Florida's real estate market remains one of the most dynamic in the United States, attracting international capital, institutional investors, and developers focused on transforming urban and coastal landscapes. Nowhere is this more evident than in the hospitality sector, where hotel owners, boutique hotel groups, resort developers, and hospitality-focused REITs are capitalizing on Florida’s growth to create destination-driven, mixed-use properties that deliver long-term value.
For those exploring or expanding hospitality-centric developments, Florida offers a compelling mix of opportunity and complexity. Forward-thinking clients such as Driftwood Hospitality are redefining what it means to develop in this space—leveraging strategic partnerships, vertically integrated platforms, and flexible development models that meet both guest demand and investor expectations.
This article is written for hospitality players seeking to unlock value in Florida's competitive market. We outline key legal, business, and structural considerations, from capital stack design and entitlement strategies to deal terms and contractual frameworks that help de-risk these projects while maximizing flexibility for future repositioning, branding, or monetization.
Whether you're entering the Florida market or scaling your current footprint, understanding these levers can mean the difference between a good project and a great one.
Understanding the Mixed-Use Model in Hospitality
A mixed-use hospitality development in Florida typically combines hotel, residential (condo or multifamily), retail, and food and beverage (F&B) components. Some also incorporate office, entertainment, or wellness pieces. These developments are often anchored by a full-service or lifestyle-branded hotel (e.g., Marriott, Hilton, IHG, Driftwood Hospitality Management) and designed to generate diverse revenue streams through:
- Room revenue (hospitality)
- Lease or sales proceeds (residential/retail)
- Parking or amenity income (shared services)
- Management and franchise fees
In representing clients like Driftwood Hospitality, a key legal role involves aligning the economic interests of stakeholders—operators, investors, landowners, and municipalities—through carefully negotiated documents that accommodate both flexibility and scale.
Site Acquisition & Entitlements: Navigating Florida’s Regulatory Landscape
Real estate counsel must guide developers through site control, entitlement approvals, and concurrency compliance. In Florida, this includes:
- Zoning and Comprehensive Plan Consistency: Counsel must ensure proposed uses are permissible under current zoning or advocate for site-specific amendments. This often involves public hearings, conditional use approvals, and negotiations with planning boards and community stakeholders.
- Development Agreements and Incentives: For large-scale developments, counsel may negotiate Development Agreements with municipalities under Section 163.3220, Florida Statutes. These allow developers to “lock in” entitlements over multiyear buildouts. Further, Florida’s Opportunity Zones, Tax Increment Financing (TIF) districts, and public-private partnership (P3) frameworks may offer additional tools for capital optimization.
- Water and Sewer Allocations: Developers should secure written assurances for utility capacity. In hospitality projects, especially those in coastal or high-tourism areas such as Miami-Dade County or Palm Beach County, utility concurrency is often a gating item.
Structuring the Capital Stack: Equity, Debt, and Public-Private Participation
Complex hospitality developments often exceed $100 million in total development cost. For such projects, a capital stack may involve:
- Land Contribution by Owner/Developer: In some cases, the developer may contribute land into a joint venture (JV) with an experienced hotel operator such as Driftwood.
- Preferred Equity & Mezzanine Debt: Institutional investors (REITs, family offices) or EB-5 programs may participate in preferred equity or mezzanine positions, often with hard preferred returns and downside protection.
- Construction Financing: Lenders in this space may require single-purpose entities (SPEs), completion guarantees, interest reserves, and step-in rights. Hospitality components often demand separate underwriting and more intensive due diligence on brand flag, management agreements, and projected revenue per available room (RevPAR).
- Public Participation: When the project brings economic benefits (jobs, tourism, tax revenue), Florida municipalities or community redevelopment agencies (CRAs) may provide subordinate debt, infrastructure reimbursements, or long-term ground leases.
Legal counsel must harmonize all tiers of the capital stack into an integrated financing framework, avoiding intercreditor conflicts and ensuring compliance with securities regulations where syndication is involved.
Hotel Management & Franchise Agreements: Negotiating for Flexibility and ROI
In representing hospitality developers and operators, few contracts are as important—or as long-lasting—as hotel management agreements (HMAs) and franchise/license agreements.
Key legal and business points include:
- Term & Termination: Long-term HMAs (20-plus years) may reduce asset liquidity unless termination rights, performance tests, or key-money clawbacks are negotiated. Driftwood, for example, brings a vertically integrated model and often seeks hybrid arrangements where management and ownership align.
- Brand Standards vs. Developer Control: Developers should negotiate rights to delay or phase capital expenditures (CapEx) and request waivers from brand standards during pre-opening or stabilization periods.
- Territory & Exclusivity: Especially for resort developments or lifestyle flags, securing geographic exclusivity within a designated radius helps preserve long-term asset value.
- Owner Approvals & Operator Duties: Counsel must define which decisions (budget, staffing, vendor selection) remain within owner control and ensure transparency around monthly reporting, gross operating profit (GOP), and reserve allocations.
Florida law generally defers to the contractual terms of HMAs and franchise agreements, but developers should be mindful of enforceability issues tied to unconscionability, fiduciary duties, and implied covenants in long-term relationships.
Shared-Use Covenants and REAs: Coordinating Across Components
A mixed-use hospitality project must function as a cohesive whole—yet often comprises multiple legal parcels, ownership entities, and use types. This complexity is typically addressed via:
- Reciprocal Easement Agreements (REAs): These allocate access rights, cost-sharing (e.g., for valet, trash, security, and maintenance), signage rights, and architectural controls among hotel, retail, and residential components.
- Condominium or Vertical Subdivision Structures: Florida law allows for “vertical subdivisions” where hotel, residential, and retail units can be separately platted and conveyed, often using commercial condominium regimes under Chapter 718, Florida Statutes.
- Licensing Agreements for Amenities: Where amenities such as pools, spas, and/or gyms are shared between hotel guests and condo owners, agreements must clearly define use rights, cost allocations, maintenance responsibilities, and insurance coverage.
Well-drafted REAs and shared-use agreements reduce operational friction, allocate liabilities, and facilitate future refinancings or partial asset sales.
Tax Structuring & Exit Strategies
From the outset, counsel should consider the tax implications of entity formation, asset disposition, and income allocation. For Florida-based mixed-use hospitality developments, this includes:
- 1031 Exchanges: Developers or investors may wish to utilize 1031 exchanges upon sale of hotel or retail components. Proper documentation and intermediary coordination are critical.
- Cost Segregation & Accelerated Depreciation: Engineering-based cost segregation studies can yield significant depreciation benefits under current IRS guidance, improving after-tax internal rates of return (IRR) for sponsors and LPs.
- Opportunity Zone Structuring: Projects located in Qualified Opportunity Zones may attract tax-sensitive equity capital, but must comply with the 90% test, substantial improvement rules, and exit timing requirements.
- Exit Flexibility: Vertical subdivision or bifurcated ownership structures enable developers to sell or refinance individual components (e.g., hotel vs. residential) based on market timing.
Conclusion: Strategic Counsel for Complex Hospitality Developments
Florida’s hospitality-driven mixed-use market rewards vision, preparation, and the right partnerships. The state’s combination of strong tourism demand, diverse capital sources, and flexible development frameworks creates fertile ground for projects that blend experience, community, and profitability. But the very attributes that make Florida attractive also require disciplined legal, financial, and operational planning to navigate regulatory complexity, align stakeholder interests, and preserve long-term optionality. By approaching site acquisition, capital structuring, brand alignment, and shared-use governance with strategic foresight, developers and investors can not only mitigate risk but also position their projects to thrive across cycles—turning opportunity into enduring value.
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