HVS Miami | 8925 SW 148th Street | Suite 216 | Miami, Florida 33176 www.hvs.com

CLEARWATER BEACH

THE VISION IS REALIZED

OCTOBER 2013

Kristina D’Amico Associate

CLEARWATER BEACH – THE VISION IS REALIZED | PAGE 2

Florida’s West Coast

The combined St. Pete/Clearwater Beach hotel

market area is located on the West Coast of Florida in

Pinellas County, just across the bay from Tampa. This

area offers 35 miles of white-sand beaches on 11

barrier islands across the Gulf of Mexico and is

anchored by Clearwater Beach to the North and St.

Pete Beach to the South.

Visitation

As a popular destination in Florida, the St.

Pete/Clearwater Beach area benefits from strong year-

round tourism, especially during the winter months and

strong weekend visitation during the summer months.

The wealth of natural attractions and recreational

attributes within this market area make the tourism

sector a strong force for the region. As shown in Figure

1, both domestic and international visitation have

steadily increased over the last 5 years with total

combined visitation (domestic and international) of 5.4

million in 2012. Both groups are projected to have

increased visitation levels in 2013.

FIGURE 1: DOMESTIC AND INTERNATIONAL VISITATION TO ST. PETE AND CLEARWATER BEACH

Source: Pinellas County CVB

The St. Pete/Clearwater Beach market is

heavily marketed to Midwesterners. Travelers

from the Midwest make up approximately 30%

of the visitors to the area with travelers from

the northeast being the second largest source

market. Tourism is dependent on these two

source markets as both markets comprise

nearly 60% of the total visitation to the area (or

nearly 3 million of the 5.4 million visitors in

2012). Interestingly, European visitors make up

the third largest source market, accounting for

approximately one million visitors per year.

FIGURE 2: ST.PETE AND CLEARWATER BEACH SOURCE MARKETS

Source: Pinellas County CVB and Research Data Services, Inc

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

2008 2009 2010 2011 2012

# o

f V

isit

ors

Pe

r Y

ea

r ('

00

0s)

Domestic Visitors International Visitors

13%

7%

24%

31%

6%

19%Florida

Southeast

Northeast

Midwest

Canada

Europe

CLEARWATER BEACH – THE VISION IS REALIZED | PAGE 3

FIGURE 4: ADR, OCCUPANCY, AND REVPAR FOR ST. PETE/CLEARWATER BEACH

Source: Pinellas County CVB and Smith Travel Research

64%

65%

66%

67%

68%

69%

70%

71%

72%

73%

$50

$60

$70

$80

$90

$100

$110

$120

$130

2008 2009 2010 2011 2012 2013 F*

Occ

up

an

cy %

AD

R

ADR RevPAR Occ%

FIGURE 3: AVERAGE MONTHLY OCCUPANCIES FOR ST. PETE/CLEARWATER BEACH

Source: Smith Travel Research

45

55

65

75

85

95

Average Monthly Occupancy

The Macro Hotel Market

The combined St. Pete/Clearwater Beach market

currently has hotel products to fit the needs of all

travelers, ranging from small motels to full-service

upscale resorts, such as the Preferred Sandpearl and the

Hyatt Aqualea, both located on Clearwater Beach. There

are 94 hotels or 11,991 hotel rooms available in this

combined market area that report to Smith Travel

Research. Figure 4 below shows the occupancy, ADR,

and RevPAR for all hotels in the combined market over

the last 5 years. HVS projects this market to gain two

occupancy points to end 2013 at 72% with ADR at $119,

representing a 5.0% increase over the 2012 ADR.

Over the last 5 years, the average occupancy for this

market area was 72%. Monthly occupancy levels are

shown in Figure 3. The market area maintains the

strongest occupancies from 72% to 89% from February

through August, with top occupancies during March and

April, as the area is a popular destination for spring

break vacations from Midwest and northeast

vacationers.

Further examination of the monthly demand pattern

reveals that even the lowest demand months still

achieve occupancies within 68% of the annual average

occupancy, while peak demand months experience

occupancies 120% greater than the average. This

relatively strong year round demand pattern suggests

the existence of unaccommodated demand and argues

for the increases in the hotel room supply that are now

in the planning stages in this market area.

CLEARWATER BEACH – THE VISION IS REALIZED | PAGE 4

Clearwater Beach: The Redevelopment Plan

In 2001, Clearwater Beach created a strategic vision,

called “Beach by Design,” in order to foster the

redevelopment of new hotel stock on Clearwater Beach.

In our opinion, there were two key elements in the

“Beach by Design” Plan that contributed to its success:

Beach Walk and the creation of a Destination Resort

Density Pool.

Beach Walk

Approximately eight years ago, Clearwater Beach began

its redevelopment effort with the introduction of the

Beach Walk project. The objective of the Beach Walk

project was to revitalize the beach and to have the

beachfront become a more pedestrian centric focal point

for visitors. As such, the main thoroughfare was

realigned and a wide pedestrian walkway was created

adjacent to the sandy beach area. The pedestrian

walkway or “Beach Walk” runs for approximately a half

mile, beginning just south of the city Pier 60. Beach

Walk has created a more open, pedestrian friendly

beach experience that brings a high level of foot traffic

past the various hotels, shops, and restaurants within

Clearwater Beach. Given the relatively compact nature

of Clearwater Beach (approximately 4.5 miles long by

0.5 miles wide) and the pedestrian friendly aspects of

the Beach Walk project, most tourists are not dependent

on the use of a car during their stay, which is a

distinguishing factor relative to most other beach

destination markets on Florida’s West Coast.

The pedestrian friendly and pedestrian busy “vibe” has

become a defining characteristics of the town and has

made Clearwater Beach a sought after destination for

visitation and development. It is clear that the Beach

Walk redevelopment plan has significantly increased the

appeal of Clearwater Beach. Recent awards include the

following: Clearwater Beach was ranked in the Top 10 list

of Best Beaches in the United States by USATODAY in

2013, Conde Nast Traveler recognized Clearwater Beach

as the Best City Beach on the Gulf of Mexico, and the

Travel Channel has declared Clearwater Beach the Best

Activity Beach in the United States. Clearwater Beach

was also recognized in the Trip Advisor Traveler’s Choice

2013 Top 25 Beaches in the United States.

Hotel Density Pool

As part of the Beach by Design Plan, the city of

Clearwater Beach also created a Hotel Density Pool. This

“pool” was created to incentivize resort destination

hotel development allows hotel zoned parcels to exceed

their density permitted “as a right” under zoning by

applying for additional hotel development units from

the pool. Currently, the pool contains a total of 947 hotel

units still available for new hotel development. Several

recent hotel developments that have benefitted from the

hotel density pool included the Preferred Sandpearl

(2007), Hyatt Regency Aqualea (2010) and Pier House

60 (2012). Additional new development is in the

planning stages, where most of these planned hotels will

also avail themselves of the hotel density pool.

Over the last 20 years, Clearwater Beach has

transitioned from Gulf Coast Beach towns of “mom and

pop” independent motels and hotels to a beach town of

nearly all nationally recognized branded hotels. It is

clear that this transformation was the result of the

“Beach by Design” Plan.

Clearwater Beach Hotel Inventory: The Big 6

On Clearwater Beach, there are currently six hotels that

have more than 200 rooms. These hotels are all full-

service upper upscale to luxury hotels and include the

Hilton, Marriott, Sheraton, Preferred Sandpearl, Hyatt,

and Wyndham Garden. These six combined hotels total

1,732 rooms. The Sandpearl and Hyatt, some of the

newer hotels in the “Big 6,” comprise 28% of the “Big 6”

inventory. Figure 5 on the following page shows the

occupancy, ADR, and RevPAR over the last 5 years, as

well as HVS forecast for year end 2013 occupancy and

ADR, for this set of six hotels.

Most of the “Big 6” have reported over 50 fill nights per

year, with many other days running occupancy levels in

excess of 90%. Similar to the greater market area, and to

even a larger degree, the Clearwater Beach hotel market

metrics clearly indicate the presence of

unaccommodated room night demand.

CLEARWATER BEACH – THE VISION IS REALIZED | PAGE 5

FIGURE 5: “BIG 6” OCCUPANCY, ADR, AND REVPAR

Source: Smith Travel Research

The “Big 6” ADR has been making gains over the last 5

years along with strong increases in occupancy. RevPAR

has increased 22% between 2010 and 2012. HVS

projects that this competitive group of hotels will end

2013 with an average rate of $210 and an occupancy of

76%, reflecting a RevPAR increase of 11.7% from 2012.

Future Development Plans

Thanks to Beach Walk, the Hotel Density Pool, and

multiple recent awards, Clearwater Beach has become a

highly sought out destination for hotel developers. A

significant amount of new hotel projects, many of which

will make use the hotel density pool are currently in the

pipeline.

Figure 6 recaps hotel projects that are currently

proposed to be built on Clearwater Beach. Note: due to

the confidential nature of many of these projects, HVS is

unable to disclose their future brand affiliation and

developers.

FIGURE 6: PROPOSED NEW HOTEL SUPPLY PIPELINE

Proposed Property

Number of

Rooms

HVS Estimated

Opening Date

Courtyard by Marriott 134 Mid-2015

Hampton Inn & Suites 90 Mid-2015

650 Bay Esplanade 102 Mid-2015

Full Service Upper Upscale Resort 345 Mid-2016

Full Service Hotel on the Former Adams Marks Site 230 Mid-2016

Full Service Luxury Resort 200 Mid-2016

Total Proposed New Room Supply 1,101

Source: HVS Research, Clearwater Beach Planning and Zoning

Conclusion

Over the last 20 years, Clearwater Beach has made a

complete transformation from the traditional “mom and

pop” hotel products to a true nationally recognized hotel

market. The transformation began with the strategic

vision behind the “Beach by Design” Plan which invested

in physical infrastructure in the town and assisted

developers in achieving an economic model for

financially feasible new hotel development. The receipt

of multiple awards and the influx of national hotel

brands associated with the redevelopment efforts have

all contributed to the success of Clearwater Beach. The

new hotel supply entering the market within the next

three years is further evidence that the strategic vision

created for Clearwater Beach in 2001 will have been

completely realized in less than two decades.

64%

66%

68%

70%

72%

74%

76%

78%

$50

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$90

$110

$130

$150

$170

$190

$210

$230

2008 2009 2010 2011 2012 2013 F*

Occ

up

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AD

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ADR RevPAR Occ%

HVS Miami| 8925 SW 148th Street | Suite 216 | Miami, Florida 33176 www.hvs.com

HVS Miami provides a variety of consulting and

valuation services for hotels, mixed-use real estate, and

shared ownership projects. HVS Miami professionals have

completed over 1,300 engagements, of which 54% were

located throughout Florida. They have also worked in 28

Caribbean islands and 12 Central and South American

countries. In addition to certified valuations, the HVS Miami

office also provides feasibility studies, acquisition due

diligence, asset management, expert witness testimony, and

marketing and sales solutions for mixed-use and shared

ownership real estate developments.

About HVS

HVS is the world’s leading consulting and services

organization focused on the hotel, mixed-use, shared

ownership, gaming, and leisure industries. Established in

1980, the company performs 4500+ assignments each year

for hotel and real estate owners, operators, and developers

worldwide. HVS principals are regarded as the leading

experts in their respective regions of the globe. Through a

network of more than 30 offices and 450 professionals, HVS

provides an unparalleled range of complementary services

for the hospitality industry. www.hvs.com

Superior Results through Unrivalled Hospitality Intelligence. Everywhere.

About the Author

Kristina D’Amico is an Associate at HVS

Miami and works

in both the hotel

Consulting and

Valuation and

Shared Ownership

Services divisions.

Kristina graduated

from Florida

International

University with a

Bachelors of Business Administration in

Finance, Cum Laude, and a Minor in

Hospitality Studies before starting her

career at HVS. She is a Registered Trainee

Appraiser in the State of Florida and is

diligently working towards her education

and experience requirements to become a

Certified General Appraiser. Kristina has

completed hotel and shared ownership

appraisals, market studies, feasibility

studies, purchase price allocations, and

ad-valorem tax valuations in the United

States, Canada, the Caribbean Basin and

South America. She specializes in assets

on the West Coast of Florida.

To Contact Kristina:

Phone: +1 (305) 378-0404 x 1016

Email: kdamico@hvs.com