HURRICANE IRMA IS expected to cost Hersha Hospitality Trust $7 million in lost earnings before interest, tax, depreciation and amortization for fiscal 2017, according to the company. Most of the Philadelphia-based company’s six South Florida properties are at least partially open, two remain closed for the near future.
Hersha’s Parrot Key Hotel & Resort in Key West, Florida, sustained limited structural damage. However, water penetration requiring remediation will keep the property closed for most of the fourth quarter. The Cadillac Hotel & Beach Club in Miami Beach, Florida, which had been undergoing major renovation while continuing to operate, will now remain closed until the work is finished in the first quarter of 2018.
Both hotels had closed due to mandatory evacuations prior to the storm. Hersha’s Blue Moon Hotel and Winter Haven Hotel in South Beach, Florida, received minimal damage and are reopened. The Residence Inn and Ritz-Carlton in Coconut Grove, Florida, suffered landscaping and signage damage, but are reopened except for 12 rooms still out of service at the Ritz-Carlton.
“Although four of our properties have resumed operations, we expect near-term performance to be materially impacted by he extended closure of our two largest hotels in South Florida and lack of leisure travel to Miami Beach,” Hersha said in an investor presentation.
Hersha, helmed by CEO Jay Shah, expects the South Florida market to contribute 11 percent of consolidated EBITDA in fiscal 2017. It projects $202 ADR, $153 RevPAR and a 30.8 percent EBITDA margin for the portfolio this year.
Along with the hurricane, “the closure of the Miami Beach convention center, reduced Latin American demand, and Zika-related concerns continue to negatively impact the Miami market,” the company said in its presentation.
However, the convention center’s expected re-opening in 2018, along with less new supply and weakening of the dollar are expected to lead to a recovery in 2019. “Miami could experience a bump in tourism in the long-term as many resort destinations in Puerto Rico, the U.S. Virgin Islands and other areas of the Caribbean will be offline due to storm damage,” the company said.