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North America

Morgan Stanley Is Bullish on Hotel Sector

Alan Woinski and Kim Woinski
December 4th, 2023 at 5:40 PM EST

Skift Take

  • Morgan Stanley remains optimistic about the hotel industry’s growth, forecasting a 2% RevPAR growth globally for next year, with potential for higher growth.
  • Selina Hospitality faces stock value decline and plans for delisting from Nasdaq.
  • The Leading Hotels of the World welcomed new members, including newly opened or renovated hotels in New York, California, China, France, Greece, Spain, Italy, and Venice.

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The DJIA fell 41 points while the Nasdaq was down 120, the S&P 500 fell 25 points. The 10 year treasury yield was up .06 to 4.29% and lodging stocks were mixed. RHP, HLT and IHG traded up to new highs but SLNA was down another -8% to another new low.

Morgan Stanley gave a global view of the hotel industry, saying RevPAR growth is slowing and it is unnerving investors. They remain comfortable with their 2% RevPAR growth forecast for next year and said it could be materially stronger. RevPAR growth has slowed in Europe and the UK while picking up in the US. While they are comfortable with 2% global RevPAR growth in 2024, MS said their top-down framework suggests a base case of 3%-4% RevPAR growth and they could make a case for high single digit growth. They remain positive on the hotel sector with key Overweight ratings on Accor and Whitbread in Europe and Hilton, Marriott, Hyatt and Wyndham in the US.

Selina Hospitality traded down to another all time low today and ended the day about $.18 above where it could be trading in a few months ending the day at $0.19. They detailed their agreement in principle on terms for $28 million in equity financing with $20 million expected to be funded this month. They also have an agreement in principle on up to $40 million of optional equity financing and agreements on terms for restructuring its $147.5 million 6% convertible senior notes. At current stock prices, SLNA shareholders were going to be diluted down to nothing anyway but at the very end of the press release SLNA disclosed that, “The parties would agree to support and vote in favor of the delisting of the ordinary shares from Nasdaq and deregistration as an SEC-reporting company.” While they say this is a take-private transaction, if they delist and stop reporting first, not only do they save the company $6 million or so a year in public company costs, the shares will most likely trade at under a penny with a wide spread on the OTC market.

Ascent Hospitality obtained a $49.8 million construction financing from Peachtree Group toconvert the historic Brown Marx Tower, in Birmingham, Alabama, to a 338-room dual-branded AC & Element Hotel. The project’s AC Hotel will have 190 guestrooms. The Element Hotel will feature 148 extended-stay rooms. The project will be completed in the first quarter of 2025.

HHM Hotels added the Le Meridien Tampa, The Courthouse to its managed portfolio of properties. The full-service boutique hotel features 130 guestrooms, a unique restaurant and bar program and multiple historic meeting rooms. HHM Hotels now manages 30 properties in Florida.

Throckmorton Partners has acquired, for a reported $73.1 million, the south tower of the Signia by Hilton San Jose in San Jose, California and will lease the 264 rooms to San Jose State University as student housing. SJSU is planning a 700-bed residence hall, and the university ahs an option to buy the tower after two years. 

IHG Hotels & Resorts announced the opening of a new Holiday Inn Express hotel in Jesup, Georgia. Owned by BRW Hospitality Group LLC, the Holiday Inn Express Jesup features 85 guestrooms, a fitness center, pool, onsite business center and meeting space. 

A New Jersey company is proposing to build a 122-room WoodSpring Suites hotel at the border of New London, Connecticut on Boston Post Road. Seven Hills Hospitality Group would replace four blighted properties at the gateway to Waterford. Seven Hills has contracted JP Hospitality Management to run the extended-stay hotel. 

Life House has been selected to manage three distinguished hotels in Pagosa Springs, ColoradoThe Nightingale Motel, High Creek Lodge, and Pagosa River Domes. The initiative comes as part of a collaboration with Elan Capital Partners. The partnership will blend Life House’s proven expertise in hospitality with the existing local charm and character of each property. 

The Celtic Ray pub in Punta Gorda, Florida will be expanding. Kevin and Max Doyle are building a 65-room hotel directly across the street from the pub. The six-story hotel will have an English pub on the sixth floor with a courtyard. With an aggressive timeline to get it done, they hope to have it up and running by New Year’s Eve in 2024. The plan is to have a groundbreaking after St. Patrick’s Day in 2024.

Universal Destinations & Experiences announced new details for Universal Kids Resort, its first theme park designed specifically for families with young children planned for Frisco, Texas. The project will feature a theme park as well as a 300-room-themed hotel. It broke ground on the space last month.

Robert Finvarb Cos. has proposed a hotel in Miami’s Wynwood Arts DistrictHidrock Realty is a partner in the project. The eight-story hotel would feature 116 guestrooms, a restaurant on the mezzanine level and another on the roof. There would also be a rooftop pool, gym on the second floor and 24 parking spaces in the basement level. Finvarb expects to sign a branding deal with a national hotel company for the full-service property. They hope to break ground in Wynwood in the third or fourth quarter of 2024.

Escape Resorts announced the opening of The Bent Inn, a new adults only LGBTQ boutique hotel in downtown Las Vegas, Nevada. The 33-room, non-gaming hotel is the first adults-only, gay and locally owned and operated boutique spot in downtown Las Vegas. Amenities include a pool deck with in-pool seating, chaise lounges, a poolside food truck, oversized outdoor heated spa and a gastropub. 

The Zoning Commission of Danbury, Connecticut voted a second time against developer Dan Bertram and his plan to turn Crowne Plaza hotel into 198 micro apartments. The second “no” vote from the Zoning Commission means he will convert the 10-story hotel into extended-stay rooms. 

A hotel in North Sacramento, California is operating again and sold recently for more than double what it did five years ago. Records show the 152-room hotel at 1900 Canterbury Road, now operating as a SureStay Plus by Best Western, was sold to a hotel operator/owner based in Willits for $11.36 million. That’s more than double the last sale in 2018, when Sac Hotels LLC bought the property for $5.6 million. 

Omni Hotels & Resorts announced new details about its enhanced Select Guest Loyalty Program making it easier and faster to achieve and retain Select Guest Status. Beginning in 2024, Omni will introduce revamped tier names and structure. The new tiers progress from Member to Insider to Champion to Icon Status, each delivering increasing levels of recognition, benefits, and free nights. Select Guest Status will now be determined by members’ on-property spend accumulated within each calendar year. Omni prides itself in providing guests with authentic local experiences, and the updated program is designed to make sure members make the most of everything the property has to offer. 

JLL Capital Markets arranged $22.5 million acquisition financing for the Hampton Inn & Suites in Truckee, California. JLL worked on behalf of the borrower, JMA Ventures, LLC to secure the acquisition loan from Metlife Investment Management. The property features 109 guestrooms and suites across two buildings, a heated outdoor pool and Jacuzzi, fitness center and over 1,000 square feet of meeting space. 

Baird said KSL Capital Partners VI obtained a $940 million CMBS debt package to finance the Hersha Hospitality take-private transaction. The $736 million first mortgage loan from Wells Fargo and Citigroup bears interest at SOFT+3.668% but KLS purchased an in-the-money interest rat cap with a 3.90% strike rate to buy down the all in rate. There also is a $204 million mezzanine loan and $47 million of Hersha management rollover equity. The financing is secured by 19 hotels totaling 3,102 rooms.

The Leading Hotels of the World welcomed eight new member hotels to its collection. This season’s additions include many new openings and significant renovations that will amplify LHW’s presence in Europe, North America and China. The new members include: The restored 113-room Nine Orchard located in New York. The 84-guestroom The Georgian in Santa Monica, California, restored in April 2023. The 27-room Hylla Vintage Hotel located in Lijiang, China. The redesigned 40-room Althoff Villa Belrose in Saint-Tropez, France. The 38-room Avant Mar which opened in July 2023 in Paros, Greece. Newly opened in September 2023 is the 49-groom Palacio Arriluce Hotel located in Getxo, Spain. Located on the Basilicata coastline in Maratea, Italy, is the 34-room Santavenere and in Venice, Italy, the newly opened 45-room Violino d’Oro Venezia. 

Personnel News

Timbers Company appointed Darrin Griffin as chief development officer. In his new role, Griffin is responsible for identifying opportunities aligned with the brand’s expansion goals, as well as overseeing the company’s current expansion, including the addition of new residences joining Timbers Resorts’ collection as well as its sister brand, Soleil Hotels & Resorts, a forthcoming collection of authentic hotels, resorts and residences situated in distinctive intriguing locales. Griffin brings more than three decades of experience in real estate and construction, holding leadership roles with RMC Property Group and Kelsey Construction. 

Alan Woinski and Kim Woinski
December 4th, 2023 at 5:40 PM EST

Companies: Best Western Hotels & Resorts, Choice Hotels International, Crowne Plaza, Element, Escape Resorts, Hampton by Hilton, Hersha Hospitality Trust, HHM Hospitality, Hilton Hotels & Resorts, Holiday Inn Express, Hyatt Hotels Corporation, IHG Hotels & Resorts, JLL, KSL Capital Partners, Le Meridien, Leading Hotels of the World, Life House, Marriott International, Omni Hotels & Resorts, Peachtree Group, Ryman Hospitality Properties, Selina, Seven Hills Hospitality Group, Signia by Hilton, SureStay Plus, Timbers, Whitbread PLC, Woodspring Suites, Wyndham Hotels & Resorts

Locations: Alabama, Colorado, Connecticut, Georgia, Las Vegas, Miami, San Jose, Tampa, Texas

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