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North America

Spark by Hilton Is a Conversion Favorite

Alan Woinski and Kim Woinski

February 6th, 2023

Skift Take

  • BofA Securities initiated coverage on Marriott Vacations with a Neutral rating and a $180 price target.
  • The Wall Street Journal published an article on how hotel companies are stepping up efforts to lure competitors’ hotels to their own brands. The article referenced Hilton’s new Spark by Hilton brand.
  • We had heard those concerns about upcoming maturities from Service Properties Trust when we were positive about their resumption of the previous dividend, giving them an 11% yield at the time.

The DJIA fell 36 points, Nasdaq was down 120, the S&P 500 fell 25 points and the 10-year treasury yield jumped another .10 to 3.63%. Lodging stocks were mostly lower. SOND was the biggest mover, down -9% while VCSA fell -6%.

BofA Securities initiated coverage on Marriott Vacations with a Neutral rating and a $180 price target.

The Wall Street Journal published an article on how hotel companies are stepping up efforts to lure competitors’ hotels to their own brands. The article referenced Hilton’s new Spark by Hilton brand, the first one built as a pure conversion vehicle. That brand is aimed primarily at bringing independent and rival properties into the Hilton system. With commentary about how the pipeline has slowed to a trickle citing new construction loan difficulty, conversions are getting a lot of attention. Spark by Hilton allows owners to convert their properties for $20,000 to $25,000 a room, about a third to half of what it would cost hotel owners in upgrades to keep their hotels in the higher-priced midscale category. While Hampton Inns may find converting to Spark hotels makes sense, Hilton said about 98% of their 200 active conversations the company is having with owners about converting to Spark are from brands from competing companies.

We had heard those concerns about upcoming maturities from Service Properties Trust when we were positive about their resumption of the previous dividend, giving them an 11% yield at the time. Today SVC priced $610.2 million in net lease mortgage notes secured by 308 net lease retail properties. The three classes are expected to yield: $305 million at 5.15%; $173 million at 5.55% and $132.2 million at 6.70%. The proceeds will be used for early redemption of $500 million of 4.50% senior notes due June 2023.

Concord Hospitality has been selected by Marriott to operate the TownePlace Suites Baltimore BWI Airport located in Linthicum, Maryland. The 136-guestroom property features a meeting room, fitness center and an outdoor pool.

The Hotel Group, an affiliate of Hotel Equities, and Hogback Development announced the purchase of the Fairfield Inn & Suites by Marriott in Moses Lake, WA. The property offers 84 guestrooms, a pool and a fitness center.

In June 2022 plans were submitted to the Grove City, Ohio government regarding a project named Indus Hotels and Stringtown Marlane Retail Center to be built on 2.9 acres of land. The location will be a five-story Hampton Inn toward the back of the property, and there will be a two-unit retail center, with one being a Starbucks.

Hyatt Hotels Corporation announced the opening of Hyatt House Orlando Airport located at the entrance of Orlando International Airport. The property offers 156 guestrooms; the Commons, a comfy lounge; the Outdoor Commons, which includes an outdoor fire pit and BBQ; an outdoor heated pool; 3,400 square feet of lawn space; the H Bar; H Market; Gym; and more than 2,250 square feet of flexible meeting spaces. Hyatt House Orlando Airport is owned by McKibbon Equities, managed by McKibbon Hospitality and developed by McKibbon Places.

The city of Sacramento, California has received a fee estimate request for a six-story, 155-room hotel. The request does not state if the hotel would have a brand or flag, but estimates the project value at $23 million. 

The Water Street District, in Dayton, Ohio, will add nearly 200 new apartments and 134 hotel rooms by late February and mid-March. The new AC Hotel Dayton should open in mid-March with a rooftop bar and restaurant, a business center, meeting space, fitness center and a lobby bar. Crawford Hoying and Woodward Development are the main developers of the Water Street District.

Pascagoula, Mississippi City leaders held a groundbreaking ceremony to officially start building a $6.8 million development called Hotel Whiskey. The property is expected to go up in two phases. The first phase will have around 13 rooms with retail space and a restaurant on the first level. The second phase will include another 30 or 40 hotel rooms as well as apartments and a pool facility.

Aspen Hospitality and the University of Colorado Boulder announced construction is beginning for the on-campus Limelight Hotel Boulder. The landmark conference center hotel is slated to open in the summer of 2025 in Boulder, Colorado. The Limelight Hotel Boulder will include 250 rooms, a ground floor restaurant and an outdoor plaza. The conference facilities, Boulder’s largest, offer a 15,000 square foot ballroom along with another 10,000 square feet of meeting space.

Wynn Hospitality LTD. announced the opening of Goldwynn Resort & Residences on Cable Beach in Nassau, Bahamas. The only Bahamian member of Small Luxury Hotels of the World, Goldwyn Resort features 81 residential-style accommodations and an open-air eatery located on the infinity-pool deck. In March the resort will debut its signature restaurant and Rhizophora Spa. Goldwyn Resort also features 12,000 square feet of indoor and outdoor meeting and event space.

Personnel Moves

Valor Hospitality Partners announced the appointments of Chief Capital Officer, Steve Cesinger as well as Chief Investment Officer and Global Principal, Brandon Hatfield. Global Co-Founder and Chief Investment Officer Steve Cesinger will assume his new role as Chief Capital officer and will continue to build and nurture Valor’s strategic relationships across the world and develop further opportunities for its capital partners. Global Principal and Chief Financial Officer Brandon Hatfield will assume the role as Chief Investment Officer and Global Principal and will focus on leading a Global Underwriting platform. He will establish a team to strategically double the size of Valor’s portfolio around the world in the next three to five years.

CBRE announced industry veteran Michael Cummings has joined CBRE Valuation & Advisory Services as a Senior Vice President to focus on the hotels sector on the East Coast and throughout the U.S. Cummings joins CBRE from Horwath HTL where he led the firm’s valuation and advisory practice in the U.S. and Mexico for the past five years.

HREC Investment Advisors announced Chris Stein joined the firm as Senior Vice President, based in the Denver office. Stein spent the last 7 years as a Vice President in a variety of roles with Stonebridge Companies.

The U.S. Travel Association announced Ellen Davis joined the organization as Executive Vice President of Business Strategy and Industry Engagement. In this new role, Davis will have responsibility for driving industry engagement, shaping the association’s event strategy, and both developing and executive a plan to generate the resources necessary to support U.S. Travel’s expanding advocacy efforts and full suite of modern association benefits. Davis joins U.S. Travel from the Consumer Brands Association. 

Nick Pilbeam appointed as Commercial Director, Hotels and Hospitality Division at Queensway Group. In this role, Pilbeam will be responsible for driving the company’s growth efforts, with a focus on further development of proprietary data and analytics platforms to deliver a great guest experience whilst optimizing business performance.

Europe Highlights

Accor announced the opening of ibis Styles Copenhagen Ørestad together with partner Borealis Hotel Group on the design-led hotel brand’s debut both in Denmark and in the Nordics. The 186-room hotel is situated within the popular Nest45 project multifunctional building. The hotel offers a restaurant, and a serene working zone and lounge on each floor.

Travelodge completed its lease re-gear with its largest landlord, LXI REIT for the majority of the properties in the 122 Travelodge hotel portfolio it acquired as part of the Secure Income REIT merger in 2022. Travelodge negotiated new caps and collars on rent reviews to limit rental increases during high inflation periods and lease extensions averaging nine years for all 122 hotels. Previously the rent increases were based on uncapped RPI, but have now been converted to CPI+0.5% with a cap of 4% and a collar of 1%. The re-gear also includes rent smoothing across the portfolio and resetting rent levels for the 122 Travelodge hotels to reflect the trading performance of each site.

Alan Woinski and Kim Woinski

February 6th, 2023

Companies: Accor, Aspen Hospitality, Borealis Hotel Group, CBRE Hotels, Concord Hospitality, Fairfield Inn & Suites, Hampton by Hilton, Hilton Hotels & Resorts, Hotel Equities, HREC Investment Advisors, Hyatt Hotels Corporation, Hyatt House, ibis Styles, Limelight Hotel, Marriott International, Marriott Vacation Club, McKibbon Hospitality, Service Properties Trust, Spark by Hilton, The Hotel Group, TownePlace Suites, Valor Hospitality Partners, Wynn Group of Companies

Locations: Bahamas, Baltimore, California, Colorado, Copenhagen, Mississippi, Ohio, Orlando, Washington State

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