Choice Hotels Disputes Wyndham's Claims

The DJIA was up 171 points while Nasdaq rose 112, the S&P 500 was up 27 and the 10-year treasury yield was up .01 to 4.03%. Lodging stocks were modestly higher. AHT (Ashford Hospitality Trust) traded down -6% to another new low, but IHG (InterContinental Hotels Group) traded up to a new high.

Truist gave their 2024 Lodging Preview, saying they are expecting mostly positive tailwinds, projecting RevPAR growth of 2.5% to 4.5% for US midscale and higher-end hotels. They see US economy hotel RevPAR growth at the low end or below that range. Variables for midscale and economy hotels will be possible tailwinds from infrastructure spend. They expect Group RevPAR to be at or above the high end of that range. Truist said they still don’t love REITs but they are not as negative on the hotel REIT sector as they have been in years past. The major hotel REIT themes they see are the possibility of continued valuation multiple expansion driving by improving investor sentiment around the direction of interest rates; modest RevPAR upside to consensus expectations, offset by concerns over EBITDA margin downside and ownership exposure to underperforming San Francisco and lack of ownership in outperforming NYC. Ryman Hospitality remains their favorite hotel REIT name. On the C-Corp side, they see modest growth. There should be fairly stable industry-wide US year over year new supply growth but a pickup in net unit growth percentages from conversions, namely into Hilton and Marriott brands. Choice Hotels and Wyndham stock performances will be driven by news around the hostile acquisition attempt. There is uncertainty about Marriott’s co-branded credit card usage and fees derived, and for Hyatt and Playa, questions about year over year growth rates in the Caribbean. Hyattis Truist’s favorite C-Corp name for 2024. They are expecting C-Corps/Vacation Ownership and REITs to increase dividends.

Ashford Hospitality Trust said they expect to report occupancy of approximately 66% for the fourth quarter of 2023 with Average Daily Rate of $182 resulting in RevPAR of $120. That is an increase of 1% over the fourth quarter of 2022. Comparable RevPAR was up 4% in October year over year, up 1% in November but was down -1% in December versus December 2022. AHT also said since commencing their offering of Non-Traded Preferred Equity during the third quarter of 2022, they ended 2023 with 3,475,318 shares of its Series J non-traded preferred stock outstanding and 194,193 shares of its Series K non-traded preferred stock outstanding, raising approximately $91.3 million of gross proceeds.

Wolfe Research initiated coverage on RLJ Lodging Trust with an Outperform rating and $15 pt. They also launched with an Outperform on Diamondrock Hospitality with an $11 target. Peer Perform ratings were given to Xenia Hotelsand Summit Hotels with their initiation.

Choice Hotels International issued an investor presentation that they said disputed the false and misleading antitrust claims made by Wyndham Hotels & Resorts in connection with CHH’s attempt to acquire WH. The CHH presentation is pretty large and calls out WH on things like saying WH’s market definition includes nine other major competitions, including MAR (Marriott), HLT (Hilton), and IHG (InterContinental Hotels Group) with CHH saying they are ignoring the many new and legacy competing brands that are rapidly growing in the STR midscale and economy segments. CHH also said that combining WH and CHH would help franchisees reduce costs, improve profitability, and counteract dominant market players and OTA. The combination would also give expanded lodging options and an enhanced rewards program. The latter is about the only thing we completely agree with. Investors seem to be slowly warming up to at least thinking something may happen with CHH stock rising $2 today and WH is trading firmly above $80.

STR reported US lodging data for the week ended 1/6. US hotel RevPAR was up 6.4% led by ADR which was up 7.2%. Group RevPAR was down -5.7%.

Auro Hotels announced the newest addition to its portfolio, the Courtyard by Marriott Orlando Airport. The property adds to their base in the Orlando market, bringing the total to eight properties and 1,521 rooms. The Courtyard is located two miles north of Orlando International Airport. The 149 guestrooms and suites include a stay experience with each room including a balcony or patio. The Courtyard Orlando Airport also has 1,500 square feet of total event space for weddings, bridal showers, award banquets, meetings, and more.

EKN Development and their partner, Garn Development, said they are beginning construction of a Residence Inn and Courtyard by Marriott in Sand City, California. The ceremony will take place on January 17. The Marriott-brand hotels will consist of 215 guest rooms on 3.67 acres. The hotels will boast an epicurean experience with an independently branded restaurant and bar. The spacious courtyard includes a resort-style gracious pool, cabanas, and a fully equipped stage for events and live performances.

Chatham Lodging Trust announced the closing of the sale of the 180-room Hilton Garden Inn Denver Tech Center for $18 million. A $6 million renovation of the hotel was planned for 2023 but was not completed due to the sale.

Wayside Investment Group announced the grand reopening of its Extended Stay America Suites located in Baytown, Texas following a comprehensive renovation. The renovations were made to provide more amenities and services to long-term guests. The three-story, 82-room property renovations included significant upgrades to guest rooms, public spaces, a refinished exterior, and new signage.

IHG Hotels & Resorts, in collaboration with MNKD Holdings Hotels and management company ROC Hospitality LLC, celebrated the opening of a new Staybridge Suites hotel in Ames, Iowa. The 82-suite hotel includes a heated indoor pool and 24-hour fitness center.

Grand Velas Boutique Hotel Los Cabos, a new all-inclusive resort and concept from Mexico’s Velas Resorts, is now open. The new boutique hotel cost $50 million to build and is Velas Resorts’ third property in Los Cabos. The new property is adults-only and includes 79 luxurious suites, a two-star Michelin chef with creative dining experiences, wine selection inspired by the proximity to Mexico’s fine wine region, and spa treatments inspired by the Mexican culture. Other amenities include a fitness center, indoor and outdoor ocean view event spaces, botanical-designed infinity pool, and a private beach area. Guests of Grand Velas Boutique have access to sister property Grand Velas Los Cabos’ five gourmet restaurants.

Mexico City recently welcomed the opening of Volga Hotel, a chic hotel showcasing a minimalist design located within walking distance to both Roma and Condesa. The 50-room hotel includes a signature restaurant, poolside rooftop lounge, underground Music Room, TIER 2/5, a concept store, exhibition space, mecaleria, and tasting table. The rooms include 34 deluxe rooms, 14 suites, and two primary suites.

The Canton, MI Township Planning Commission will be meeting again to consider a plan that would bring a Topgolf location, Chick-fil-A, a Portillo’s, and a new hotel to the area of I-275 and Ford Rd. The commission has to consider the rezoning request from Top Canton LLC.

Ian Schrager and Steve Witkoff have a plan to avoid foreclosure at the Public on the Lower East Side of Manhattan. The Real Deal said the two are working with lender Varde Partners to convert some of the 367 room hotel’s $90 million distressed debt into equity. A November email indicated the developers planned to swap up to $30 million of Varde’s debt into equity, giving them a 45% stake in the property. NY City Regional Center, an EB-5 manager that raised nearly $80 million for the project, is objecting, saying the developers are not sharing details. The center filed a lawsuit saying they have to give approval to Schrager and Witkoff to negotiate any deal. The mezzanine loan was originally from Korean lender Shinhan Investment Corporation. Varde acquired the mezzanine loan and last year started a UCC foreclosure.

A joint venture between Newbond Holdings and Apollo Global Management has secured a $100 million loan to refinance a Tampa, FL hotel, according to the Commercial Observer. Monarch Alternative Capital provided the loan on the sponsorship’s 309-room Westin Tampa Waterside in Downtown Tampa. JLLarranged the transaction on behalf of the JV. Newbond and Apollo acquired the hotel in 2021 for $67.5 million. The new owners were reported to have been exploring a sale of the hotel last year with Bloomberg saying the property could fetch $150 million.

JLL’s Hotels & Hospitality Group announced it arranged the sale of the 308-room El Tropicano River Walk Hotel, the first purpose-built hotel located on San Antonio’s River Walk. JLL worked on behalf of the seller, El Tropicano Hotel LLC, and procured the buyers, Trestle Studios, Sopris Capital, and The Town Lake Company.

RobertDouglas announced it represented, as exclusive advisor, SunCoast Properties Inc, in the $29 million first mortgage floating rate financing of the 174-key SunCoast Park Hotel Anaheim, Tapestry Collection by Hilton. Seven Hills Realty Trust, a REIT managed by Tremont Realty Capital, an affiliate of The RMR Group, provided the financing.

Personnel Moves

HHM Hotels announced the promotion of Dani Elhachem to Chief Operating Officer. HHM’s operating portfolio includes over 100 Marriott-branded hotels, 65 Hilton-branded hotels, over 50 independent and soft-branded hotels and resorts plus dozens of properties in the Hyatt and IHG brand families. In tandem with Elhachem’s appointment, HHM announced a strategic role transition for Mike Murray, a company founder. Murray will assume the newly created position of Chief Business Officer.

Resolute Road Hospitality announced the addition of Tony Cruz as Senior VP of Operations. He was most recently COO at Hawkeye Hotels.