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North America

Lodging Stocks Surge With Broader Market Gains

Alan Woinski and Kim Woinski
November 10th, 2022 at 5:19 PM EST

Skift Take

  • Let’s go backwards to give you an overview of today’s market. The 10-year treasury yield plunged 0.32 to 3.83%. That is a nearly 8% drop in the yield on a modestly better CPI report.
  • Vacasa reported 3Q results that went over as well with investors as their weak fourth quarter guidance.
  • The LWHA Q3 2022 Major U.S. Hotel Sales Survey includes 119 single asset sale transactions over $10 million which totaled roughly $3.7 billion.

Let’s go backwards to give you an overview of today’s market. The 10-year treasury yield plunged 0.32 to 3.83%. That is a nearly 8% drop in the yield on a modestly better CPI report. Back to the regularly scheduled program, the DJIA surged 1,201 points, Nasdaq was up 761, and the S&P 500 rose 208 points. People will look at this and wonder if these are weekly numbers. Lodging stocks surged, except for VCSA, plunging -45% to a new low (see next story). SLNA was the biggest gainer, up 16% while MCG was up 15%, SOND, HT and BHR were up 11% and HGV and XHR both rose 10%. INN was up 9% and SVC and HST were both up 8%. The list of 7% gainers were a who’s who of mainly lodging REITs.

Vacasa reported 3Q results that went over as well with investors as their weak fourth quarter guidance. Analysts did not react well with JP Morgan being the first to downgrade the stock to Neutral, saying they are moving to the sidelines until trends improve. VCSA said demand began to weaken in September and has been getting more pronounced in 4Q. 

The LWHA Q3 2022 Major U.S. Hotel Sales Survey includes 119 single asset sale transactions over $10 million which totaled roughly $3.7 billion. By comparison, the LWHA Q3 2021 Major U.S. Hotel Sales Survey included 88 single asset sale transactions over $10 million which totaled $4.8 billion. By further comparison, the LWHA Q3 2019 Major U.S. Hotel Sales Survey identified 41 transactions totaling roughly $3.725 billion. Noteworthy Q3 2022 observations include 27 trades of the national quarter total occurred in the State of California followed by 20 trades in Florida. Two Q32022 sales were consummated for more than $200 million each. Five Q3 2022 sales were consummated for between $100 million and $199 million each. Institutional investment platforms, many of whom are lodging centric, dominated the Q3 2022 hotel transaction arena. The era of plentiful and attractively priced debt and equity capital that drove the commercial real estate markets including lodging during the last several years has come to an end, and with it, the certainty of property values. Although rising interest rates make deals more challenging, LWHA thinks the hospitality industry is positioned to minimize the impact of its borrowing cost with its ability to continually re-price room rates. Capital remains available, although market uncertainty has induced hesitancy for risk-taking and tightening across both debt and equity. Existing debt facilities scheduled to mature over the next 12 to 18 months will create new venture opportunities while challenging many existing investments. Many owners will need to provide or source additional capital to bridge unavoidable financing gaps when dealing with maturing loans, while some sponsors will be forced to sell assets. Sponsors who recognize that investment in lodging underwritten on a long-term basis, generally reap healthy returns. 

Shamin Hotels announced the opening of the eight-story Moxy hotel in downtown Richmond, Virginia. The eight-story hotel offers 100 rooms, a bar and communal spaces that are highly social.

Mereté Hotel Management announced the opening of the new SpringHill Suites by Marriott Medford Airport in Oregon. The 131 all-suites hotel is managed by Mereté and owned by Navigators Hospitality, LLC. The hotel features a bar, event food options, an indoor pool and a large fitness center.

Choice Hotels International, Inc., signed an agreement with Noble Investment Group to develop 9 WoodSpring Suites hotels in Georgia and South Carolina over the next two years, signaling increased institutional interest in the largest economy extended-stay brand in the market.

MCR acquired the Homewood Suites by Hilton Kansas City Speedway, a four-story, extended-stay hotel in Kansas City, Kansas, marking the company’s first hotel in The Sunflower State. The 108-suite property offers 720 square feet of meeting space, a grab-and-go market, a lobby lounge, fitness center, indoor pool, business center and 125 parking spaces and EV charging.

The Crowne Plaza Auburn Hills, Michigan, began a significant renovation project under the ownership of Midwest Lodging Group and design partner Midwest Hospitality Design Services. The multi-stage renovation will include upgrades to the hotel’s 190 guest rooms, public area, and bar and restaurant, with an anticipated mid-2023 completion. The Crowne Plaza Auburn Hills also includes 4,800 square feet of flexible meeting and event space.

citizenM announced the Q1 2023 opening of its second hotel in MiamicitizenM Miami Worldcenter. The 351-room property will feature 4 societyM meeting rooms, a gym and a rooftop pool and bar. Due to open Spring 2023, citizenM will introduce its fifth hotel in Paris. The boutique-sized hotel citizenM Paris Opera will offer 84 rooms, two societyM meeting rooms and 24/7 canteenM. Anticipated to open in Summer 2023, citizenM will open the brand’s very first hotel in Austin. Developed in partnership with Turnbridge Equities, the 17-story tower will house a 344-room hotel, 24/7 canteenM, gym, and a rooftop pool and bar. Following the opening next year, 2024 and beyond will see citizenM adding several more properties to its portfolio including Rome – the first in the city; London – a fifth location; Dublin – first in the city; Miami – third in the city following citizenM Miami Worldcenter; Boston – the brand’s second in the city; Menlo Park – a benchmark project for Facebook’s campus; and DC – the brand’s third in the city. citizenM aims to have 40 operational hotels by 2024.

Hyatt and Gencom won a referendum for the joint venture’s proposal to replace the James L. Knight Center and an adjacent 615-room hotel in downtown Miami with a mixed-use project. The joint venture is planning Miami Riverbridge, a three-tower project with 1,500 apartments, a new 615-key Hyatt Hotel with 264-service-branded apartments, a 190,000 square foot convention center and 12,000 square feet of restaurant and retail space. The development would also have 50,000 square feet of outdoor public green space facing the Miami River. Miami Riverbridge would have two 61-story towers and a single 80-story building. Construction would begin in 2025.

A battered Bay Area lodging industry has suffered two casualties for failure to pay the mortgage. The first, the Comfort Suites San Jose Airport hotel, faces foreclosure after a notice of loan default late last month. The 56-room hotel owned by affiliates led by Hansaben Patel and Bhavesh Patel, defaulted on a $5.4 million loan. Pacific Enterprise Bank provided the financing. The second, a South Korea-based investor that owns land approved for a lodge in North San Jose also received a loan default notice. Mirae San Jose received a notice of loan default after failing to pay its mortgage on land in north San Jose’s Alviso district where it planned to build a 200-room hotel. Pine Tree Specialized Private Investment Trust and KEB Hana Bank loaned $26.4 million to Mirae San Jose when it bought the land. The lenders in both loan defaults seek full repayment, along with late fees and interest. Without payment, they intend to conduct separate foreclosure proceedings to seize ownership of the properties, or to auction off the real estate.

Chance Carlisle, the developer of the proposed Grand Hyatt says the city of Memphis has failed again to deliver a convention center hotel and announced the project was dead. The Grand Hyatt was supposed to be a 350+ room hotel with three restaurants and 94,000 square feet of meeting space. It would have also created a 735-room campus with the existing Hyatt Centric and the Caption by Hyatt Hotels. Carlisle said the site for the Grand Hyatt is still one of the best locations in the city, and they are still trying to decide what to develop on the property.

The Metcalfe Hotel in downtown Ottawa has been newly redesigned. Part of the Gray Collection, The 108-room hotel features a café and multifunctional lounge, a curved bar that extends from the lobby to the new adjacent French restaurant, and the Living Room located in the center of the 5-story atrium.

In Oklahoma City, Oklahoma, the Chickasaw Nation held an official groundbreaking ceremony for $400 million OKANA Resort & Indoor Waterpark. OKANA includes a riverfront hotel, spa, outdoor adventure lagoon, amphitheater, golf simulator, indoor waterpark, restaurants, First Americans Retail Gallery and a 39,000 square foot conference center. The first phase of the project will develop about 40 of the 140 acres at the site held by OKANA MDE, LLC, a wholly owned subsidiary of the Chickasaw Nation. The resort-hotel will feature an 11-story, 404-room hotel. Aquatic Development Group is the hotel developer and Benchmark Hospitality will operate the hotel and waterpark.

JLL Capital Markets arranged $172 million in financing to acquire the newly completed Four Seasons Hotel Nashville. JLL worked on behalf of the sponsorship, a joint venture between GD Holdings, Stonebridge Development Co. and Copford Capital Management LLC, to secure the acquisition financing through Credit Suisse. Newly delivered in 2022, the Four Seasons Hotel Nashville is a 40-story, full-service luxury hotel with 235 keys including 42 suites, a restaurant, unique bar concept, spa, resort-style pool deck and modern event spaces.

HVS Brokerage & Advisory announced the sale of the 96-key Holiday Inn Express & Suites Houston NW – Cypress Grand Parkway located in Cypress, Texas. The property was purchased by Capital One Hotels from Ta Vu LLC.

Hodges Ward Elliott brokered the sale of The Source Hotel + Market Hall, a prominent mixed-use development located in the heart of Denver’s River North Art District, on behalf of the seller. The Source Hotel + Market Hall is comprised of an eight-story, 100-room hotel and two market halls featuring numerous independent retail and restaurant vendors. The development also includes an on-site 300-stall parking garage, rooftop restaurant and bar, rooftop outdoor pool and over 2,550 square feet of function space.

RobertDouglas, represented, as exclusive advisor, affiliates of Concord Hospitality, Whitman Peterson, and Creation Gardens in the sale of the AC Hotel Louisville Downtown, in Louisville, Kentucky. The transaction was valued at $51 million. The asset features 156 guestrooms, a leased restaurant bar, 2,629 square feet of meeting space, and a parking garage with 187 spaces. 

We have been advised by Wheelock Street Capital that they are part of the partnership that is developing the 2 million square foot project in West Palm Beach’s Nora District. We covered the story that was in the Wall Street Journal. Wheelock said they are part of the partnership along with Place Projects and NTD Development.

Personnel Move

CoralTree Hospitality announced Nathaniel Brethold joined the home office team as director of restaurants, bars and events. In this new role, Brethold provides properties with oversight of food and beverage operations including innovative restaurant concepts, new menus and creative guest experiences. Brethold most recently led the team that created the food and beverage concepts for the Shinola Hotel in Detroit which included seven food and beverage outlets.

Alan Woinski and Kim Woinski
November 10th, 2022 at 5:19 PM EST

Companies: AC Hotels by Marriott, Braemar Hotels & Resorts Inc., Chickasaw Nation, Choice Hotels International, citizenM, Comfort, Concord Hospitality, Copford Capital Management LLC, CoralTree Hospitality, Crowne Plaza, Four Seasons, GD Holdings, Grand Hyatt, Hersha Hospitality Trust, Hilton Grand Vacations, Hilton Hotels & Resorts, Holiday Inn Express, Homewood Suites by Hilton, HVS, Hyatt, Hyatt Hotels Corporation, IHG Hotels & Resorts, JLL, Marriott International, MCR, Mereté Hotel Management, Moxy Hotels, Noble Investment Group, RobertDouglas, Selina, Shamin Hotels, Sonder Holdings Inc., SpringHill Suites, Stonebridge Companies, Summit Hotels, Vacasa, Woodspring Suites, Xenia Hotels & Resorts

Locations: California, Denver, Kansas City, Louisville, Memphis, Miami, Michigan, Missouri, Nashville, Oklahoma City, Oregon, Ottawa, San Francisco, Texas, Virginia

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