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North America

Earnings Reports and Interest Rates Spook Investors

Alan Woinski and Kim Woinski

November 2nd, 2022

Skift Take

  • Lodging stocks were down before the Fed decision to raise interest rates by another 75 basis points and conference call but the selling accelerated after, led by the REITs, not surprisingly.
  • Investors did not take the earnings reports from Airbnb, Ashford Hospitality Trust or Xenia Hotels & Resorts very well.
  • Meanwhile STR reported for the week ended 10/29, US hotel RevPAR was up 33.5% year over year.

There are two things that are a near certainty these days in the stock market. The first is the market has a really good chance of being up on Fridays and will crater during and especially after Fed Chief Powell holds his press conference. The DJIA ended the day down 505 points while Nasdaq was down 366, the S&P 500 fell 96 points and the 10 year treasury yield was up .01 to 4.06%. Lodging stocks were down before the Fed decision to raise interest rates by another 75 basis points and conference call but the selling accelerated after, led by the REITs, not surprisingly. The worst of it was felt by SLNA, down another -37% to a new all time low price the SPAC that bought them never saw. AHT was down -15%, XHR was down -14%, ABNB was down -13% while BHR and SOND fell -8% each. There was a long list of lodging stock declines at 5% or more but these were the bigger decliners.

Investors did not take the earnings reports from Airbnb, Ashford Hospitality Trust or Xenia Hotels & Resorts very well. ABNB had a strong 3Q report with solid margins but sounded too cautious on the future, adding to an already nervous situation. First they said they were switching to fully loaded pricing which means a person booking now sees the entire pricing. Pricing changes like that took some time to adjust to when hotels and others did that in the past. ABNB also warned that holiday-quarter revenue could fall short of market expectations, expressing concern about the strong dollar. We think you get the picture as to why the stock traded like it did.

Xenia missed estimates, enough in this market to be taken to the woodshed by the investment community. Analysts were expecting RevPAR growth in the low 30s, they only got high 20s. Meanwhile it looks like XHR was pretty busy with sales and renovations during the quarter, something that will have implications in the future, mostly positive. XHR bought back 536,000 shares in the quarter for $8.2 million with $86 million left in their authorization.

Ashford Hospitality Trust reported 3Q results, already mostly known as they update each month and gave a pre-announcement. AHT said September was finally a month where RevPAR was ahead of pre-pandemic levels.

Meanwhile STR reported for the week ended 10/29, US hotel RevPAR was up 33.5% year over year with US Group RevPAR up 93%. RevPAR was up 27.2% versus the comp week in 2019.

The all-new Four Seasons Hotel and Private Residences Nashville is now open in Tennessee. The 40-story property encompasses 235 hotel guest rooms and suites, along with a unique chef-driven restaurant and bar concept, The Spa at Four Seasons, resort-style pool deck, fitness center and modern event spaces. Four Seasons Hotel and Private Residences Nashville also features 144 private residences. 

Construction is moving along on H Hotel W39 in Midtown, Manhattan. Developed by Wei Hong Hu of H Hotel LLC, the 28-story hotel will yield 65 hotel rooms, meeting rooms and a fitness center. YIMBY predicts H Hotel W39 will complete construction around the end of 2023 or in early 2024 at the very latest.

Melia Hotels International announced the addition of two new hotels in Mexico. Gran Melia Hotels & Resorts will open its first hotel in Mexico and ME by Melia will continue growing in the country with its second hotel. The second ME by Melia hotel in Mexico will be located in Guadalajara and will be the brand’s first city hotel in the country. ME Guadalajara will provide 150 rooms and suites, a sky pool and an impressive rooftop area. In line with other ME hotels worldwide, the hotel will also offer a wide range of outstanding dining experiences. The Gran Melia will open in Riviera Nayarit and will provide 180 rooms and suites, in addition to all the facilities required for the perfect luxury experience. The two new hotels will add to the 7 hotels already in operation and another 3 in the process of opening in the Melia Hotels International portfolio in Mexico.

Selina Hospitality PLC has formed a strategic partnership with Mantra to curate wellness retreats throughout Selina’s ecosystem of 163 locations across 25 countries and six continents. Per the Global Wellness Institute, the wellness economy is projected to reach nearly $7.0 trillion in 2025, and the Mantra partnership allows Selina to tap into this growing business segment all while maximizing synergies across distribution and operating expenses. 

Capital Vacations Club announced 32 new Club resorts across 15 states representing a significant milestone for the company as it further expands into popular destinations on the west coast including Hawaii, California and Arizona. 

The pieces are falling in place for a $200 million redevelopment proposal spanning Downtown Cincinnati’s convention center district, including preliminary designs for a new name-brand convention center hotel. 3CDC gave an update on the convention center district to the Hamilton County Board of Commissioners that the hotel is expected to go on the Fifth Street surface parking lot which is currently owned by the Port Authority. 3CDC, appointed to lead the joint city-county convention center district project, received proposals from four national hotel developers and it is currently receiving those proposals. The hotel would feature 800 rooms, up to 80,000 square feet of flexible meeting space and junior and senior ballrooms. The submitted designs, which are subject to change, show a building of 26-32 stories tall. 3CDC plans to host the four developers for 90-minute interviews in November. 

Sensei Porcupine Creek opened its doors in Rancho Mirage, CA, as the first standalone retreat under the Sensei brand. The 230-acre private estate offers 22 accommodations, including Estate House rooms, Casitas with private outdoor heated spas and freestanding luxury villas. At the heart of the retreat stands the elegant Estate House. Beyond the Estate House lies a lagoon-style pool, Sensei Spa, a Fitness Pavilion and a Yoga Pavilion, an 18-hole golf course, and premier tennis facilities. Sensei Porcupine Creek also offers multiple dining options including Sensei by Nobu.

Hunter Hotel Advisors announced the sale of the Holiday Inn Express & Suites Kendall East in Miami. IRAS Group sold the property to Borluv Group for $8,825,000. Hunter’s Miami Office arranged the sale on behalf of the seller. The Holiday Inn Express & Suites Kendall East offers 66 guest rooms and suites, an outdoor pool and a well-equipped fitness center. 

Spirides Hotel Finance Company provided and the borrower has closed on a $6.3 million mortgage loan from a southeast U.S. headquartered bank to refinance the existing mortgage debt plus take $1.5 million cash out of the Holiday Inn Express in Latta, SC. The $1.5 million cash taken out of the loan proceeds will be used by the borrower as an owner’s cash equity down payment to build another hotel in North Carolina where they already own the land. This 4-story Holiday Inn Express features 68 guest rooms and suites. The terms of the financing arranged by Spirides include a 70% loan to value ratio, a low interest rate fixed for 5 years, and a 25-year amortization.

Stonehill PACE announced the company originated its first C-PACE financing in the state of Washington with a $16.3 million loan for the Cornus House, a new 199-unit multifamily project with 1,233 square feet of retail development. The C-PACE financing is over a 30-year term and will fund lighting, covered process, seismic and qualifying soft costs. Development of the new project is scheduled to begin before the year’s end, with a targeted completion date of November 1, 2024. The property is owned by Cornus House, LLC.

GreenLake Asset Management LLC has funded a $22,750,000 loan to redevelop a 108-room oceanfront hotel in Wildwood Crest, NJ. The property will feature an infinity pool, outdoor event venue, ocean view patio lounge, restaurant, fully renovated rooms and direct beach access. Located in the Doo Wop Historic Motel District, the hotel is anticipated to open on Memorial Day weekend in 2023.

reAlpha has secured a $200 million financing facility from Churchill Real Estate to help fuel its acquisition growth. The financing facility was arranged by Ackman-Ziff Real Estate Group. reAlpha will be positioned to launch its syndication platform more quickly than anticipated. Moreover, having a single financing partner will help to further streamline the financing part of the acquisition process, reducing overhead significantly. In addition to driving greater efficiencies and cost-savings, reAlpha Realty serves to expand the Company’s acquisition pipeline through partnerships and referral programs with outside brokerages as well as home builders and developers. With enhanced operational capabilities and a sizeable financing facility, reAlpha is positioned to launch its syndication platform more quickly, helping to democratize the short-term rental growing economy.

Personnel Moves

Hotel Equities named James Hansen as Executive Vice President. Hansen will handle the state of Florida and support HE’s Business Development Team on strategy and daily direction. Hansen will work closely with Chief Development Officer Joe Reardon to ensure all strategies are implemented throughout North America and the Caribbean. Before joining HE, Hansen served as Vice President of Sales & Marketing at Kolter Hospitality. 

Europe Highlights

Mama Shelter announced their expansion plans for 2023 and 2024. The brand is adding six new Mamas to their collection by the end of 2024. The 119-bedroom Mama Shelter Rennes, France is opening March 2023 as the ninth Mama in France. Mama Shelter Dijon France is opening in June 2023 with 120 rooms across five floors. In late 2023, Mama Shelter Dubai is opening in the Middle East for the first time, and will be home to 197 rooms and 204 apartments. Mama Shelter Medellin, Colombia is opening in early 2024 with 150 rooms. Mama Shelter Nice, France will heat to the French Riviera in June 2024 with 101 colorful rooms; and Mama Shelter will open for the first time in Switzerland in November 2024 with the 178-room Mama Shelter Zurich.

Alan Woinski and Kim Woinski

November 2nd, 2022

Companies: Accor, Ashford Hospitality Trust, Braemar Hotels & Resorts Inc., Capital Vacations, Ennismore, Four Seasons, Gran Melia Hotels & Resorts, GreenLake Asset Management LLC, Holiday Inn Express, Hotel Equities, Hunter Hotel Advisors, IHG Hotels & Resorts, Mama Shelter, ME by Melia, Melia Hotels International, reAlpha, Selina, Sensei, Sonder Holdings Inc., Stonehill, Xenia Hotels & Resorts

Locations: California, Cancun, Cincinatti, Colombia, Dubai, France, Guadalajara, Medellin, Miami, Nashville, New Jersey, New York City, South Carolina

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