New York City's Changing Supply Dynamics

The DJIA fell 55 points while Nasdaq was up 197, the S&P 500 rose 29 points and the 10 year treasury yield was up .02 to 4.19%. Lodging stocks were higher with MAR and IHG hitting new highs again. SOND was up 13%.

SHCO rebounded 13% as they rejected the report from GlassHouse Research, Soho House said the report contained factual inaccuracies, analytical errors and false and misleading statements. They believe the report was designed to bring down their stock price for the benefit of a short seller, something that clearly happened on Thursday. SHCO said they expect to report 2023 results next month in line with expectations. SHCO said members of their Board and affiliates own 74% of the shares outstanding and have actively been buying shares with a weighted average price of $6 per share. Their Board approved a new $50 million share repurchase authorization. The bombshell they dropped to try to counter short selling was their strategic review that was started in fall of 2023, may result in the company going private. The Special Committee of the Board has hired legal and financial advisors. Why did they bother going public?

S&P Global Ratings said they expect Park Hotels & Resorts to sustain the adjusted leverage debt to EBITDA of 5.0x - 5.5x through 2024, supported by continued recovery of group and business travel. S&P expects that to enable mid-single-digit RevPAR growth and stable EBITDA margin in 2024. PK giving back the Hilton San Francisco Union Square and Parc 55 San Francisco Hilton Hotel properties to their lender has improved their leverage. S&P raised their issuer credit rating on PK two notches to BB- from B and raised their issue-level rating on PK’s senior unsecured notes to BB from B+.

JLL launched its NYC State of the Lodging Industry report. Key takeaways include: Strong Market Fundamentals: NYC RevPAR led top-25 U.S. markets in 2023. Driven by the highest ADR in the market’s history, NYC RevPAR reached historic heights in 2023, exceeding 2019 levels by 15.2%. Favorable Supply Outlook: Zoning changes & short term rental restriction to benefit existing hotels. Following a decade of historic growth, NYC hotel supply is expected to grow at an average annual rate of 1.6% over the next three years. Existing NYC lodging supply has already been impacted by the 16,000 rooms taken out of inventory for asylum seekers and the recent restrictions imposed on short-term rentals. Robust Hotel Liquidity: Foreign capital re-emerges to drive transaction volume to eight-year high. NYC hotel transaction volume soared to $3.3 billion in 2023, the market’s highest total since 2016. Foreign capital, driven by Asian and Middle Eastern investors, has emerged as the largest acquirer of hotel assets following nearly three years of minimal activity. Rising Development Costs: Discount to replacement presents opportunity for hotel investors. Driven by rising construction costs and ongoing supply chain disruptions, NYC development cost per key for full-service hotels has soared to $796,000 in 2023. While acquisition costs are on the rise, the cost-to-buy is still significantly less than the cost-to-build.

Hotel Tonnelle, part of Marriott’s Tribute portfolio, completed a comprehensive renovation that transformed every corner of the New Orleans, Louisianaproperty. The renovation includes 132 renewed guestrooms, onsite dining outlet, meeting spaces, lobby and all public areas. The property is managed by Aimbridge Hospitality.

A new dual-branded hotel is coming to Albuquerque’s Uptown area this spring. Sun Capital Hotels is spearheading the project that will feature two Marriottbrand hotels under one roof for a total of 149 rooms. Half the New Mexicoproperty will be a TownePlace Suites by Marriott with 63 kitchen suites and the other half will be a Fairfield Inn by Marriott with 86 rooms. Construction, which began a year ago, is scheduled to finish by May. Along with the dual-branded hotel in Uptown, Sun Capital Hotels is also planning to construct a new hotel on Jefferson Street NE. Construction on the Home2 Suites by Hilton is expected to start next year with opening planned for 2026. In addition, the firm is in the process of designing a Fairfield Inn and SpringHill Suites in El Paso, Texas.

Kimpton Hotels & Restaurants has unveiled the name and anticipated opening date for its first hotel in San Antonio, Texas. The 10-story development will be branded Kimpton Santo and is expected to open in late 2024. White Lodging is the developer and owner of the Alamo City property which includes several schoolhouse structures, which have been preserved and will be incorporated into the hotel’s design. The hotel will house eight schoolhouse guest suites in one of the property’s historic buildings. The Kimpton Santo development will include more than 13,000 square feet of event space featuring two ballrooms and an outdoor atrium, multiple fine dining options and a pool.

Construction has begun on One Beverly Hills, a nearly $5-billion condominium and hotel complex, set to open by early 2028 in Beverly Hills, California. Owners of the property broke ground Thursday on what they call a 17.5-acre Urban resort that will unify the neighboring Beverly Hilton and Waldorf Astoriahotels with condo high-rises, 8.5 acres of botanical gardens and the first ultra-deluxe Aman hotel on the West Coast. The Aman in Beverly Hills will have 75 suites in a 10-story building. The tower residences will be branded and serviced by Aman. One Beverly Hills will include shops and restaurants intended to complement the city’s upscale retail areas.

Demolition is underway at the former Associated Bank in Waukesha, Wisconsin, making way for the construction of a Cobblestone Hotel. The entire hotel construction project should take between 15 and 18 months to complete. The future hotel will include 60 rooms, an indoor pool, restaurant and 20 parking spaces.

A topping-off ceremony was held for the Caesars Virginia casino hotel resort. The hotel, originally 18 floors and 500 rooms, topped out at 12 floors and 320 rooms.

Seibu Prince Hotels & Resorts unveiled The Prince Kitano New York, following a year’s-long renovation. Formerly known as The Kitano Hotel New York, the refreshed property now sits within The Prince portfolio, the company’s flagship hotel brand. The Prince Kitano New York is Seibu Prince Hotels & Resorts’ first property located in the continental U.S. The Park Avenue hotel boasts 150 refurbished accommodations, along with a modernized lobby and restaurant areas.

The Best Western Plus Heritage Rail Inn & Suites recently opened in York County, Pennsylvania, after completing a $3-million renovation. The new hotel features 73 guestrooms along with 55 suites, a fitness center, business center, meeting room and seasonal outdoor pool. The hotel will debut a new lobby bar in the next month or two.

Best Western Hotels and Resorts announced the opening of Best Western SeaWorld San Antonio following a $1.5-million renovation. The San Antonio, Texas hotel, owned by Aman Patel, features 70 guestrooms and 12 suites, a fitness center, outdoor pool, laundry facilities and a business center.

Crystal Coast Oceanfront Hotel, a newly renovated coastal retreat in Atlantic Beach, North Carolina completed an extensive renovation of over $2M led by Blue Water Development. The renovation will continue throughout 2024. Formerly known as The Inn at Pine Knoll Shores, the property offers renovated spaces and amenities along with new activities. In conjunction with the hotel’s re-brand, the property will soon introduce a brand-new look and feel for its onsite restaurant which will be completely overhauled and open in Spring 2024.

Fortius Capital launched a new property acquisition initiative in mountain and resort markets, including Colorado, Utah, Idaho and Oregon. The firm is actively acquiring entry-level housing and outdoor hospitality assets that meet the following criteria: 50+ site RV parks; 40+ site manufactured housing communities; 10+ unit multi-family opportunities; or entitled land zoned for selective assets in mountain and resort markets. Transaction sizes typically range between $2,000,000 to $25,000,000.

JLL’s Hotels & Hospitality Group arranged the sale, on behalf of the seller, of the dual-branded Aloft / Element Arundel Mills BWI Airport hotel located in Hanover Maryland, to Spark GHC. The Aloft consists of 142 guestrooms and the Element has 147 guestrooms. Key amenities include an indoor pool, fitness center, market, guest laundry and meeting space.