Posted: Mar 23, 2021
Are Guesthouses and B&B’s a Smart Buy in Key West?
Papa's Hideaway 309 Louisa St. Key West

Key West guesthouses and B&B's have fully transitioned from those days when the Owner poured and shared in Happy Hour with guests beginning around 3pm, ledgers were kept in smudges of pencil (if at all) and deferred maintenance was branded as Key West funk.  Today, Key West B&B's and guesthouses operate as and by professionals. Revenue is maximized through; app-ready mobile websites, 3rd party booking, constant touch systems that generate repeat customers, multiple revenue and retail sources and the Occupancy:ADR:RevPAR matrix. How did this 99.8% tourist-based business fare in Key West in 2020?



Every year the Monroe County Tourist Development Council (TDC) commissions the travel research firm, Smith Travel Research (STR), 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 shown here compares and contrasts not only the tourist destinations in Monroe County, but with other tourist destinations throughout the state of Florida. The data shows 5 years, 2016 - 2020, allowing graphic displays to clearly identify trends.


March thru August 2020 shows significant reductions across all categories.  This is due in large part because Monroe County ordered all guesthouses to close on March 22, 2020 and US 1, the only road into Monroe County from the state of Florida, was closed to all but residential and essential traffic on Friday, March 27. 


The road blocks remained in effect until June 1, 2020.

Occupancy Rate (OR) 2020


The average daily Occupancy Rate (OR) for 2020 was Down 23% for the year to an average of 64%.  March thru August showed major drop off in occupancy. Of all the months in 2020, only December showed a modest increase, 1.3%, over the previous year.


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, then dropping to 81% for the year.

Average Daily Rate (ADR) 2020


The change in the Average Daily Rate (ADR) for 2020 was off only 3% to $256 per night. Between 2016 and 2019 the ADR has remained flat between $256 and $265.  The ADR fell heavy in April and May and then lagged the 5-year curve as guesthouses and B&B's reduced rates in order to woe back travelers.


Historically, February and March are 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) 2020



Average Revenue per Available Room (RevPAR) was Down 26% for 2020.  March, April and May were off significantly with June, July and August recovering to only 50% of the previous year. December closed the year on an upswing as recovering Occupancy Rates and Average Daily Room Rate climbed towards normalcy.


Florida Comparative Markets 2020


As you can see from the above Revenue per Available Room (RevPAR) chart, Key West and the Florida Keys (the two top lines on the chart) lead the state when it comes to Guesthouses making money. March, April and May, when US 1 was closed and air traffic into Key West Airport was at a minimum, were lousy.  But compared to other tourist destinations in Florida, the Florida Keys and Key West have once again recovered faster and stronger.


Key West has successfully stiff armed the nightly rental challenge from AirBNB and the like.  The vacation rental market is accomodating longer stay, 28+ day tourists but hotels, guesthouses and B&B's have the market cornered for short stay, 1 - 5 day vacationers, in particular those many vacationers on holiday who seek the personalized and concierge treatment provided by Key West flavored guesthouses and B&B's.

Summary and the Future 2021

Sea Shell Motel. 718 South St., Key West


From my contacts in the Guesthouse and B&B business in Key West, I can tell you without hesitation or exaggeration that the return to normal Occupancy and Daily Room Rates is well under way.  Many guesthouses took 2020 as a time to repair their physical condition, upgrade amenities and improve their marketing skills.  Serious investment has been made into the Guesthouse business in Key West and a prosperous future is in-hand.


However, the question to ask is - will January - April 2021 provide enough to rehire those thousands lost in 2020 AND provide for the lean times that will occur, as always, in July, August and September 2021?


As of this writing, there are five guesthouses for sale in the Old Town Key West area, priced from $3.199M to $7.6M with from 6Bed/6Bath to 21Bed/21Bath. Each is a well known Guesthouse with many years of business. Buyers should insist on legitimate P&L statements, steady ROI's, proof of advanced bookings and a property with minimal differed maintenance.


If you have any comments or questions, please contact me here.


Good luck!