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North America

REITs Remain Cautious About Corporate Travel

Alan Woinski and Kim Woinski

November 20th, 2022


Skift Take

  • MCG and INN both were up 6% while SVC and SLNA were up 5% each. SOND fell -5% on the day.
  • Xenia Hotels & Resorts announced its board of directors authorized the repurchase of up to an additional $100 million of the company’s outstanding common shares. With the additional authorization
  • U.S. lodging REIT management teams did express concerns about cracks in demand forming with technology customers soon after recent layoff announcements.

The DJIA ended Friday with a gain of 199 points while Nasdaq was up a point, the S&P 500 rose 19 points and the 10-year treasury yield was up .04 to 3.82%. Lodging stocks were higher. MCG and INN both were up 6% while SVC and SLNA were up 5% each. SOND fell -5% on the day.

Xenia Hotels & Resorts announced its board of directors authorized the repurchase of up to an additional $100 million of the company’s outstanding common shares. With the additional authorization, XRH has approximately $173 million remaining under its total repurchase authorization.

It was a subdued NAREIT REITworld conference in San Francisco, judging by the analyst reports. Truist said that with it taking place so close to 3Q earnings, there wasn’t much said that was new. Some U.S. lodging REIT management teams did express concerns about cracks in demand forming with technology customers soon after recent layoff announcements. Truist said they found management teams remaining fairly optimistic about continued improvement in top-line fundamentals into 2023 but feel it is still a ways to go for a full recovery. Most teams are resigned to leisure travel softening but more positive and focused on the continued recovery of the laggard demand segments and markets, specifically higher-rated corporate travel, group/convention, and non-leisure urban markets such as San Francisco. Some REITs noted they are trying to evaluate the pent-up group demand in 2022 versus the re-normalization of group trends in 2023+. Truist views Ryman Hospitality most positively coming out of the conference.

Jefferies said its takeaways from NAREIT include that with the era of cheap capital concluding, developments and acquisitions no longer pencil. They found most REITs believe they don’t have much to do other than sit back and wait for everything to settle out. REITs’ main defense is capital preservation and driving organic growth. They believe that urban, business transient, and group travel recovery is continuing, bullish for Lodging & Gaming REITs. The next leg of the recovery is positive for business, group, and urban while uncertainty grows around weakening consumers and a possible recession that would impact leisure travel. Their top picks include Host Hotels, Xenia Hotels and Hersha Hospitality.

The Baird/STR Hotel Stock Index rose 15.8% in October from September. Year to date the index is down -8%. The Hotel Brand sub-index was up 14.4% from September while the Hotel REIT sub-index was up 20.6%.

Atrium Hospitality announced the completion of the multi-million dollar makeover of the 275-suite Hilton Charlotte Airport in North Carolina. The two-year capital enhancements included: guest suites, two executive floors, and a penthouse suite; private dining area, social seating in an open-air atrium and new lobby design; 28,300 square feet of event space and the addition of a new executive boardroom on the first floor; and expanded fitness center with new workout equipment and indoor pool area.

Hilton has partnered with the Hallmark Channel to offer a selection of Hallmark Channel “Countdown to Christmas” Holiday Suites by Hilton at three properties across the U.S. Guests can choose to stay in a “Cozy Christmas” suite at the Hilton Chicago; a “SoCal Christmas” suite at the Hilton San Diego Bayfront; or a “Glam Christmas” suite at the Hilton Las Vegas Resorts World. Guests in all three suites can enjoy nightly Christmas tree lighting and a selection of Hallmark Channel holiday favorites.

IHG Hotels & Resorts announced the opening of Hotel Indigo Vancouver Dwtn – Portland Area, in Vancouver, Washington. The boutique hotel offers 138 rooms, 8,551 square feet of meeting space including a grand ballroom, a fitness center and multiple food and beverage outlets. The Hotel Indigo Vancouver Dwtn – Portland Area is owned by Indigo One LLC and managed by MKM Hospitality.

First Hospitality assumed management of the Inn on Sheridan, a boutique hotel in Zion, IL. The company also added the Holiday Inn Express Cincinnati West to its extensive roster of branded hotels. This marks First Hospitality’s first properties in both markets. Inn at Sheridan offers 84 guest rooms, two distinct spaces for events, a fitness facility, a library, a coffee shop, a restaurant and bar, and a boutique shop. The newly renovated Holiday Inn Express Cincinnati West offers 117 guest rooms, an outdoor pool, and a fitness center.

Dana Point Harbor Partners presented design details for the multiyear revitalization of the Orange County harbor. In the updated designs, DPHP highlighted incoming restaurant, retail and public spaces at the harbor, with increased pubic green walkways and seating areas, event spaces, shops, rooftop bars, food court and a boardwalk that connects Doheny State Beach to Baby Beach. Burnham-Ward Properties is overseeing the harbor’s amenities upgrades. Construction on the redevelopment is planned for early 2023. Also proposed in the designs are two waterfront hotels, built by R.D. Olson Development, replacing The Dana Point Marina Inn. With one four-star upscale hotel and one three-star casual hotel, the two accommodations with be situated on the waterfront with amenities including pools, restaurants and bars, a fitness center, ballroom and direct access to the water.

Centennial Yards Company announced the groundbreaking of Centennial Yards. The $5 billion, 50-acre development is located at the site where Atlanta was founded, and is expected to contain 8 million square feet at full completion, with 4 million square feet of new residential buildings and 4 million square feet of commercial buildings, including new office, retail, restaurants, and hotels. Construction commenced on the first two ground-up high-rise buildings, an 18-story full-service boutique hotel named Anthem, and an 18-story residential tower, located adjacent to Mercedes-Benz Stadium and State Farm Arena. Both towers are slated to be completed in 2025. Anthem will feature a pool deck with bar and event room with capacity for large events, 8,000+ square foot ballroom and a rooftop restaurant and bar.

Olympia Development and Related Companies plan $1.5 billion in development to bring housing, office, retail and two hotels across 10 properties in the District Detroit near Little Caesars Arena in Detroit, Michigan. Plans call for 695 mixed-income residential units, commercial and retail space and 467 hotel rooms across the 10 properties in downtown Detroit. The project involves the construction of six buildings and the renovation of four buildings.

NewcrestImage closed on the acquisition of a 45-hotel portfolio, which includes Marriott International, Hilton and Choice Hotels International brands. The portfolio totals roughly 3,300 rooms in 11 states including Arkansas, Colorado, Illinois, Iowa, Kansas, Michigan, Minnesota, North Dakota, Ohio, South Dakota and Texas. Thirty-five hotels are under Marriott brands, seven under Hilton brands, and three are under Choice Hotels International brands. Aimbridge Hospitality and HHM Hospitality will retain the management contracts for the hotels.

Paramount Lodging Advisors completed the sale of the Hotel Felix Downtown Chicago NPL. The PLA team represented the seller. The sale allowed the lender to unwind their existing interest on the $47MM non-performing loan.

NOMAD Hotels Group is the first Peruvian “home-boutique” hotel chain. Aimed at digital nomad travelers, it will offer hotel concepts and innovative experiences. NOMAD Hotels Group will open its first hotel in Peru’s city of Arequipa under the Nomad Urban brand in December 2022 with 18 rooms. Other projects under development that will be carried out in the next 3 years are: a 250-room hotel in Lima, a 50-room hotel in Oxapampa and an 80-room property in Zorritos. NOMAD’s portfolio consists of 6 hotel concepts including: Nomad Urban; Nomad Tribe; Nomad Family; Nomad Ecohotel; Nomad Village; and Nomad Hybrid. Internationally, NOMAD has set out to expand its hotel, restaurant and bar brands. This plan will start with the Indigo restaurant in Miami, New York and Barcelona. In addition, the Nomad Tribe projects will be developed in Portugal; Nomad Urban in New York and Miami; and Nomad Family in Orlando.

Urban Commons filed for bankruptcy on the hotel portion of the Wagner at the Batter, just weeks after a lender filed a petition to foreclose on the Lower Manhattan asset. According to court documents filed in the Southern District of New York, a company-controlled entity sought Chapter 11 protection on Tuesday. In the filing, the company declared $22.9 million in claims against the property, the biggest of which was $13.7 million from the Battery Park City Authority. The agency is Urban Commons’ landlord on a ground lease at the site. Ichigo holds $5 million in bonds against the property. Urban Commons purchased the hotel from a joint venture of Millennium Partners and Westbrook Partners in 2018. The hotel, which forms the base of a 36-story tower, has 298 rooms across 12 floors. Above it are 120 condo units. The hotel closed when the pandemic began in early 2020 and has yet to reopen.

Europe Highlight

Archer Hotel Capital completed the acquisition of the Royal St Honore hotel in Paris for €87 million from DigitalBridge, previously known as Colony Capital. The 68-key hotel also includes a retail unit. The Royal St Honore will be managed by Archer’s operating arm, Archer Hotel Management. Archer Capital is a joint venture of APG Group and GIC Real Estate.

Personnel Moves

Prominence Hospitality Group announced Jack Jones as a new area director of sales for the Pennsylvania region. Most recently, Jones served as Group Sales Manager and Director of Sales for two Courtyard by Marriott locations. In his new role, Jones will focus on significant sales growth for the Forge Hospitality hotels within Prominence’s portfolio.

Alan Woinski and Kim Woinski

November 20th, 2022

Companies: Aimbridge Hospitality, Atrium Hospitality, Centennial Yards Company, Choice Hotels International, First Hospitality, Hersha Hospitality Trust, HHM Hospitality, Hilton, Hilton Hotels & Resorts, Holiday Inn Express, Host Hotels & Resorts, Inc., Hotel Indigo, IHG Hotels & Resorts, Marriott International, NewcrestImage, Nomad Hotel Group, Prominence Hospitality Group, Xenia Hotels & Resorts

Locations: Arkansas, Atlanta, California, Charlotte, Chicago, Cincinatti, Colorado, Detroit, Illinois, Iowa, Kansas, Las Vegas, Michigan, Minnesota, New York City, North Carolina, North Dakota, Paris, Peru, San Diego, San Francisco, South Dakota, Texas, Vancouver

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