DAYTONA BEACH, FL—Known for its miles of sand on Florida’s central Atlantic coast, Daytona Beach is a hot spot for not only visitors but hoteliers.
“Healthy demand growth—3% over the first seven months of the year—coupled with a manageable 2.2% increase in new supply, has led to slight occupancy increases this year,” said Jan Freitag, SVP of lodging insights, STR. “With the exception of 2017, room demand growth has been healthy for several years in Daytona Beach. This is an indicator of strong underlying fundamentals.”
Year to date, occupancy in the market is at 70%, up 0.8%, according to STR. During the same time period, ADR hit $129.25, up 1.3%, which is not as high as it has been in previous years.
“Growth in room rates has slowed sharply, from more than 6% in 2016 and 2017 to just 1.3% this year to date; so far this year, the market has shown three months with an ADR increase below 1%,” he said.
Year to date, RevPAR reached $90.41, up 2%; supply increased by 2.2%; and demand increased by 3%, STR’s numbers revealed.
“The U.S. hotel industry is now in its 10th year of recovery, and given this long upcycle, growth rates are slowing,” he said. “However, absolute demand, occupancy and room rates are at near-record levels. Clearly, Daytona Beach is attractive to travelers from near and far, and operators are able to capitalize on the demand.”
Daytona Beach is facing many of the same challenges as other markets, including access to labor. “Low unemployment rates are driving up wage costs and making hiring and retaining talent a top priority,” Freitag said.
Specifically, the market is facing challenges with major infrastructure projects, including the new I-95 exit. “Large-scale, long-term construction projects have a way of creating their own roadblocks,” said Plato Ghinos, president, Shaner Hotels. “Secondly, Daytona Beach must ensure it has the ability to create and spread new messaging information to visitors about this quality destination. Over the past few years, Daytona Beach has added a number of unique amenities that will delight visitors. Now, they have to make sure the rest of the world knows, too.”
From a visitor standpoint, Daytona Beach is known for its beaches. “Our 10.2 million annual visitors know us for having one of the most beautiful and iconic beaches in Florida, but they also come to experience endless adventures in the Daytona Beach area, great local restaurants, arts and culture offerings and more,” said Lori Campbell Baker, executive director of Daytona Beach Area Convention and Visitors Bureau. “And, being just about an hour’s drive to St. Augustine, Kennedy Space Center and the Orlando theme parks, Daytona Beach is the perfect beach base camp from which to explore the best of what East Central Florida has to offer. Visitors can choose from thrilling activities or embrace the tranquility of days spent relaxing on 23 miles of our white-sand beaches.”
In addition to the coast, Daytona Beach has events throughout the year for travelers, too. “It benefits from its great visitors per year with events ranging from the Daytona 500 and Rolex 24 to Biketoberfest,” Ghinos said. “As home to NASCAR, and hard-packed beaches, Daytona Beach offers something to all types of travelers.”
There are numerous properties in the Daytona Beach pipeline, including Comfort Inn & Suites Daytona, Courtyard Daytona Beach Oceanfront, Daytona Beach Tapestry Collection by Hilton, Hampton Inn & Suites Port Orange I-95, La Quinta Inns & Suites Daytona Beach International Speedway and SpringHill Suites Daytona Beach Oceanfront.
“With area investments of more than $2 billion in progress and more hotels, attractions, dining and shopping options available, it’s a great time to experience all that Daytona Beach has to offer,” Campbell Baker said.
One reason why the market is a good market to invest in is millennials. “Millennials are flocking to Daytona for so many reasons,” said Brian Quinn, head of development of new construction brands, Choice Hotels International Inc. “In addition to a low cost of living, sunny weather and lots of entertainment options, from car racing to museums and beaches, the city has strong education and healthcare systems and excellent public safety. The city and county governments, including law enforcement, are on the same page when it comes to welcoming growth.”
The Daytona Beach market has 200 properties and 12,000 rooms, according to the Daytona Beach Area Convention & Visitors Bureau. “The area offers a wide variety of accommodations, including four-star luxury oceanfront resorts, flagship hotels, independent boutique properties, bed and breakfast inns and vacation condominiums,” Campbell Baker said.
The outlook for the Daytona Beach market is strong. “I’m personally bullish on the Daytona market, partially because there’s so much undeveloped land,” Quinn said. “As long as the municipalities and government work together to execute their master development plan, I believe Daytona is one of the pockets in the state that will grow by leaps and bounds over the next few years.”
Some even believe more upper-midscale hotels will enter the market over the next 10 years or so.
Campbell Baker laid out why. “First is the influx of millennials,” she said. “These guests remember the Great Recession and want a trusted brand that provides value in their lodging experience. The second reason is that, according to research, more Americans are self-identifying as middle class. These factors mean there’s never been a better time to invest in the midscale segment in Daytona.”
“As demand continues to grow, so will supply, as evidenced by the more than 1,000 rooms we currently track in our pipeline,” Freitag said. “The main drivers of a positive future of this market will be pricing and access to labor.”
“With recent new construction of the Speedway facilities, the market is evolving to a resort/entertainment destination,” Ghinos said. “Today’s traveler wants unique travel experiences. There are few things more exciting than experiencing the roar of the engines during the numerous and various races throughout the year.” HB