California Hotel Sales Cool Off

The DJIA fell 338 points on Friday while Nasdaq was down 154, the S&P 500 was down 43 points and the 10 year treasury yield was down .07 to 3.19%. Lodging stocks did better than the overall market with a mixed bag. SOND was up 7%, AHT was up 6% but VCSA was down -5% to lead the biggest movers.

IN OBSERVANCE OF THE U.S. LABOR DAY HOLIDAY, THERE WILL BE NO DAILY LODGING REPORT ON MONDAY, SEPTEMBER 5.

UBS cut its price target on Park Hotels to $15 from $22.

After a record-breaking 2021 for hotel sales in California, hotel transaction have cooled off in the state in the first six months of this year. The number of individual hotel sales declined by 9.9% and total dollar volume is down 33.6% thus far in 2022, according to Atlas Hospitality Group. In San Diego, 25 hotel were sold in the first six months of 2022, compared to 28 in the same time from in 2021. The most expensive local hotel sale of 2022, as reported by Atlas, was the 126-room Moxy Hotel in downtown San Diego at $46 million; next highest was the 90-room Inn at Rancho Santa Fe at $42.7 million; followed by the 90-room Courtyard San Diego Gaslamp/Convention Center at $41 million. Atlas reports that the media price per room has increased by 12.7% statewide, up from 127,285 in 2021 to a new California record at $143,443. In San Diego County, however, where individual sales of hotels decreased by 10.7% and total dollar volume was down 41.7%, the median price per room declined by 11%. Comparably, individual hotel sales in Orange County were down 34.5% and dollar volume decreased 16.8% in the first half of the year. The median price per room was up 13.7%. In Los Angeles County through the first six month of 2022, individual hotel sales declined by 21.7% and dollar volume was down 4.5%. The median price per room increased by 24.3%. According to Atlas, hotel investors looking at San Diego know that the region is strong for commercial business and tourism and has some of the best long-term potential of any region in California. Therefore, San Diego hotel owners are more confident about the long-term outlook for the region and thus will be less motivated to sell. Atlas also noted that construction costs continue to climb and that investors find that purchasing a hotel cost less than replacements. 

According to Baltimore Business Journal, more and more Baltimore hotels are slated to become apartments. In Downtown Baltimore, at least a half dozen hotels have closed and sold to a new owner within the past 2 ½ years. At least five of those are likely to be headed to residential use. Among them are properties like the former Holiday Inn on Lombard Street, a 365-room hotel that sold for $21.5 million to a firm managed by Neil Kadisha and could be transformed into a market-rate, multi-family development. Last summer, the Embassy Suites on St. Paul Place, a 37-story tower, sold to investors who intend to convert it to residential use. The Best Western Plus Envy Hotel is slated to become a residential car facility. In Baltimore, and across the country, there is a shortage of affordable housing units within city centers. And while the tourism industry has seen gains in leisure trips, business travel has been much slower to recover. Repurposing some hotels for residential use might even represent an optimization of Downtown Baltimore’s hotel market. Though hotel conversion projects face challenges, including aging infrastructure and zoning hurdles, the appeal is the central location of many hotel properties. Vivo Investment Group recently acquired the Radisson Hotel and Holiday Inn Baltimore Inner Harbor, which together total more than 700 hotel rooms. The developer plans to convert the towers to a mixed-use apartment community with approximately 708 units, mostly studios, as well as retail space. The new apartment community will have the advantage of existing hotel amenities, including meeting areas, ample lobby space and a pool deck. 

The $220 million office redevelopment by Union Station  in Washington D.C., is nearing the finish line. RMR Group is rebuilding the office building at 20 Massachusetts Ave. NW, as a 10-story mixed-use property with work scheduled to wrap in spring 2023. Office Properties Income Trust, which is managed by RMR Group, owns the property. Last year, the leasing team secured a 274-room Royal Sonesta Hotel, which will take the lower floors of the building. There will be an office on the top four floors and ground-floor restaurant and retail space. The new 20 Mass will be unusual, as office tenants will enjoy access to hotel amenities like a ballroom, penthouse and fitness area. 

The Palm Springs City Council voted unanimously to overturn the planning commission’s rejection of a developer’s request for more time to build a long-in-the-works hotel and spa adjacent to downtown. The decision allows the Orchid Tree Resort & Spa to keep heading toward an expected opening date in mid-2025 in Palm Springs, CA. In July, the Palm Springs Planning Commission denied a request by the developer, Richard Weintraub, for a two-year extension for needed permits. Current plans for the Orchid Tree call for 74 hotel rooms, a restaurant, spa and meeting space. Weintraub now has until Feb. 1 to secure financing. 

A New Jersey hotel and water park that has been closed for over two years will soon reopen. Mt. Laurel’s 14-acre hotel and water park, formerly known as The Hotel ML and Coco Key Water Resort, is reopening under new ownership. Although an opening date has yet to be announced, it is expected to reopen under a new, undisclosed name in the fall. The hotel will reopen at limited capacity, operating about 100 of its 279 rooms, and the indoor water park will likely open in 2023.

The Oceanview Motel in Wildwood Crest, NJ has new owners who vow to reopen the “doo-wop” retro-style property. A tentative grand opening is set for Memorial Day weekend 2023. According to Madison Resorts, the renovated, four-story property will feature 108 rooms, including 90 suites; new lobby/reception; restaurant; lounge area with firepits; an ocean view patio lounge; and other upgrades. 

The LDS church has purchased the Peaks Hotel in Park City, UT, for an undisclosed price. It was purchased by Property Reserve Inc., which is the real estate arm of the Church of Jesus Christ of Latter-day Saints. The hotel will undergo a remodel next year and become a Marriott property. The 127-room hotel includes an onsite restaurant.

Dorchester Collection announced the appointment of Marion Ryan as area director of sales & marketing for its three UK hotels. Marion replaces Matthew Rowlette, who after nearly five years at Dorchester Collection takes on a new venture in Dubai. Marion comes to Dorchester Collection from Four Seasons Hotels UK Collection where she most recently served as director of sales & marketing. In her new role, Marion will be fundamental in the strategic director of sales leadership across the three UK hotels, spearheading market positioning and reservations strategies to achieve global growth. 

Accor announced the signing of a management agreement with Odyssey Group Hotel and the Spanish SOCIMI, Millenium Hospitality Real Estate, for a Fairmont hotel and residences in Spain, scheduled for a soft opening in the next 12 months, and to be fully opened by Easter 2024. Fairmont La Hacienda will be located in La Hacienda, a gated residential and golf development. The complex will comprise 323 keys, including 153 hotel guest-rooms with 3 Junior Suites and 2 two Bedroom Suites. In addition, 51 villas with 170 keys will also complete the room offer, whereby 156 of them will be composed of Junior Suites and one Bedroom Suites. The luxury resort will offer five restaurants and bars, a spa, fitness space and facilities, a 1,108 square meter ballroom and a selection of flexible meeting rooms, surrounded by two of the best golf courses of the area.

Scandic Helsinki Hub opened in the Finnish capital. Located in downtown Helsinki, the hotel is housed in an impressive 1920’s printing house that has been transformed into a large 352-room hotel. Along with unique loft-style rooms, the hotel features 8 event and meeting space; a co-working lounge, a restaurant and 2 bars, courtyard terrace, a gym, sauna, and garage with electric car and bike charging. 

Non-U.S. international visitor volume to the U.S. surged 134.9% to 4,062,569 compared to June 2021, according to the National travel and Tourism Office. This represented 64.2% of the pre-COVID visitor volume of June 2019 and was down marginally from the last month’s 64.4%. Overseas visitor volumes to the U.S. jumped 162.7% to stand at 2,065,607 from June 2021. June 2022 was the 15^th consecutive month that total non-U.S. resident international arrivals to the U.S. rose on YOY basis. In the first half of 2022, international arrivals soared 170.7% YOY to 20,732,271, which was 93.8% of arrivals in 2021. International outbound travel volume from the country increased 82% YOY to 8,680,304 and reached 83% of June 2019 departures. June 2022 was the 16^th consecutive month when total U.S. citizen international visitor departures increased on a YOY basis.

Edyn has expanded Locke, its lifestyle brand, with the acquisition of the NH Kensington in London, marking edyn’s sixth Locke property in London. Scheduled to finish conversion and open in June 2023, the apart hotel will feature 121 apartments, a bar, restaurant, co-working space, private gardens and meeting areas.