Two Perspectives on Hotel Recovery

The DJIA fell 139 points on Friday while Nasdaq was down 104, the S&P 500 fell 28 points and the 10-year treasury yield was down .01 to 3.45%. Lodging stocks were mostly lower. While AINC was up 5%, we saw -5% declines in MAR, H, ABNB and IHG.

Citigroup cut its rating on IHG Hotels & Resorts to Sell from Neutral. Citi believes the incomplete recovery in corporate travel will weigh on IHG’s RevPAR. Citi expects downward pressure on corporate travel to increase as a recent study suggests only 16% of major corporations have adequate business travel reduction targets related to carbon emissions. Citi said mid-term environmental pressure combined with the impact of the adoption of virtual meetings might lower corporate room demand by 5% to 10%.

Berenberg, on the other hand, sees hotels as the top travel play. The brokerage firm says concerns about the hotel industry are overblown and the outlook for RevPAR for 2023 and 2024 will strengthen further. They see no evidence of a bigger structural risk to either business travel or anything pointing to migration to disruptors like Airbnb and other OTAs. They raised their ratings on Hilton, Hyatt, and Marriott to Buy.

Baird removed their Bullish Fresh Pick designation on Marriott as the shares are up 1,000 basis points versus the S&P 500 since their positive call in July. They view the risk/reward as less attractive today, especially given macroeconomic uncertainties, a negative business travel data point from Southwest Airlines, and increasing borrowing costs. The 1% excise tax on share repurchases also could impact EPS accretion.

Xenia Hotels & Resorts announced the reinstatement of their quarterly common stock dividend. Their board authorized a cash dividend of $0.10 per share for the third quarter of 2022.

Travel + Leisure Co. provided an update on its third quarter results and outlook for the remainder of 2022 in advance of presentations at several conferences in September. The company is reiterating the third quarter and full-year outlook provided on July 28, 2022, in its earnings press release, including the following measures: third quarter adjusted EBITDA of $230 million to $240 million; and full year adjusted EBITDA of $860 million to $880 million. The company stated that through the end of the year, booking pace at their vacation ownership resorts remains strong with room nights on their books 8% above 2019.

Hotel del Coronado, part of Curio Collection by Hilton announced the opening of Shore House at The Del, a sort of hotel within a hotel. The Shore House at the Del is a collection of 75 high-end residential-style seaside offerings. With the property’s opening, Hotel del Coronado now offers five distinct authentic neighborhood experiences. Located in Coronado, CA, Shore House at The Del features multiple dining and entertainment experiences; a dedicated entrance, valet and reception experience; VIP concierge service, zero-edge ocean-view pool, and wellness offerings.

IHG Hotels & Resorts announced the opening of its newest Holiday Inn Express & Suites in Ankeny - Des Moines, IA. The 94-room property offers 6,000 square feet of meeting space, a business center, fitness center and indoor heated pool. The Holiday Inn Express Ankeny - Des Moines operates under the ownership of Horizon Hotels Iowa, LLC.

Halekulani Corporation announced the reopening of Waikiki’s most iconic and popular venues, House Without A Key, following a complete revitalization and enlargement. Located in Halekulani Hotel, the indoor/outdoor restaurant has been completely transformed. With a dramatic new entry experience adjacent to the sea, House Without A Key will feature a new shaded outdoor bar, an exhibition-style glass kitchen and a custom Marra Forni Brick oven created in Italy exclusively for Halekulani. 

The Kessler Collection celebrated the grand opening of its second property in South Carolina, Grand Bohemian Lodge Greenville. Located in the heart of Greenville, the seven-story property features 187 suites and guestrooms, Kessler’s signature Poseidon Spa, Between the Trees restaurant and an upscale bar featuring an outdoor verandah and terrace.

New Castle Hotels & Resorts announced the acquisition of the 55-room, historic LaSalle Hotel in Bryan, TX. Following an extensive interior and exterior renovation of the property, the LaSalle will join the Marriott Tribute Portfolio. The LaSalle, which features a subterranean speakeasy and a lobby-level bar/restaurant, will operate as an independent hotel through the fall of 2023. This was the property that we referenced in Thursday’s newsletter as being acquired by Marriott. The local news article we took that from incorrectly said Marriott International was acquiring the property when in fact New Castle did.

Capital Vacations entered into management agreements with two resorts: the 50-suite Laurel Point in Gatlinburg, TN and Nautical Mile in Wells, ME, bringing the company’s management portfolio to more than 200 resorts. Capital Vacations will provide resort management, sales and rental guarantees as part of its agreement with board of directors of both resorts. 

Another huge development has been proposed for District Detroit with a proposed hotel next door to Little Caesars Arena in Detroit, MI. The Ilitch family has teamed up with Related Cos’ Steven Ross and a plan for a new $190 million hotel just south of the LCA. A News release says the hotel would stand 14 stories and have nearly 300 rooms along with 30,000 square feet of amenities and shopping, adding to the latest in a string of high-rise, high-end building across downtown. 

After 142 years of remaining in the family, the Hotel Lenhart in Bemus Point, NY is in the process of being sold. Hotel Lenhart co-owners and siblings, Bebe Johnston and John Lenhart Johnston, Jr., have already signed a purchase agreement with the new owners; however, the process of officially selling the hotel is still underway. 

The Mayfair Hotel, in Coconut Grove, FL, has reopened following two years of renovations. Some of the renovations included updating the garden and the conversion of an elevator cab into a very small bar. The rooms are completely made over: a fully renovated bathroom, a larger bed and a clawfoot tub. Food is a driving force at the rooftop restaurant at The Mayfair Hotel.

Wyndham Hotels & Resorts unveiled a new, portfolio-wide, mobile tipping solution for its U.S. and Canadian franchisees, making it one of the first major hotel companies to do so. Developed and managed by Béné, the platform enables guests to easily tip hotel team members digitally via their preferred mobile device. It comes as a growing number of consumers adopt and show a preference for digital payments, which according to consulting firm McKinsey, 82% of Americans are now using. Once a hotel opts-in and is setup on the Béné platform, guests can easily recognize the team member of their choice by scanning a QR code during their stay and choosing how much they would like to tip. QR codes are unique to each team member and tips are deposited daily either directly into their individual bank accounts or into the property’s account to be distributed with regular payroll. 

Madison Realty Capital provided a $315.6 million loan to Carpenter & Companyand Woodward Interests for the Four Seasons Hotel & Residences in New Orleans, LA. MRC’s loan will fund the completion of the asset’s renovation. The 341-key hotel is part of a 33-story mixed-use tower with 92 condominium units on the top floors. The property will include event space, two restaurants, an outdoor pool and private gardens. It is also home to Vue Orleans, a 360-degree observation deck. JLL Capital Markets negotiated the financing.

HVS Executive Search announced the promotion of Alice Sherman to Senior Vice President. Alice works with a diverse hospitality client base and has had great success placing executives in all disciplines. Prior to HVS, Alice worked in the fine-dining restaurant and boutique hotel industries in roles such as recruitment, training, new openings, operations, public relations and communications.