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North America

Choice Hotels Repurchases More and More Shares

Alan Woinski and Kim Woinski

May 8th, 2024

Skift Take

Choice Hotels’ earnings exceeded low expectations, highlighted by aggressive share repurchases that historically benefit the stock.

The DJIA was up 172, Nasdaq was down 30, the S&P 500 was flat and the 10 year treasury yield was up .03 to 4.49%. Lodging stocks were lower with earnings getting a thumbs down today. CHH was down -5% despite a mixed opinion by analysts, while SVC was down -6% to a new low after their report.

Expectations were low going into Choice Hotels’ earnings report so the results were better than estimates and definitely better than feared. Our most positive takeaway is that CHH became very aggressive on share repurchases again, historically a good sign for the stock. In 1Q24 they only bought 400,000 shares for $60.6 million. So far in 2Q, they have bought back 1.1 million shares for $136 million. They still have 5.3 million shares left in their authorization.

Ashford Hospitality Trust’s earnings report was deemed to be below estimates with the reason, given their pre-announcement, being the Keys A and B portfolios being transferred to a court appointed receiver. Baird said AHT’s March hotel-level results were also softer than forecasted. Baird said AHT is making progress on asset sales and they think the Oaktree loan could be repaid in 3Q24. That loan has a remaining balance of $107 million.

Host Hotels & Resorts showed why they have an advantage over many other hotel REITs. They issued $600 million of unsecured notes at a very attractive 5.921% yield to maturity. The coupon is 5.7% but this is the tightest spread over Treasury yields that HST has achieved. They used the proceeds to repay $215 million under its revolving credit facility, which had a 6.26% interest rate, plus HSThad recently repaid $400 million of senior notes that matured on April 1.

Compass Point upped their rating on Sunstone Hotel Investors to Neutral from Sell. Compass Point’s price target was raised to $12 from $10.

Deutsche Bank lowered their price target on Ryman Hospitality to $136 from $141 while reiterating their Buy rating. They believe RHP has been caught up in a broader downdraft in sentiment towards lodging REITs and believe this presents a stock-specific opportunity.

STR reported US lodging data for the week ended May 4th. US Hotel RevPAR was up 0.5% with rates up 1.3%. Group RevPAR rose 2.5%. The tail end of the impact of the Passover comp was probably in this week.

SSG Hotels announced the groundbreaking of an 86 room Staybridge Suites by IHG in Greenwood, Indiana. This is SSG’s second Staybridge Suites endeavor. The all-suite extended stay hotel will include a complimentary breakfast buffet, light bites & happy hour, pool, fitness center, outdoor patio area, and business center. The design includes a refreshed prototype from IHG.

IHG Hotels & Resorts said they recently opened a new Holiday Inn Express & Suites hotel in Nokomis, FL. The Holiday Inn Express & Suites Nokomis – Sarasota South offers 98 rooms, fitness center, and 900 square feet of meeting space. The hotel operates under the ownership of Shree Gajanand Hospitality LLC.

La Corsha Hospitality Group has begun construction on a boutique hotel at a 5.5 acre property in Austin, Texas. The 63 room hotel will also include event space and a restaurant. La Corsha expects to complete construction in summer of 2025 but is also already planning a future phase which will include a spa and more hotel rooms constructed on the western edge of the property.

The Black Oak Casino Resort in Tuolumne, CA announced the details of a major renovation and expansion project at THE HOTEL. They expect this to be completed by summer 2025. It will include the addition of 48 new suites, a complete overhaul of the existing 148 rooms, an updated hotel exterior and the construction of two all-new aquatic facilities. Black Oak Casino Resort is owned and operated by the Tuolumne Band of Me-Wuk Indians.

La Concha Resort in San Juan, Puerto Rico, announced the unveiling of a new, oceanfront spa called Elemara Spa & Salon. This is part of a property-wide renovation. This year the resort will also unveil additional property-wide enhancements throughout a comprehensive property evolution. The resort has 243 oceanfront rooms and a 235 suite tower. The property is part of the Condado Collection, a group of hotels located in San Juan that are owned and operated by Paulson Puerto Rico.

Hard Rock International announced the global launch of Unity by Hard Rock, their loyalty program that spans Hard Rock’s portfolio of more than 200 locations including hotels, cafés and Rock Shops around the world.

Affiliates of Gencom have refinanced the Rosewood Bermuda. The five star resort in Tucker’s Point spans 240 waterfront acres and features more than 800 linear feet of beachfront. The financing was originated by Blackstone Mortgage Trust Inc and KSL Capital Partners LLC for an undisclosed amount and terms. Gencom first acquired the fee-simple Rosewood Tucker’s Point master-planned estate out of receivership in 2017 and they executed a series of repositioning efforts including a complete overhaul and renovation. The property has 88 keys and is operated by Rosewood Hotels and Resorts.

The Real Deal reported the Pomeranc family is facing financial troubles at its Sixty LES Hotel, located on the Lower East Side of Manhattan. The article said a $23 million collateralized loan obligation on the 141 key hotel was reported as non-performing this month as it was not paid off on its extended maturity date of April 6. An investor in the hotel, Mitchell Adelstein, told The Real Deal that the lender had agreed to an extension and Adelstein’s firm, Capstone Realty Group, is helping the Pomerancs work out the financing. They are working with the lender to replace or extend the loan. The Pomeranc family’s Sixty Collective refinanced the hotel in 2021 with a $64 million mortgage from lender Argentic which then sold the senior debt on the CLO market.

Hunter Hotel Advisors announced the sale of the Hampton Inn and Homewood Suites Boston Peabody to Giri Bar Harbor Kebo Inc. and Giri Peabody 57 LLC on May 1. Hunter represented the institutional seller. The two hotels offer a combined 205 keys, located less than 10 miles from Salem and 13 miles south of Boston.

Personnel Moves

HVS Executive Search announced the promotion of Wendy Hollander to Chief Administrative Officer. She will direct and oversee all administrative operations, ensuring the development and implementation of efficient systems and policies. Hollander has been with HVS Executive Search for three years.

Cooper Hotels announced that Candace Selecman has joined their Memphis corporate office as Accounting and Benefits Manager. She previously served as General Manager of Cooper Hotels’ DoubleTree by Hilton Memphis.

Dennis Mitchell has been promoted to Vice President of Development and Construction for OTO Development. In his new role at OTO’s leadership team, Mitchell is based out of the company’s corporate headquarters in Spartanburg, South Carolina.

Capella Hotel Group announced the appointment of Ivy Kwan as Senior Vice President of Sales and Marketing. She joins Capella Hotel Group from Urban Resorts Concepts where she was Senior Vice President of Commercial Strategy and Business Development.

Hospitality America announced the promotion of Leigh Holloway to Chief Strategy Officer. Holloway joined the hotel development and management company in 2016 and was previously VP of Revenue Strategy.

Alan Woinski and Kim Woinski

May 8th, 2024

Companies: Choice Hotels International, Ashford Hospitality Trust, Blackstone, Capella Hotels & Resorts, Cooper Hotels, Hampton by Hilton, Hard Rock International, Holiday Inn Express, Homewood Suites by Hilton, Hospitality America, Inc., Host Hotels & Resorts, Inc., Hunter Hotel Advisors, HVS, IHG Hotels & Resorts, OTO Development, Ryman Hospitality Properties, Service Properties Trust, Sixty Collective, SSG Hotels, Staybridge Suites, Sunstone Hotel Investors, Inc.

Locations: Boston, California, Florida, Indiana, New York City, Puerto Rico

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