Guesthouses remain a solid investment in Key West for both on-site and out of area owner - operators. Mostly gone are the days when the owner shared Happy Hour with guests, financial statements were kept in a drawer next to the Bacardi and insurance claims from storms fixed overlooked problems. Today, Key West B&B's and guesthouses operate as a profession. App-ready mobile websites, 3rd party booking, constant touch systems that create repeat customers, multiple revenue sources and the Occupancy:ADR:RevPAR matrix all maximize revenue.
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 Revenue Per Available Room (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 2014, allowing graphic displays to clearly identify trends.
Occupancy Rate 2018
The average Occupancy Rate (OR) for 2018 was UP a healthy 3.4% to an average of 83.6%. May showed a surprising drop as US schools and European businesses held their tourists at home. Yet each of September, October, November and December showed strong gains as they return to their historic averages.
Since 2012, the average Occupany Rate has remained steady at approximately 83%. Only in 2017, with Hurricane Irma, has the average Occupancy Rate shown any significant change.
Average Daily Rate (ADR) 2018
The change in the Average Daily Rate (ADR) for 2018 was flat at an increase of a modest .4%. Only June experienced a sizable increase, UP 6.8% over June 2017. Second was December, UP 5.5%.
February and March remain the two most expensive months at an average per night of $330 for each month. August and September remain the cheapest at an average of $200 and $185 per night respectively.
Revenue per Available Room (RevPAR) 2018
Average Revenue per Available Room was UP a healthy 3.9% for the year. June was UP 7.9% to an average of $195 per night. September thru December were also UP well; in large part due to statistical weakness from 2017 (Irma) plus December increased its ADR by 5.5% to an average of $285.
Florida Markets Guesthouse Summary
As you can see from the above chart, Key West and the Florida Keys lead the pack when it comes to Guesthouses making money. A few trends:
- The average Occupancy Rate of 83% has not changed since 2012.
- Average Daily rate is UP 16% since 2012 and 9% since 2015.
- Average Revenue per Available Room is up 16% since 2012 and 9% since 2015.
- Is the upward trend in ADR and RevPAR slowing? If so, why?
Key West has successfully stiff armed the nightly rental challenge from AirBNB and the like. Not so successfully dealt with has been the challenge presented by the vacation rental market which has not only taken tourists away from hotels, guesthouses and B&B's but has seriously impacted the traditional 12-month rental market.
As of this writing, there are ten guesthouses for sale priced from $2.9M to $7.9M in Key West. Buyers should insist on legitimate P&L statements, steady ROI's, proof of advanced bookings and a guesthouse with minimal differed maintenance.
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!