Florida has long been a magnet for investors seeking reliable returns in hospitality and real estate. From luxury hotels in Miami to vacation condos in Tampa and Orlando, the Sunshine State offers countless ways to profit from tourism.
According to data from Visit Florida, the state welcomed over 130 million visitors last year—a clear driver for both short-term rental and hotel investment growth.
But with the rapid growth of short-term rentals in Florida driven by platforms like Airbnb and Vrbo, many investors are asking the same question: Are hotels still the better investment—or have short-term rentals become the smarter play?
The Rise of Short-Term Rentals in Florida
Florida’s short-term rental market has exploded over the past decade. With over 130 million annual visitors and year-round demand, cities like Miami, Orlando, and Tampa are experiencing record booking rates.
According to AirDNA, Florida ranks among the top three U.S. states for vacation rental occupancy, with average daily rates exceeding $230 in coastal destinations. Investors are capitalizing on this by purchasing condos, duplexes, and multifamily units for flexible short-term leasing.
Why it matters:
Short-term rentals offer flexibility—owners can adjust rates seasonally, diversify income sources, and manage occupancy based on demand spikes like spring break, sports events, or conventions.
However, the market isn’t without challenges. Local governments are tightening regulations, limiting rental days, or requiring special permits. Investors must stay ahead of city-specific rules in Miami-Dade, Orange County, and Hillsborough to avoid fines and ensure long-term viability.
The Appeal of Traditional Hotel Investments
While short-term rentals have captured headlines, hotel investments remain a pillar of Florida’s commercial real estate sector. The state hosts over 400,000 hotel rooms, many tied to national brands like Hilton, Marriott, and Hyatt.
Hotels offer institutional-level stability, with structured management, brand recognition, and access to professional financing. They appeal to investors seeking predictable cash flow, especially in high-tourism zones like Orlando’s theme park corridor or Miami’s convention district.
Hotels also benefit from economies of scale—operating multiple rooms allows for better cost control and profit margins compared to single-unit rentals.
That said, hotel ownership demands higher capital and operational expertise. Maintenance, staffing, and marketing costs are significantly higher than managing short-term rentals. For smaller investors, joining hotel REITs or fractional ownership models can be an accessible alternative.
Profitability Comparison: Short-Term Rentals vs. Hotel Investments
Both investment types can be lucrative—but their profit profiles differ depending on your goals and resources.
Short-Term Rentals: High Flexibility, Moderate Risk
- Average ROI: 8–12% annually in top-performing markets like Miami and Destin.
- Entry Costs: Lower. A single condo or duplex can start generating income with minimal staff.
- Risks: Regulation changes, market saturation, and high platform fees.
- Best For: Individual investors seeking hands-on management or hybrid personal/vacation use.
Hotel Investments: Long-Term Stability, Higher Capital Needs
- Average ROI: 6–10% annually, but with more predictable occupancy rates.
- Entry Costs: High. Land, construction, or brand franchise fees can exceed $10 million for mid-range hotels.
- Risks: Economic downturns, brand competition, and high fixed costs.
- Best For: Institutional or high-net-worth investors prioritizing scalability and steady returns.
Short-term rentals in Florida typically yield higher returns (8–12%) due to flexible pricing and low overhead, while hotel investments offer steadier income (6–10%) with greater operational stability but higher upfront costs.
Market Trends Shaping 2025
Florida’s real estate and hospitality landscape continues to evolve, driven by tourism recovery, remote work trends, and changing traveler preferences.
- Hybrid Travel Demand: More professionals are working remotely while traveling, increasing long-term Airbnb stays and urban short-term leases.
- Sustainability Focus: Investors in both rentals and hotels are prioritizing energy-efficient upgrades, solar solutions, and eco-certifications to attract conscious travelers.
- Luxury Expansion: High-end hotel investments in Miami, Palm Beach, and Naples continue to outperform the market due to limited supply and international demand.
Strategic investors are diversifying—owning both short-term rental units and shares in hotel portfolios to balance flexibility with institutional security.
For example, GoCommercial’s insights on mixed-use property for sale in Florida highlight how multi-functional developments integrating retail, hospitality, and residential spaces are redefining profitability in urban centers.
Regional Insights: Where Opportunities Shine Brightest
Miami
Strongest short-term rental performance in Florida, with year-round tourism and international demand. However, strict municipal rules and taxes require diligent compliance.
Orlando
Stable hotel market supported by theme parks and conventions. Short-term rentals also thrive in Kissimmee and Lake Buena Vista.
Tampa & St. Petersburg
Balanced market where both hotels and short-term rentals perform well. Investors are shifting toward mixed-use projects and retail space for lease opportunities that enhance community value.
Naples & Palm Beach
Luxury hotel investments dominate. Average daily rates and occupancy levels make these prime spots for long-term hospitality investors.
For deeper insights into emerging investment hubs, explore our blog on top cities in Florida for mixed-use developments.
Risk, Regulation, and Tax Considerations
Investors must analyze not just returns but also the evolving legal landscape. Florida municipalities have taken varied stances on short-term rentals—some encouraging tourism-driven income, others enforcing caps or licensing systems.
Hotel investments, while more regulated and capital-intensive, benefit from established property tax frameworks and tourism incentives in certain counties.
It’s critical to consult specialized CRE attorneys and tax advisors before finalizing acquisitions to optimize deductions, depreciation, and cross-asset diversification strategies. Understanding local regulations, licensing requirements, and tourism trends is key to making informed decisions in Florida’s evolving hospitality market.
Making the Right Choice: Strategy Matters
Ultimately, the best investment depends on your financial capacity, risk tolerance, and desired involvement.
- Choose short-term rentals if you seek flexibility, quicker cash flow, and are comfortable managing dynamic pricing and guests.
- Opt for hotel investments if you value stability, scalability, and professional management structures.
Hybrid strategies—such as investing in mixed-use developments or hospitality-focused REITs—offer the best of both worlds.
Florida’s Hospitality Future Is Hybrid
Both short-term rentals and hotel investments are thriving in Florida’s booming hospitality economy. But the landscape is changing fast. Investors who diversify across asset classes, understand regional nuances, and anticipate regulation shifts will be best positioned to maximize returns.
Whether your goal is steady income or agile growth, Florida remains a world-class destination for hospitality investment—and GoCommercial can help you identify the best properties for your portfolio.
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