The pandemic was a boon for hotels in the Florida Keys, where tourists could enjoy the archipelago's white sand beaches, crystal blue water and laid-back island lifestyle as many tropical tourist destinations were shuttered.

But as travel opened up around the world in recent years, the Keys has slumped. Now, a rebound is underway — and hotel investors have noticed.

Three hotels in the Keys — one in Islamorada and two in Key West — have sold in just the last two months for more than $500M combined.

The transactions came after a year in which the Keys took the mantle of the No. 1 market in Florida for revenue per available room over the past 12 months by a comfortable margin, surpassing Naples and West Palm Beach, CoStar Senior Director of Hospitality Market Analytics Chantal Wu said.

Before this recent stretch, room rate, RevPAR and occupancy had been slumping. Those days are over.

"For all of last year, I had to write very sad market reports for Florida Keys just because performance results were down," Wu said. "This year, at least it's some positive news to deliver."

The Florida Keys, grouped into the Upper, Middle and Lower Keys, are a chain of coral and limestone islands that begin at the southern tip of Miami-Dade County and are connected by the two-lane Overseas Highway, which stretches 113 miles to the southernmost point of the continental U.S.

Driving from the north end at Key Largo to the bottom in Key West takes about three hours — assuming there isn't an accident that blocks traffic.

Travelers are drawn to its nostalgic island escapism, where they can spend the day fishing in the middle of the ocean, swimming with the dolphins and manatees, or trying the region's famous key lime pie.

But the state controls what can be built, which has stunted the growth of the hotel industry. In March 2020, there were 209 hotels in the Keys, according to CoStar data provided to Bisnow. As of this summer, there are 206.

“You can't just come here, find land and just get approval to build a 300-room resort" said Daniel Samess, CEO of the chamber of commerce for Marathon, a 13-island city in the Middle Keys. “No. 1, we don't have much land, vacant land, anymore. And No. 2, you've got to have those [state] entitlements to do it. So it's a higher barrier to entry.”

That means the existing hoteliers have free rein to charge some of the highest rates in the country. During the first six months of this year, the daily rate for the Keys averaged $409, according to CoStar. In New York City, during the week of the World Cup Final, the ADR was $425.

But sales have been slow — until recently. Bass Pro Shops in June agreed to buy the 254-room Cheeca Lodge & Spa in Islamorada, known as the "Sport Fishing Capital of the World," from Northwood Investors for more than $300M, or over $1M per key.

The resort has hosted presidents George H.W. Bush and Harry Truman and author Ernest Hemingway at its 525-foot fishing pier. The 80-year-old property is among the largest in the Keys, spanning 26 buildings with three restaurants, a nine-hole golf course, a spa and three swimming pools.

Northwood purchased Cheeca Lodge in 2011 and expanded it with 43 suites, a conference center and 11 luxury casitas. Once those investments started to pay off, it was time to sell, JLL Hotels and Hospitality Group President Dan Peek said.

"When you own a really nice asset in the Keys, it's sort of hard to convince yourself to sell it," said Peek, who helped arrange the deal.

"In this case so far, Cheeca Lodge was sort of up against its hold period," he added. "They'd owned it for 15 years. That's a long time."

That transaction helped kick-start the sales market, and more sellers are seeing what they can get for their hotels, Samess said.

“Equity funds and institutional investors see that, and so sometimes you then see other properties come up for sale now because it was a good comp,” he said.

In July, two more hotel transactions followed within a week of each other.

Braemar Hotels & Resorts announced it was selling the Pier House Resort & Spa to an affiliate of Sixth Street for $190M after owning it for 12 years and spending $12M on renovations. The Key West hotel used to be a 50-room motel, built in 1967, but it has been expanded to a 142-key resort with a full-service spa right on the water.

A week later, Miami-based developer Mast Capital and Dallas-based Koch Real Estate paid Frisbie Group $38M for the Islands of Islamorada Resort, which Frisbie built in 2020. It was Mast's second attempt to buy — Frisbie sold it to The Wills Cos. for $72M, providing seller financing and staying on as a partner.

Mast already has a presence in the market, including owning the Little Palm Island Resort & Spa, but this marks the first move in the region for the company since 2022, Mast Capital Chief Investment Officer Jordan Kornberg said.

"A new opportunity circled around, and we were excited to be able to get another price that makes sense and buy it this time around," Kornberg said.

The recent sales come amid an upswing in hotel performance following a post-pandemic crash.

When the entire country shut down due to the pandemic, Florida was among the earliest states to reopen, and the Keys benefited as tourism boomed during 2021 and 2022.

Revenue per available room reached $308 in 2021, a roughly 45% increase from 2019, according to a March Florida Keys hotel report by Tourism Economics.

"We definitely broke any and all records as far as tourism here," Samess said. "We've kind of come back down to earth since then, slowly but surely."

RevPAR fell 17% to $256 in 2023 but has been creeping back up.

Hotel demand rose 3.3% in 2025, which brought an end to three years of declines, and started 2026 with a 4% increase, according to the report.

Performance is projected to keep rising as domestic leisure travel spending expands and the ultra-wealthy descend on South Florida, bringing their companies with them and hundreds of employees who may opt to drive down for a quick weekend getaway at the beach.

The projected growth for the rest of the year is expected to lift Keys hotel revenue past the $1B threshold for the first time since 2023, according to Tourism Economics.

Pressure to invest in existing hotels is high because the chances of growth in the market are slim.

Environmental restrictions and zoning laws effectively cap hotel development in the area. Only 110 rooms have hit the construction pipeline since last June, according to CoStar.

By comparison, Miami-Dade County has a pipeline that is expected to add more than 20,000 rooms, Miami Today reported, citing CoStar data.

The dynamic has made acquisitions one of the only ways investors can get a foothold in the market.

"If we could do a deal in the Keys every year, we probably would, knowing what we know now," Kornberg said. "It's just a matter of having this opportunity."