It was another banner year for guesthouses in Key West. Even with the kick in the teeth from Hurricane Irma in September, well run guesthouses still had excellent Room, Occupancy and RevPAR rates for 2017. Twelve guesthouses have sold in the Old Town area from January 1, 2016 to December 31, 2017, five in 2017. Though revenue is the primary determinent of a sale price; a rough guide of the value of the property can be the average sale price per transient license. The average sale price per transient license for the twelve properties sold was $429,000. Expect more sales in 2018.
The big story was the impact in September from Hurricane Irma. The bigger story was the rebound.
Every year the Monroe County Tourist Development Council (TDC) commissions the travel research firm, Smith Travel Research, to evaluate the hotel and motel industry in Monroe County. Data is collected from throughout the county to determine monthly and annual changes in Occupancy Rate, Average Daily Rate (ADR) and RevPAR.
The data is contrasted not only among the tourist destinations in the County, but with other tourist destinations throughout the state of Florida.
Data displayed carries back to 2013, allowing graphic displays to clearly identify trends.
Occupancy Rate
Each of the first eight months of 2017 showed an increase in the Occupancy Rate for B&B's and Guesthouses in Key West with four months showing over a 6% gain from the same month in 2016. Then Irma.
September's Occupancy Rate dropped 57%; BUT October, November and December showed drops of only 3.5% to 5%.
The net loss in Occupancy Rate for 2017 versus 2016 was only 2.4%.
Average Daily Rate (ADR)
Every month in 2017 showed a lower Average Daily Rate that was below 2016, resulting in an ADR for the year of $256. This is 3.5% below 2016. Of note, the biggest percentile drops were in January, February and March of 2017 when competition is the highest for tourist dollars, not after Irma.
The Average Daily Rate at the end of 2012 was $189. The ADR at the end of 2017 was $256 - a 35% rise in five years.
RevPAR
The 2017 Average RevPAR, Revenue Per Available Room, dropped 5.9% from 2016. This is due to two time periods; The drop in ADR in the first three months of 2017 and the post IRMA combined drop in Occupancy Rate and ADR.
At the end of 2012 the average RevPAR was $155. At the end of 2017, the average RevPar was $210 - a 35% increase.
Summary
As you can see from the above chart, Key West and the Florida Keys are the two highest revenue producing areas in Florida. The RevPAR shown is a combination of all hotels, motels and B&B's in the market area.
Gone are the B&B days in Key West when it was all cash 'n carry, maintenance was deferred until a storm pointed out your weanesses and the proprietor enjoyed happy hour as much as the guests.
Guesthouses and B&B's must operate as a profession. Dynamic, mobile app-ready websites, 3rd party booking, constant touch systems to communicate with past customers so they become repeat customers, multiple revenue sources like renting bikes and tours and of course, the Occupancy:ADR:RevPAR matrix so you are maximizing net.
As a quick and general reference - financing requires 25% to 30% down, time period of 25 to 30 years and interest rates are 4.5% to 5%.
If you have any comments or questions, please contact me here.
PS. Many thanks to Kelli Fountain at the TDC for her constant care and courtesy in helping me write this and other articles like it. Kelli is a heck of a statician and a pleasure to work with.
Good luck and welcome to 2018!