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North America

Hotel-Branded Residential Developments Grow in Popularity

Alan Woinski and Kim Woinski
October 11th, 2023 at 5:32 PM EDT

Skift Take

  • Stock market performance: DJIA up 66 points, Nasdaq up 97, S&P 500 up 19 points, and 10-year treasury yield down to 4.60%.
  • Lodging industry updates: US hotel RevPAR increased 5.2%, Group RevPAR was up 29.5%. Stifel lowered target price on Wyndham Hotels & Resorts, while Exane BNP Paribas downgraded IHG Hotels & Resorts.
  • International travel data: International visitors spent $19.0 billion on US travel in August 2023, with a trade surplus of $1.8 billion. Travel and tourism accounted for 7.4% of US exports of goods and services in August 2023.

The DJIA was up 66 points, Nasdaq was up 97, the S&P 500 rose 19 points and the 10 year treasury yield was down .06 to 4.60%. Lodging stocks were mixed. The two biggest movers were to the upside with both SHCO and VCSA both up 7% on the day.

STR reported US lodging data for the week ended 10/7. US hotel RevPAR was up 5.2% year over year on a 5.4% jump in ADR.  Group RevPAR was up 29.5%

Stifel lowered their target price on Wyndham Hotels & Resorts to $83 from $84. They maintained their Buy rating on WH.

Exane BNP Paribas downgraded IHG Hotels & Resorts to Underperform from Neutral. The analysts called IHG its least preferred European hotel company given its US exposure and capped upside risk. Exane BNP believes US pricing has peaked and that US stocks look unattractive.

Data recently released by the National Travel and Tourism Office shows that in August 2023 international visitors spent $19.0 billion on travel to, and tourism-related activities within, the United States, an increase of nearly 29% compared to August 2022. Conversely, American spent more than $17.2 billion traveling abroad during August, yielding a balance of trade surplus of nearly $1.8 billion. International visitors spent more than $137.7 billion on U.S. travel and tourism-related goods and services year-to-date, an increase of more than 33% when compared to 2022. Travel and tourism accounted for 7.4% of U.S. exports of goods and services in August 2023, up 5.7% from August 2022. Purchases of travel and tourism-related goods and services by international visitors traveling in the U.S. totaled $10.6 billion during August 2023, an increase of nearly 35% when compared to the previous year.  Fares received by U.S. carriers from international visitors totaled $3.4 billion in August 2023, up 29% when compared to August 2022. Expenditures for educational and health-related tourism, along with all expenditures by border, seasonal, and other short-term workers in the U.S. totaled $5.0 billion in August 2023, an increase of 17% when compared to the previous year. 

According to CoStar, hotel brand companies are experimenting with 100% branded residential properties, which executives say have higher profitability and demand along with less risk. Branded hotel residences have long been a staple of luxury hotel development but as demand grows for hotel-like homes, companies such as Marriott International and Hilton are expanding a unique segment: hotel-branded residential developments without the hotel. Global Branded Residences Ltd. feels that it’s a model that works across several tiers. Hotel-branded residences are fundamentally driven by the market they’re in.  There are stand-alone luxury-branded residences designed for trophy ownership. Then the bulk of the market is luxury residential developments with a hotel that include a rental program. Then at the furthest end are condo-hotels running a rental program, where the owner is limited in the usage of the property so the hotel has a significant product inventory. 

The Embassy Suites by Hilton Orlando North, in Altamonte Springs, Florida, announced the completion of a multi-million dollar renovation to its 277 all-suite hotel. The fourteen-month extensive renovation  project includes updates to all guest suites, lobby, atrium area, Omaha Steakhouse and more than 7,200 square feet of event spaces. Additional amenities include a fitness center, indoor pool and hot tub.

Hilton announced the grand opening of Spark by Hilton Mystic Groton in Mystic, Connecticut. The new property offers 120 guestrooms, seasonal outdoor pool, a retail market, and public space with multi-functional seating.  The property was developed by Distinctive Hospitality Group.

Truist was among the first to stay at the first Spark and said they are anticipating a very successful brand. Truist believes Spark should be highly appealing for hotel developers, a potent long term competitive threat within economy/midscale and could increase HLT franchise fees by 10%+ at scale.   Truist feels HLT entering the economy space is a very big deal for the global lodging industry and lodging investors. They can envision thousands of Spark hotels globally over time and see it similar to HLT’s Hampton Inn as a positively distinctive category-killer hotel brand that materially outperforms its direct competition in part by positioning it a bit differently relative to the closest competitive flags. Assuming Spark is a big success, Truist could see future material entry into the Economy space by Marriott, IHG, Hyatt and other global C-Corps that have largely maintained chain scale exposure of at least Midscale or higher.

The Sheraton Fort Worth Downtown is nearing completion of one of the most extensive hospitality transformations ever in the Fort Worth, Texas market. Managed by Aimbridge Hospitality, the hotel’s $45 million renovation is scheduled to be completed by the end of this year. The transformation includes new exterior and signage, redesigned entryway, more suites and several new work-space studios. The Sheraton Fort Worth Downtown will also debut a signature restaurant/bar. Construction has been taking place in phases since fall 2022, allowing the hotel and its almost 30,000 square feet of conference space to remain open during much of the project. 

Construction is nearing the end for a new hotel in Downtown Sacramento, California. According to general contractor Tricorp Group, the eight-story, 179-room hotel, the first AC Marriott in the region, should open in early 2024. Owned by Phota Sacramento LLC, the $40 million project will include a bar/lounge, media center, business center and a fitness center.

Brickell Miami LLC, an affiliate of Constellation Hotel Holdings, Ltd., has sold the SLS Brickell Hotel, a mixed-use hospitality development in Miami, Florida, for $55 million. The asset offers nearly 58,000 square feet of indoor and outdoor event space, two ground-floor restaurants, three bars/lounges, a rooftop pool terrace, two ballrooms, various meeting spaces, a fitness center and the Ciel Spa. The hotel traded in this deal occupies the first nine floors of the SLS Tower, with common areas and 453 residential condominium units above. The 124-key hotel and remaining ground-floor restaurant/retail space and associated hotel and restaurant FF&E within the 54-story mixed-use building was purchased by 1300 Brickell Miami LLC. 

The Chelsea Hotel in downtown Toronto has completed a $25 million dollar refurbishment. The investment included a complete refresh for 600 guestrooms in the Executive Tower, hotel corridors throughout the hotel and modernization and refurbishment of the Executive Tower elevators. There was also a refurbishment of Market Garden Restaurant while the Elm Street Bar & Lounge has undergone extensive enhancement. Next month the hotel will roll out its WiFi upgrade, after a further investment of $2.3 million. The hotel is owned by Great Eagle Group and is managed by Langham Hospitality Group.

Rosedev, the owners of what is now the Empire Meadowlands Hotel, in Secaucus, New Jersey, has entered into a lease agreement with a new operator planning to bring it back to life. Turtlebrook Investments LLC is planning to refurbish the interior of the 14-story hotel, as well as review safety issues like the elevators and fire suppression systems before the town can inspect it. It is unknown when the hotel will reopen and the financial terms of the agreement were not available.

The Athens Group along with its partner, Hatteras Sky, announced the recent topping off of Asher Adams in downtown Salt Lake City, Utah. The signature project features the adaptive reuse of the historic Union Pacific Depot Train Station along with the construction of a new, eight-story guestroom tower. The Athens Group is transforming the property into a 225-room Marriott Autograph Collection hotel; the first of its kind in Salt Lake City. Opening in the fall of 2024, Asher Adams will boast meeting and event spaces, a patisserie, a signature restaurant, two bars, a fitness center and a 17,000 square foot live entertainment venue.

Urban Cowboy Hotels has been renovating the George Schleier Mansionlocated in the Capitol Hill neighborhood of Denver, Colorado, into a hotel with 16 rooms, a bar and restaurant. The renovation included turning the former two-story carriage house into Urban Cowboy’s own Public House bar and restaurant. A separate Parlor Bar will be located in the main mansion.  GBX Group is the mansion’s owner. 

The Lancaster County Convention Center Authority is putting the historic Swan Hotel in downtown Lancaster, Pennsylvania on the market, packaged along with air rights to authority parking lots near the hotel site.  Proposals to purchase and redevelop the hotel will be accepted in a six- to 12-month process that is expected to result in new ownership. 

Personnel Moves

HHM Hotels announced the promotion of Shawn Tuli to Chief Investment Officer. In this newly created role at HHM Hotels, Tuli will build on the company’s strength around investment, third-party growth, M&A, and overall capital allocation. Tuli has previously served HHM Hotels in a variety of impactful roles. 

Crestline Hotels & Resorts, LLC announced the appointment of Laura Mack as Senior Vice President of Accounting & Finance. Mack joins Crestline from American Campus Communities, Inc., where she held the position of Senior Vice President, Chief Accounting Officer. In her new role at Crestline, Mack will oversee corporate accounting and finance as well as hotel accounting.

Commonwealth Lodging Management has hired Jesse Hemphill as Director of Hotel Operations. In his new role, Hemphill will oversee multiple properties within the Commonwealth Lodging portfolio. His responsibilities include assisting in new development projects, leading the recruitment and training of senior management staff, and implementing the brand processes and procedures to ensure profitability while delivering exceptional guest experiences. 

Alan Woinski and Kim Woinski
October 11th, 2023 at 5:32 PM EDT

Companies: Constellation Hotel Holdings, Ltd., Crestline Hotels & Resorts, Embassy Suites by Hilton, Ennismore, HHM Hospitality, Hilton Hotels & Resorts, IHG Hotels & Resorts, Marriott International, Sheraton Hotels & Resorts, SLS, Soho House and Co Inc., Spark by Hilton, Urban Cowboy Hotels, Vacasa, Wyndham Hotels & Resorts

Locations: California, Connecticut, Denver, Fort Worth, Miami, New Jersey, Orlando, Pennsylvania, Toronto, United States

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