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North America

Analysts Become Modestly Less Bullish on U.S. Hotel Companies

Alan Woinski and Kim Woinski
July 5th, 2023 at 4:24 PM EDT

Skift Take

  • Stock market indices, including the DJIA, Nasdaq, and S&P 500, experienced declines on Friday, while the 10-year treasury yield saw a slight increase.
  • Barclays expects some REITs, such as Pebblebrook Hotel Trust and DiamondRock, to be disproportionately impacted by below-expectation revenue per available room (RevPAR), while they believe Apple Hospitality will outperform.
  • Oppenheimer slashed price targets on several lodging stocks, including Chatham Lodging Trust, RLJ Lodging Trust, Braemar, and Apple Hospitality, while maintaining their Outperform ratings on these companies.

The DJIA fell 0.37% on Friday while Nasdaq was down 0.18%, the S&P 500dropped 0.20%, and the 10-year treasury yield was up .07 to 3.93%. The Dow Jones U.S. Hotels Index was down 1.3% for the year but was still up 8.6% year-to-date.The Federal Reserve was split on whether the U.S. will avoid a recession this year, the WSJ said.

Barclays said with headline RevPAR being below their prior growth expectations, they expect some REITs will be disproportionately impacted, pointing out Pebblebrook Hotel Trust and maybe DiamondRock. They believe Apple Hospitality will outperform as its segments (Upscale, limited service) are still up year over year. They actually upped their price target on APLE to $20 from $19.

Oppenheimer slashed price targets on most of their coverage on lodging stocks. They cut Chatham Lodging Trust’s price target to $12 from $14, RLJ Lodging Trust to $13 from $15, Braemar to $5 from $6 and Apple Hospitality to $19 from $21. Oppenheimer maintained their Outperform ratings on all these companies.

JP Morgan lowered 2Q23 through 2024 estimates on Wyndham Hotels & Resorts to reflect the softer US Economy and Midscale chains scale segment RevPAR results, which are tracking down -3.4% year and year and down -1% quarter to date, respectively. WH’s hotels in these segments account for 96% of its domestic rooms base and 56% of its worldwide rooms portfolio. JPM said they believe their non-US hotel RevPAR is holding up, particularly in light of generally positive Chinese RevPAR performance and relatively easy year over year comps there. JPM cut their target price on WH to $80 from $90.

HSBC lowered their target price on Soho House to $8 from $8.50. They maintained their Buy rating on the stock saying strong membership dynamics keeps it positive on SHCO, especially over the long term.

STR announced U.S. May results. May 2023 Top-Line Metrics (percentage change from May 2022): Occupancy: 64.8% (-0.2%); ADR: $156.25 (+3.8%); and RevPAR: $101.31 (+3.7%). May 2023 Bottom-Line Metrics (percentage change from May 2022): GOPPAR: $83.86 (-2.6%); TRevPAR: $222.78 (+4.1%); EBITDA PAR: $61.16 (-7.1%); and LPAR: $72.82 (+13.6%). 

San Francisco conventions are slowly creeping back to 2019 levels, according to the San Francisco Examiner. Of the 15 major metropolitan hotel markets nationwide, San Francisco is the only one that hasn’t recovered from the pandemic. Los Angeles and New York hotel occupancy climbed back to 2019 levels, while Miami leads most metropolitan cities in the number of overnight stays. In San Francisco, the Moscone Center hosted 49 events in 2019. Booked conventions have steadily increased since the Center reopened partially in September 2021. In 2022, 33 events were held at Moscone Center in 2022, up from five in 2021. 

The 139-room Courtyard by Marriott Clearwater Beach and the 145-room AC Hotel by Marriott Clearwater Beach have been sold to Mission Hill Hospitality for a combined $113.7 million. The seller of the Florida hotels was an entity linked to Norwich Partners. The buyer acquired a $38.5 million mortgage from Athene Annuity and Life Company.

Delta Hotel, in Wichita Falls, Texas, is nearing completion and is expecting to open on August 8th. The new full-service hotel will have amenities such as an in-house steak house, pool and Jacuzzi, along with a large convention center.

The Town of Plattsburgh, New York is preparing to add two new hotels in the near future. Plattsburgh Lodging Ventures has already purchased 3.5 acres on route 3 to develop a Home2 Suites. Construction will begin on the hotel in the fall and when complete, the hotel will have 97 rooms including 10 suites. There is not a lot of information regarding the second hotel except it would also be in the Route 3 corridor.

The Hilton San Diego Gaslamp Quarter announced the completion of its $22.5 million renovation. The completely remodeled hotel features 286 guestrooms, lofts and suites along with a new restaurant concept.

ARA US Hospitality Trust has agreed to divest its Hyatt Place Oklahoma City Airport hotel for $8 million as part of efforts to optimize the trust’s portfolio. The divestment is expected to be completed in the third quarter of 2023.

Hyatt House Colorado Springs Airport celebrated its official opening, marking the first Hyatt House hotel in Colorado Springs, Colorado. The new hotel is owned by Coughlin & Company, Inc. and managed by 5 Senses Hospitality Management. Hyatt House Colorado Springs Airport offers 112 guestrooms, The Commons, the Outdoor Commons with a fire pit and BBQ grill, The H BAR, H Market, a gym and 900 square feet of flexible meeting spaces. 

Vana Partners are looking to bring a new economy hotel brand to Daytona Beach, Florida. The proposed four-story Echo Suites Extended Stay by Wyndham will offer 124 rooms, a fitness center and laundry. 

IHG Hotels & Resorts celebrated the opening of its newest Holiday Inn Express & Suites hotel just outside of Boise, Idaho. Featuring 91 guestrooms and suites, the Holiday Inn Express & Suites Meridian – Boise West offers an indoor pool and an onsite fitness center. The property is owned by Hotel Developers-Meridian HIX, LLC and managed by InnTrusted

Raj Singh announced the opening of the Staybridge Suites hotel in Dawson Creek, BC, Canada. The property features a pool, fitness center and meeting facilities. 

West Park Investments and TA Partners LLC are proposing to build a new hotel in Fullerton, California. The hotel would include 125 guestrooms, a restaurant, and a parking garage with 385 spaces. The project is expected to be complete by the fall of 2026.

The Wilton Planning & Zoning Commission gate its approval of the new four-story iPark Hotel to be constructed on Route 7 on the Norwalk, Connecticut border. It will be located on the mixed-use campus of iPark Norwalk and will be the first hotel within the town’s borders. The full iPark campus currently includes office space, warehouse space and a health club. A 132-units residential building is also proposed on the Norwalk section of the site.

The historic El Tropicano Riverwalk Hotel property, located in San Antonio, Texas, has been pulled from its foreclosure auction. An affiliate of Weston Urban Financial LP has wanted the shuttered hotel property sold at auction because its owner defaulted on a $6.3 million loan that help finance the acquisition of the 324-room hotel. J. Mitchell Little, a lawyer representing Alamo Equity LLC, said the auction was not going forward as his client has a number of options available, including a potential pending sale of the property to an eager buyer

Icona Resorts is in talks to buy two additional Jersey Shore properties just weeks after opening its eighth oceanfront hotel. The properties would be in opposite parts of New Jersey, with one north and another along the southern shores. Icona has eight hotels operating under two brands: Icona Resorts and Mahalo.

Europe Highlights

Henderson Park and Klarent Hospitality have acquired the 241-room Waldorf Astoria Edinburgh – The Caledonian in a deal to be worth around £85 million. This is the third hotel in Edinburgh, U.K. in Henderson Park’s Klarent Hilton portfolio. The property was previously owned by Twenty14 holdings. JLL advised the seller on the transaction.

The Rome EDITION has opened in the Eternal City. The intimate 91-room property has three unique bars, a rooftop lounge, bar and pool, a show-kitchen restaurant, urban wellness space with a gym and treatment rooms, and a courtyard garden. 

The Olayan Group has purchased the Mandarin Oriental Hotel, Barcelona from Farallon and Reig Capital. The 120-key hotel features a spa, rooftop pool and an indoor pool. JLL’s Hotels and Hospitality team represented Reig Capital Group. 

Ruby Hotels has opened its 16th hotel in Europe, located in London’s Notting Hill district. The new hotel, called Ruby Zoe, features 173 rooms across six floors, a bar, retail area and a vinyl store curated by Ruby’s resident artists. This is Ruby Hotels’ second property in London. The Company also plans to open a third location, Ruby Stella, in Farringdon later this year.

Alan Woinski and Kim Woinski
July 5th, 2023 at 4:24 PM EDT

Companies: AC Hotels by Marriott, Apple Hospitality REIT, Braemar Hotels & Resorts Inc., Chatham Lodging Trust, Courtyard by Marriott, Delta Hotels & Resorts, DiamondRock Hospitality Company, Echo Suites Extended Stay by Wyndham, Edition Hotels, Hilton, Hilton Hotels & Resorts, Holiday Inn Express, Home2 Suites by Hilton, Hyatt Hotels Corporation, Hyatt House, Hyatt Place, IHG Hotels & Resorts, Inntrusted, Mandarin Oriental, Marriott International, Pebblebrook Hotel Trust, RLJ Lodging Trust, Ruby Hotels, Soho House and Co Inc., TA Partners, Wyndham Hotels & Resorts

Locations: Barcelona, British Columbia, California, Colorado, Connecticut, Edinburgh, Florida, Idaho, London, Los Angeles, Miami, New Jersey, New York City, Oklahoma City, Rome, San Antonio, San Diego, San Francisco

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