The DJIA rose 43 points, Nasdaq was up 60, the S&P 500 was up 17 points and we told you it would happen, the 10-year treasury yield soared .10 to 4.54%. All those who held out locking in a mortgage are allowed to kick themselves. Lodging stocks were all over the place. SHCO was up 6% and SLNA rose $0.07 which is 24%. AINC hit a new low but then bounced, ending the day up 7%. INN, AHT and VAC also hit new lows. SOND was down -6%.
B of A Securities upped their price target on Soho House to $9 from $8. They maintained their Buy rating.
Argus Research initiated coverage on Choice Hotels with a Buy rating and $145 price target.
Baird gave a review of the Hersha Hospitality Trust preliminary proxy statement. In the statement, HT said five interested parties approached them at the NYU Hospitality Conference and following week about a transaction with them. Beginning on June 21, 19 potential bidders were contacted by their bankers and 12 entered into confidentiality agreements. Four non-binding offers were received but only KSL and another unnamed party made it to the final round and negotiations. Party A actually bid higher than KSL but wanted one month to obtain financing. KSL provided a larger equity commitment and more favorable terms in its debt commitment. Party A also came back and offered to only acquire HT’s NYC portfolio for $420 million. There was more such as KSL plans to keep HT management involved post-closing and management could potentially rollover a portion of their equity interests. Specifics are expected to be discussed after shareholder’s approval is obtained.
According to Reuters, U.S. hotel owners could see greater pressure on their ability to service the loans backing their properties as a decline in leisure stays coupled with rising costs are expected to pinch their profits. In the second quarter, many hotel owners reported rates of leisure stay anywhere between 25%-35% above 2019 levels. According to Fitch Ratings, as the surge in travel after the pandemic wears off, demand is shifting away from pricey leisure stays and towards lower-rated group business travel. Several hotel owners defaulted on loans backing various hotels in 2020, when travel plummeted at the start of the pandemic. According to a Moody’s report, nine of the 19 CMBS loans that liquidated in the second quarter of 2023 were hotel loans that initially defaulted in 2020, selling at a loss after the borrowers failed to work out a solution to avoid default. Rising labor, energy and insurance costs will further pinch the wallets of hotel owners, adding to their risk in making interest payments. The greatest cost burden for hotel owners stems from insurance rates, especially hotels in areas most exposed to climate chaos, especially hotels along the coast of Florida, where hurricane, flood and wind storm insurance premiums increased 2-3x.
Fitch Ratings said US hotel sector revenue growth will decelerate as further recovery in occupancy rates is balanced with lower average daily room rates due to a demand shift away from high-priced leisure stays and toward more business group and transient travel. Their base case assumes US RevPAR growth of 5%-6% in 2023 and 0%-2% in 2024 with notable out performance from the upper upscale and upscale hotels. Fitch believes asset-light brand owner/operators are better positioned relative to hotel owners over the one to two year Rating Outlook horizon given broadly diversified portfolios and lower fixed costs. They believe lodging C-Corps are best positioned to outperform in the current environment, given broadly diversified portfolios and lower operating and financial leverage relative to hotel owners. They said companies like Wyndham and Hyatt have extensive development pipelines requiring minimal capex since they are typically funded by franchisees/owners, although owner financing is an important consideration in assessing future net room growth given the current volatility in the financing environment. High operating leverage of hotels owners, including REITs, leaves them more susceptible to pressure from lower ADRs due to leisure rate pressure and a shift toward lower-rated group business travel and away from leisure demand. Fitch also expects hotel margins to come under pressure due to rising insurance, labor and energy costs amid lower ADRs.
Hilton Worldwide Holdings announced it is working to ensure mandatory fees are displayed upfront on all its websites and apps. Hilton is also advocating for all platforms that advertise, distribute, and sell their inventory to display all fees to ensure the consumer sees consistent information wherever they book. The platforms include hotel websites to online travel agencies, as well as Google and short-term rental platforms. Hotel operators have received criticism on how fees are displayed to consumers and have been accused of engaging in fraudulent and anti-competitive practices by misleading consumers in advertisements, which prevent comparative shopping, and charging millions of dollars in hidden fees. U.S. Senators Amy Klobuchar and Jerry Moran introduced the bipartisan Hotel Fees Transparency Act in July, with the aim of cracking down on hidden fees and establishing federal guidelines for pricing. In May, Marriott International took similar action and agreed to prominently display all “resort fees” and increase price transparency in its advertisements and booking process. Las year, Airbnb made changes to the way it displays prices on its platform after it faced customer complaints.
The first Spark by Hilton has opened in Mystic, Connecticut. Spark by Hilton Mystic Groton has an open space in the hotel, 24-hour retail market and 24-hour digital check-ins. More Spark by Hilton locations are scheduled to open across the country.
The Holiday Inn Express and Suites in downtown Aurora, Illinois could soon have a new owner. To facilitate the sale, the city is being asked to reassign an incentive agreement between current owner, Midwest Management IL Inc., to the new owner. It is in regard to a $500,000 loan the city made to the hotel when it remodeled and converted from a Comfort Inn in 2015. According to the city’s Economic Development office, the payments will continue through 2025, but now with the prospective new owner. The amount still owed is approximately $206,000.
The Colony Hotel, in Palm Beach, Florida, will reopen Thursday after a two-month closure for maintenance and renovations that included a soon-to-be-completed redesign of one of the hotel’s villas with a new partner: Gwyneth Paltrow. The villa, named after Paltrow’s Goop brand, reflects The Colony’s growing partnerships with lifestyle personalities and brands seen as resonating with the hotel’s guests. The Colony’s reopening will showcase other work completed during its summer closure, which was aimed at tackling projects critical to the hotels infrastructure and longevity as a historic land marked property.
Weyland Ventures, in partnership with the Common Bond Hotel Collection, announced the opening of the Myriad Hotel in the Highlands district in Louisville, Kentucky. The 65-room hotel offers two restaurant and bar concepts, a signature retail concept and event space, pool and lounge, and indoor and outdoor event space.
Gravity Haus announced the addition of Gravity Haus Jackson Hole in Jackson, Wyoming into its growing portfolio for the Winter 2023/2024 Season. The opening of Gravity Haus Jackson Hole will follow a full transformation and rebranding of The Continuum Hotel, with renovations set to begin in October 2023 and represents the newest destination to the Gravity Haus full membership benefits program. Owned by Molokai Hospitality and located in the heart of Teton Village, Gravity Haus Jackson Hole is an 87-room boutique hotel offering guests and members the brand’s signature amenities including co-working spaces, discounted gear rentals, fitness spaces, locally-inspired restaurants and farm-to-cup coffee offerings.
365Villas, a vacation rental management software provider, launched industry-first website features including a tool that gives property managers the opportunity to offer a full suite of “Flex-Stay” options for the first time. Alongside a new full payment discount feature, cancellation indemnity and early bird discount offers, “Flex-Stay” brings property managers in line with mainstream airlines and hotel websites and gives guests the choice to pay more in case they need to amend their booking. 365Villas’ addition functionality also gives property managers the option to apply a discount to bookings if guests pay the whole fee upfront rather than in installments; and the cancellation indemnity tool gives guests the choice of paying a premium in return for a refund in the event of cancellation. All new interface features are integrated within the 365Villas PMS and can be tailored by each property manager to suite their target market. Alongside the host of new features, 365 Villas introduced a number of new website themes and designs to help property managers effectively market and promote their portfolio while giving end-users the best booking experience possible.
The Park Hyatt brand will debut the new Park Hyatt Los Cabos at Cabo del Sol, the first-ever Park Hyatt in Mexico. The property will be part of the master-planned golf resort community of Cabo del Sol, overlooking the Sea of Cortez. The 163-room resort will have multiple pools, a golf course, a spa, multiple food and beverage venues, and 35,000 square feet of indoor and outdoor meeting space. The hotel will also have a residential component, with 19 villas and residences.
Personnel News
Accor named Julie White as chief commercial officer of its premium, economy and midscale division in Europe and North Africa. White comes to Accor from Wyndham Hotels & Resorts, where she served as vice president of commercial for Europe, the Middle East, Africa and Eurasia.
Coast Hotels Limited appointed Dale Prout as Director of Development, located in California. In his new role, Prout will focus on growing Coast Hotels’ portfolio of franchised and managed hotels in North America specifically targeting key locations throughout the West Coast of the USA to support the company’s exponential growth and expansion strategy. Most recently, he served as Director of Franchise Development for Radisson Hotel Group.
Europe Highlights
CapitaLand Ascott Trust has sold four mature serviced residences in regional France for a total of €44.4 million as part of its portfolio reconstitution strategy. The four properties divested include: Citadines Croisette Cannes, Citadines Prado Chanot Marseille, Citadines Castellane Marseille and Citadines City Centre Lille. The proceeds from the sale will be used for asset enhancement initiatives in Europe and to partially finance Clas’ recent proposed acquisition of three prime lodging assets: The Cavendish London, Temple Bar Hotel in Dublin and Ascott Kuningan Jakarta.
