It is no secret on the island of Key West that tourism is changing. Hotels have been bought up by developers seeking to transform them into condos, time-shares, and higher priced hotels. Most of the properties targeted by developers have been the moderately priced hotel rooms - the bulk of Key West's typical-tourist accomodation.
Many businesses in Key West have been suffering due to nearly 1000 hotel rooms being "off-line" during their reconstruction. It remains to be seen if these projects will be a success, whether tourists of the future will spend $350+ night to stay in Key West, whether "condotels" are a smart investment (I have my doubts), and whether the island will seriously suffer by pricing out the majority of our visitors. It is a risky gamble on the part of developers - rolling the dice with the livelihood and character of Key West.
Unfortunately, things are looking tougher for the future.
One of the largets property owners and developers on the island, the Spottswoods, have announced a massive redevelopment at the west end of Key West - near the entrance from U.S. 1.
The Spottswoods have bought up one of the last remaining stretches of moderately priced Key West hotel rooms and plan to replace it with new expensive hotel rooms & time-share units (along with restaurants, retail, bar, and a huge conference center. Oh, and they'll build 50 affordable housing units on the property.
The hotels that are due to close are the Days Inn (with 133 hotel rooms), the Comfort Inn (with 100 rooms), the Holiday Inn (with 144 hotel rooms) and the Radisson Inn (with 145 rooms). This is a total of 522 hotel rooms that will close. When it reopens, the new hotel will have 417 hotel rooms - a loss of 105 hotel rooms. Even if you add in the time share properties, there is still a loss of 72 hotel rooms!
Maybe most worrying is that the hotels' closings are some of the last moderately priced hotels on the island. So the big question for the future is, will there be enough tourists willing to pay $350+ per night to stay in Key West? My guess is "probably not". In any market, when you double the price of anything, you can expect to receive less buyers. What is yet to be determined is the "price elasticity of demand" - which shows how much demand drops when prices change.
Either way, the difficult times for Key West's tourist businesses are surely not over.
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