Lionstone's Hunt For Virgin Territory In South Florida
Like a Virgin, one Miami developer is hoping to help this hotel chain touch South Florida for the very first time.
Lionstone Development is actively scouting South Florida's hot hotel markets to locate at least two Virgin Hotels. We spoke with Lionstone CEO Diego Lowenstein about the hunt. For now, Diego says the firm is eyeing potential sites along Miami Beach, Downtown Miami, Fort Lauderdale and even the potential for “more pioneering areas” like Wynwood. Nothing has been secured as of press time.
Part of Sir Richard Branson's empire, the Virgin Hotel concept is a lifestyle hotel that comes with some unique twists, including early check-in and late check-out, mini-bars with “fair prices” and rooms that separate lounge, dressing and bathrooms into mini-suites. It's a brand that Diego says could see upwards of 40 locations—with between 200 and 300 units each—in the US and Canada. It debuted last year in Chicago.
While Diego wouldn't pinpoint room rates at a Virgin (he says they're submarket dependent), he does explain it will be a competitive price for a hotel that bridges lifestyle and luxury. And that is a level he's more comfy with in Miami's crowded hospitality market going forward. Lionstone, of course, developed and owns two Ritz-Carltons here: Bal Harbour and South Beach. It also developed Epic Hotel & Residences that's flagged by Kimpton (above).
Fundamentals have been pretty solid for Lionstone so far. Diego says RevPAR is up 6% this year at the Ritz-Carltons. That actually counters average market conditions: RevPAR dropped nearly 3% in Downtown Miami to $208/night, fell 8.4% in South Beach to $245/night, and declined shy of 4% in Bal Harbour, according to April year-over-year stats by the Greater Miami Convention and Visitors Bureau (see graph). Diego's bullish on hospitality in Miami Beach since the market is naturally supply constrained, even with the wave of renovations taking place. Downtown Miami is another matter. “In the next couple of years, that market will have a very different dynamism and competitive pressure” as new hotel units need to adjust to the overall submarket, he tells us. That could mean rates moderate there.
But Diego is confident the South Florida summer season should be strong with tourism, especially with travelers from Europe who may opt to head to Miami instead of Middle Eastern resort spots due to instability in the region. And he sees corporate and group bookings showing a lot of resilience. “We are always concerned about recessions, but ultimately they will come,” he says, adding that he expects there to be an economic “dent” soon after the US presidential election. But barring a Black Swan event, that recession should be light. “I think we can forecast something that is much more manageable.”