developers. A significant amount of new hotel projects, many of which will make use the hotel density pool are currently in the pipeline. Figure 6 recaps hotel projects that are currently proposed to be built on Clearwater Beach. Note: due to the confidential nature of many of these projects, HVS is unable to disclose their future brand affiliation and developers. Source: Smith Travel Research The Big 6 ADR has been making gains over the last 5 years along with strong increases in occupancy. RevPAR has increased 22% between 2010 and 2012. HVS projects that this competitive group of hotels will end 2013 with an average rate of $210 and an occupancy of 76%, reflecting a RevPAR increase of 11.7% from 2012. FIGURE 6: PROPOSED NEW HOTEL SUPPLY PIPELINE Proposed Property Number of Rooms HVS Estimated Opening Date Courtyard by Marriott 134 Mid-2015 Hampton Inn & Suites 90 Mid-2015 650 Bay Esplanade 102 Mid-2015 Full Service Upper Upscale Resort 345 Mid-2016 Full Service Hotel on the Former Adams Marks Site 230 Mid-2016 Full Service Luxury Resort 200 Mid-2016 Total Proposed New Room Supply 1,101 Source: HVS Research, Clearwater Beach Planning and Zoning Conclusion Over the last 20 years, Clearwater Beach has made a complete transformation from the traditional mom and pop hotel products to a true nationally recognized hotel market. The transformation began with the strategic vision behind the Beach by Design Plan which invested in physical infrastructure in the town and assisted developers in achieving an economic model for financially feasible new hotel development. The receipt of multiple awards and the influx of national hotel brands associated with the redevelopment efforts have all contributed to the success of Clearwater Beach. The new hotel supply entering the market within the next three years is further evidence that the strategic vision created for Clearwater Beach in 2001 will have been completely realized in less than two decades. CLEARWATER BEACH THE VISION IS REALIZED PAGE 5
HVS Miami provides a variety of consulting and valuation services for hotels, mixed-use real estate, and shared ownership projects. HVS Miami professionals have completed over 1,300 engagements, of which 54% were located throughout Florida. They have also worked in 28 Caribbean islands and 12 Central and South American countries. In addition to certified valuations, the HVS Miami office also provides feasibility studies, acquisition due diligence, asset management, expert witness testimony, and marketing and sales solutions for mixed-use and shared ownership real estate developments. About HVS HVS is the world s leading consulting and services organization focused on the hotel, mixed-use, shared ownership, gaming, and leisure industries. Established in 1980, the company performs 4500+ assignments each year for hotel and real estate owners, operators, and developers worldwide. HVS principals are regarded as the leading experts in their respective regions of the globe. Through a network of more than 30 offices and 450 professionals, HVS provides an unparalleled range of complementary services for the hospitality industry. www.hvs.com Superior Results through Unrivalled Hospitality Intelligence. Everywhere. About the Author Kristina D Amico is an Associate at HVS Miami and works in both the hotel Consulting and Valuation and Shared Ownership Services divisions. Kristina graduated from Florida International University with a Bachelors of Business Administration in Finance, Cum Laude, and a Minor in Hospitality Studies before starting her career at HVS. She is a Registered Trainee Appraiser in the State of Florida and is diligently working towards her education and experience requirements to become a Certified General Appraiser. Kristina has completed hotel and shared ownership appraisals, market studies, feasibility studies, purchase price allocations, and ad-valorem tax valuations in the United States, Canada, the Caribbean Basin and South America. She specializes in assets on the West Coast of Florida. To Contact Kristina: Phone: +1 (305) 378-0404 x 1016 Email: kdamico@hvs.com www.hvs.com HVS Miami 8925 SW 148 th Street Suite 216 Miami, Florida 33176