The DJIA was down 67 points, Nasdaq was down 14, the S&P 500 was down 12 points, and we may as well just get it over with and get to 4.50% on the 10-year, with the yield rising another .11 today to 4.19%. Lodging stocks were lower, weighed down by a tough day of earnings reports. SLNA, after that ridiculous trading yesterday, was down -15%. VAC was down -11%, H and PLYA were both down -8%, HST was down -7%, and INN fell -5% on the day.
Today was the worst day we have ever seen for earnings reports. We mean quality relative to analyst estimates, not just in the number of reports, although that was in the top three. Based on how investors sold off the stocks after their reports, Marriott Vacations topped the list with a miss that Truist described as not a pretty result or guide. They said there was no way to really spin this at all with the guide reduced by -8%, mostly due to the bad 2Q, which seems to have been exacerbated by the transition of Vistana and others into the Abound by Marriott Vacations program. As a Chairman’s Club owner, we can tell you that VAC has a horrible track record of transitions, whether it is a new website that still doesn’t work most of the time or deciding to confuse everyone with the new Abound by Marriott Vacations. It was a question of time before the Chickens Came Home to Roost.
After such sterling reports from Marriott and Hilton, the miss by Hyatt is surprising until you realize they are more tied into leisure and resort now with ALG. H missed Street estimates by -6%, mostly due to owned/leased earnings and lower ALG adjusted EBITDA relative to expectations. It was down more than 8% at the close. We will say their results seemed to be the subject of interpretation, with some analysts saying the results were not as bad as the reaction showed. The other really big surprise was Host Hotels missing estimates by -4%, as well as reducing their guide. This is HST’s first earnings miss since 2020. Slower transient business in San Francisco and Seattle and softer resort portfolio results were the culprits.
Hilton Grand Vacations’ inline results, while VAC missed by so much, was interesting, but the integration of Diamond Resorts and their exposure to Hawaii are still tailwinds.
Hersha Hospitality was generally in line, while Summit Hotel missed expectations and reduced guidance. Park Hotels, also helped by Hawaii, beat estimates but slightly lowered guidance.
According to the U.S. Construction Pipeline Trend Report by Lodging Econometrics for Q2 2023, the five markets with the largest hotel construction pipelines are Dallas with 184 projects/21,501 rooms, Atlanta with 141 projects/17,993 rooms, Phoenix with 119 projects/16,107 rooms, Nashville with 116 projects/15,346 rooms, and Los Angeles with 112 projects/17,797 rooms. The markets with the most projects currently under construction at the Q2 close are New York with 47 projects/8,201 rooms and Phoenix with 29 projects/6,064 rooms. Dallas has the most projects scheduled to start in the next 12 months with 69 projects/8,045 rooms, followed by Atlanta with 66 projects/7,932 rooms, and the Inland Empire market with 48 projects/4,946 rooms. Dallas also leads markets with the most projects in early planning with 90 projects/10,104 rooms, Los Angeles with 52 projects/8,663 rooms, and Nashville with 51 projects/6,009 rooms. LE recorded a combined renovation and conversion pipeline total of 1,939 projects/253,473 rooms for the U.S. at the Q2 close. The markets with the largest combined number of renovations and conversions are Atlanta with 39 projects/4,232 rooms, Chicago with 36 projects/4,921 rooms, and Dallas with 33 projects/5,687 rooms. At the close of the second quarter, the Inland Empire Markets had the largest number of new projects announced into the pipeline with 7 projects/791 rooms, followed by Tampa with 6 projects/986 rooms, and Nashville with 6 projects/803 rooms. For the first half of 2023, the U.S. opened 224 new hotels/27,194 rooms, with another 384 new hotels/48,607 rooms expected to open by year-end. Markets with the greatest number of new hotels forecast to open for all of 2023 are led by New York with 42 projects/7,192 rooms, followed by the Inland Empire market with 16 projects/1,564 rooms, Austin with 14 projects/2,201 rooms, Atlanta with 14 projects/1,369 rooms, and Dallas with 13 projects/2,100 rooms. In 2024, Atlanta is forecast to top the list of new hotel openings with 20 projects/3,198 rooms, then Phoenix with 19 projects/3,480 rooms, and Dallas with 19 projects/2,159 rooms. At this time, in 2025, Atlanta is anticipated to lead in new hotel openings with 24 projects/2,829 rooms expected to open, followed by Dallas with 23 projects/2,343 rooms, and the Inland Empire market with 18 projects/1,844 rooms.
A bankrupt Holiday Inn in downtown Manhattan can’t use Chapter 11 to maintain its low-rate mortgage without paying penalty interest linked to its default. The U.S. Bankruptcy Court in Manhattan ruled that Golden Seahorse, the owner of the 50-story hotel, should pay its lenders’ default interest and fees, totaling about $20 million, if it wants to keep its cheaper mortgage as it leaves Chapter 11. Golden Seahorse is among bankrupt companies that have been trying to keep their loans at their original, lower rates, known as a reinstatement. If successful, the move could help businesses avoid taking on new, more expensive debt at rates that reached a 22-year high last month. Lenders who object to reinstatement argue that they are missing out on higher rates and fees they are entitled to collect on defaulted loans. The hotel owner continues to argue that it doesn’t owe the default interest under New York law, based on the undisputed fact that the sole reason for the payment default in May 2020 was the Covid-19 pandemic. Golden Seahorse said it might not be able to pay the penalty amount, and the court hasn’t decided how much default interest and fees the hotel owner needs to pay.
Tharaldson Hospitality Management announced the grand opening of its 84th hotel, the Residence Inn Fairfield Napa, in Fairfield, California. The hotel boasts 104 suites, a fitness center, and an outdoor pool area.
Evolution Hospitality announced the opening of the AC Hotel San Rafael in San Rafael, California. The five-story hotel features 104 guest rooms, indoor and outdoor meeting space, San Rafael’s first rooftop bar, plus AC Hotel’s Signature AC Kitchen and AC Lounge, the AC Market, and 6,000 square feet of indoor and outdoor event space.
Tidal Real Estate Partners LP submitted an application for height modification on its Gulch hotel project in Nashville, Tennessee. Plans for the Gulch Edition development have changed multiple times since 2019, but throughout all its iterations, the Marriott’s Edition brand hotel has remained the project’s anchor. The new proposal for the project includes a 28-story mixed-use hotel and condo development with restaurant and commercial space. The Edition hotel would offer 278 guest rooms and 72 residential units. Plans for the site also include a restaurant on the main level, a lobby bar, a pool bar, and underground parking.
Embassy Suites by Hilton Miami International Airport announced the completion of the multi-million-dollar renovation to its 318-room property. The six-month extensive renovation project includes updates to all guest rooms, lobby, breakfast area, and more than 20,000 square feet of event spaces.
Atrium Hospitality completed a four-phase, multi-million-dollar transformation of the 261 suites at the Embassy Suites by Hilton Albuquerque, New Mexico.
Oxford Capital Group, LLC, announced a new long-term lease of the 225-room, luxury lifestyle Thompson Washington D.C. hotel with the owner of the property, Germany’s Union Investment. Oxford Hotels & Resorts, LLC has taken over the management of the hotel. The 11-story Thompson Washington D.C. offers multiple food and beverage venues and more than 7,000 square feet of indoor and outdoor function and meeting space.
IHG Hotels & Resorts announced the opening of the new Holiday Inn Philadelphia Arpt-Stadium Area in Philadelphia, Pennsylvania. The 206-room property is owned by 2015 Hospitality Management LLC and managed by Watermark Hospitality Group. It features more than 10,000 square feet of meeting space, a fitness center, a restaurant, and a bar.
National Hospitality Services, an affiliate of Hotel Equities, announced its recent addition of two hotels: MainStay Suites in Williston and Candlewood Suites, an IHG hotel in Bismarck, both situated in the heart of North Dakota.
The Four Seasons Hotel & Residences at Turtle Creek in Dallas, Texas, is set to begin construction in January 2024, with scheduled completion in October 2027. With a construction cost of $475 million, the scope of the Four Seasons project is set to include a 233-key hotel, a four-level underground parking garage, 118 condominiums, and a ballroom. At a height of 35 floors, the building’s top floor is expected to house the residential units. Carpenter & Co. will develop the hospitality project in conjunction with Perot Development.
Contractors are putting the finishing touches on The Study at Johns Hopkins hotel in Baltimore, Maryland. Hospitality 3 and Study Hotels are working with Hopkins to open the $26 million, 115-room hotel. Located in the Charles Village, the property will feature a restaurant, bar, and 2,500 square feet of conference space.
This summer, Lennox Hotels Miami Beach completes a refresh of its 118 guestrooms and a redesign of the lobby. Located in Miami Beach, Florida, the property features an outdoor pool with a poolside bar, a restaurant, a fitness center, and a new monthly wellness program.
Elite Hospitality announced that construction on the Margaritaville hotel in downtown Flagler Beach, Florida, will begin in September and take 18 months to complete. The 3-story hotel will offer 100 rooms, a restaurant, a meeting room, a fitness room, a pool with a tiki bar, a rooftop terrace, and retail outlets.
Developer ADP Solutions presented plans for a Margaritaville Resort at Marina Village in Riviera Beach, Florida. The 150-room hotel would be developed under its Compass brand and would feature multiple food and beverage venues, a pool, and an 875-space parking garage.
hihotels by Hospitality International has continued its growth this year by signing four properties to the system: three Scottish Inns in Texas and a Red Carpet Inn & Suites in New Jersey. The properties are the 49-room Red Carpet Inn & Suites in Hammonton, New Jersey, a former Rodeway Inn; 35-room Scottish Inns, Austin, Texas, a former Rodeway Inn; Scottish Inns, Hankamer, Texas with 40 rooms, a former Palace Inn; and the 31-room Scottish Inns, in Weatherford, Texas, also a former Rodeway Inn. hihotels now has more than 60 properties in Texas and 20+ in New Jersey.
Belmond’s first significant North American refurb is almost complete. Now, Maroma, A Belmond Hotel, Riviera Maya is poised to welcome guests back starting today. While the existing rooms have been spruced up, guests can now choose from 10 additional waterfront suites. The property also features multiple onsite food and beverage venues and opening in November 2023 is Latin America’s debut Guerlain Spa.
JLL’s Hotels & Hospitality group arranged the sale of a mezzanine loan for a four-property portfolio of hotels totaling 1,228 guestrooms and consisting of the Club Quarters Boston, Club Quarters Chicago Central Loop, Club Quarters Philadelphia, and Club Quarters San Francisco. JLL procured Masterworks Development as the buyer.
Personnel News
Sonesta International Hotels Corporation appointed Michelle Steffens as Vice President of Operations with responsibility for the managed portfolio of full-service hotels and oversight of the full-service regional operations team. Most recently, Steffens was Senior Vice President of Operations at Aimbridge Hospitality.
Christopher J. Collins joined OTO Development as Vice President, Food & Beverage. Collins will oversee the full F&B portfolio, emphasizing elevating the guest experience while expanding revenue opportunities and maximizing profit. Before joining OTO Development, Collins most recently served as Vice President of Food & Beverage with Kraft Sports & Entertainment at Gillette Stadium.
CBRE announced that Andrea Grigg had joined CBRE Hotels as a Senior Managing Director and Global Head of Hotels Asset Management to develop and lead the firm’s global hotel asset management and operator selection practice. Grigg will focus on bringing cross-border hospitality solutions and ownership representation to global hotel investors. She will also oversee operator, brand selection, and management contract negotiation services. Grigg joins CBRE from JLL.
JLL’s Hotels & Hospitality Group announced that Senior Vice President Bethanie DeRose was named to the 2023/2024 Association Board of Director Slate for Destinations International. DeRose is part of JLL’s Global Tourism practice leadership within the Hotels & Hospitality Group.
