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North America

Truist Reviews Pebblebrook Markets

Alan Woinski and Kim Woinski
July 10th, 2023 at 4:39 PM EDT

Skift Take

  • DJIA rose 210 points, Nasdaq up 25, S&P 500 up 11; 10-year treasury yield retreated to 4.01%.
  • RW Baird supports Ashford Hospitality Trust‘s decision to return hotels to lenders, citing improved cash flow prospects.

The DJIA rose 210 points, Nasdaq was up 25, the S&P 500 was up 11 points while the 10-year treasury yield retreated .04 to close to 4.01%. Lodging stocks were higher but most were up 2% to 3%. VCSA was the biggest mover, up 5% today.

RW Baird issued a report on the Ashford Hospitality Trust announcement they were going to return 19 hotels (3,583 rooms) with $570 million of debt to their lenders. Baird called this not totally surprising and the right move. The three KEYS pools had been performing well below a 1.0x DSCR and AHT’s near-term cash flow profile should improve. Baird said AHT’s actions highlight the challenges that borrowers are facing today, particularly as debt maturities approach. The hand back the keys vs. pay down decision is more difficult for higher-levered, floating-rate loans, according to the report.

Truist formally and informally visited several Pebblebrook Hotel Trust hotels/markets. They said Naples looks better than feared even if LaPlaya has a ways before a full reopening. Truist is mixed on the new San Francisco tourist ad campaign and they support PEB’s reduced concentration in SF and possibly Los Angeles. For 3Q23, Truist is maintaining conservatism on near-term EBITDA projections partly driven by their lack of conviction on PEB-specific factors: performance of recently repositioned hotels, LaPlaya and convention-driven EBITDA. Truist maintained their $16 price target. They assume PEB modeling should become less complicated as many of the capital investment projects and LaPlaya’s full reopening are completed in the next six months.

Numis said IHG’s recent US data shows a steady slowdown from May with rooms sold falling by -11% on year in May and -13% in June. They see the dominant factor as a demand reversal for leisure bookings as May’s Friday and Saturday night demand fell by around -2%. Numis lowered its rating on IHG to Hold from Add.

UPDATE: Regarding the preceding paragraph about the Numis report on IHG, and their downgrade to Hold: We received the information from Dow Jones but that had a lot of bad information in it. First, Numis gave general data on recent trends in the US market, not IHG-specific like Dow Jones made it sound. Dow Jones said the US industry year-on-year decline in rooms for May and June are -1.1% and -1.3%. Dow Jones left out the decimal points and had it as -11% and -13%. Numis still used this data for being a little less positive on IHG, saying the room sold decline is due to weekend demand softening, with RevPAR up 1.9% in April, up 3.7% in May but slightly negative in June. While Numis downgraded to Hold, they noted that IHG’s business model remains highly cash-generative and high quality for the long term.

The Ritz-Carlton, Naples reopened to debut its transformation. The Florida Gulf Coast beachfront resort unveiled a dramatic transformation including the addition of the new Vanderbilt Tower, which features an expansive new Ritz-Carlton Club Lounge and more than seventy club-level guestrooms, along with a new resort lobby, and three new dining experiences. The transformed resort also presents new outdoor spaces including new pools, bungalows, and cabanas along with extensive redesigns to all 474 guestrooms and suites. 

Investment firms are snatching up some of the last remaining budget-friendly hotels in the East End of the Hamptons with plans to fix them up and jack up prices. Among the recent buyers in Montauk is Blue Flag Partners, who capped a $35 million East End buying frenzy with a $15 million acquisition of the 27-room Haven Montauk last month. Blue Flag plans to slowly develop their properties in New York’s Hamptons over time and rebrand them, leading to increase room pricing. 

Two boutique hotels are being proposed for Downtown Charleston, South CarolinaOperating Ventures LLC is proposing a four-story, 50-room boutique hotel with a fitness center, meeting space and onsite parking. The property was purchased by 56 State SC Property LLC from Easy Bay Co. Ltd. for $4.75 million in March. The other hotel that is proposed is for 657 King Street. Plans show a five-story, 18-room boutique inn with onsite parking, a rooftop area, meeting space and two ground-floor commercial spaces. Atlantic South Development is listed in documents as the owner, through the sale of the property has not been finalized. 

Bi-Park Development is planning an $800 million mixed-use project that will include a resort and swimmable lagoon in Huntersville, North Carolina. Construction on the Lagoona Bay Resort would start by mid-2024, with the first pieces open in spring 2025. Plans call for an up to 300-room luxury hotel, complete with a 35,000 square foot convention center; a 10-acre lagoon surrounded by white sand beaches; a rooftop restaurant and bar. A Beach Club will include a clubhouse, pools, tennis and pickle ball courts. The project also calls for 250 single-family homes, 320 apartments, 201 town homes and 410 condo units. The project’s second phase would add 210,000 square feet of restaurant and retail concepts. 

Good Neighbor announced a new hospitality concept, a guesthouse opening in Baltimore in late summer 2023. The hospitality alternative features seven unique, design-immersive, thoughtfully curated spaces that are a fully shoppable experience. 

Noble House Hotels & Resorts announced the renovation completion at Estancia La Jolla Hotel & Spa in California. The $13.9 million renovation of this hotel, which is owned by Pebblebrook Hotel Trust, has seen the transformation of all 210 guest rooms and suites. In addition to the transformation of its accommodations, the property has also revitalized its five existing lawn spaces and introduced one new outdoor area. Altogether spanning 10,000 square feet, these six lawns enhance the overall experience offered to guests.

Personnel Moves

Travel + Leisure Co. announced Jon G. Munoz joined the company in the role of senior vice president, environmental, social and governance. He most recently served as chief diversity, equity, and inclusion officer for Booz Allen Hamilton, a management consulting firm.

Europe Highlights

Wyndham Hotels & Resorts announced the upcoming opening of Super 8 by Wyndham Chester East, the brand’s first entry in the UK. Expected to open this month following an extensive refurbishment project, the 41-room hotel will offer a mix of contemporary rooms, a stylish bar and restaurant, as well as onsite EV charging facilities. The refurbishment is part of a larger multi-million investment by Roadchef as it looks to upgrade its roadside hotels across the UK.

A new boutique hotel, Pieve Aldina, part of the French group Domaine de Fontenille, has opened in Chianti, Italy, following a renovation. Pieve Aldina is part of the Relaix & Chateaux collection and features 22 rooms and suites, an outdoor pool, spa and a restaurant.

W Hotels Worldwide announced the debut of W Budapest, marking the brand’s first opening in Hungary. Previously home to the Institute of Ballet, W Budapest boasts 151 guestrooms and suites, three dining concepts, the AWAY Spa and several meeting and event spaces including the Great Room and two Studio Rooms.

Radisson Hotel Group has had a strong H1 2023 with strategic growth across the portfolio being delivered in APAC and in EMEA with milestone openings and signings. Across EMEA, H1 2023 growth included the addition of more than 8,000 keys through signings and openings across different brands in Greece, Germany, UK, Italy, Switzerland, France, Saudi Arabia, and Nigeria. Key signings and openings include the opening of Radisson Collection Hotel, Santa Sofia Milan, the signing of Radisson Blue Hotel, Rome UER and Radisson Blue Hotel Abuja CBD, as well as the signing of Radisson RED Edinburgh Airport, the opening of a Radisson long-stay property in Zurich with 430 rooms, the opening of a new Radisson property in Ferrara, as well as the signings of Radisson Residences Limassol in Cyprus and Radisson Hotel Mersin in Turkey, scheduled to open in Q1 2024. 

Alan Woinski and Kim Woinski
July 10th, 2023 at 4:39 PM EDT

Companies: Ashford Hospitality Trust, Marriott International, Noble House Hotels & Resorts Ltd., Radisson Hotel Group, Relaid & Chateaux, Ritz-Carlton, Super 8, Travel + Leisure Co., Truist Securities, W Hotels, Wyndham Hotels & Resorts

Locations: Baltimore, Budapest, California, England, Florida, Italy, Los Angeles, New York, North Carolina, San Francisco, South Carolina

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