Hospitality Market Update: Florida Hospitality Snapshot & Emerging Challenges

By Max Downing – Originator

Florida Hospitality Performance Snapshot

• ADR rebound in Q1 2025:  Florida’s hospitality industry saw a sharp increase in average daily rates – up 31% quarter-over-quarter, signaling strong rate recovery.
  
• Southeast regional momentum:  The Southeast U.S. (including key Florida markets) posted RevPAR growth of ~2.2% YoY in Q1 2025, buoyed by rate hikes and occupancy gains. Urban submarkets like Orlando, Miami, and Tampa led the resurgence, supported by group and leisure demand.

Three Current Challenges We’re Seeing in the Florida Hotel Market

1. Valuation Gaps

With less transaction volume, appraisals are having difficulty pegging true values. The last hotel we closed, the appraisal came in a few million below what was expected. Two subsequent appraisal reviews later, we finally got value in line with original expectations. But that could have killed the deal, given the lender’s LTV constraints.

2. PIPs 

We see more “let’s just sell” decisions made lately because of large, looming PIPs. Cost increases over the past few years have led to large PIPs. Forecasted ADR growth is often not significant enough to support the investment in such expensive PIPs. As a result, owners start leaning towards a sale. This is not true for every upcoming PIP, but is more common nowadays than it was 5+ years ago

3. Financing Roadblocks

Being a commercial mortgage banking firm, we not only represent 25 life companies, but also work extensively with banks, credit unions, debt funds, CMBS, etc. High volatility among many lenders means we must have a real-time pulse on each lender’s available hospitality allocation (because there may be $15M in hotel money available on a Monday, that may not be there by the end of the week).

Largo Capital is ready to hear about any hotel deals you are currently working on and see if we can help secure the right financing.