U.S. Hotels Expect a Strong Next 12 Months

The DJIA rose 244 points but Nasdaq plunged 512 while the S&P 500 was down 79 points and the 10-year treasury yield dropped .02 to 4.15%. There were still some lodging names in positive territory by the close, but a lot of digesting of recent gains took place today.

Barclays is expecting modest EBITDA upside for hotel companies during 2Q24 earning season as better than expected U.S. RevPAR growth should result in at least in-line results, with EBITDA modestly ahead of guidance and consensus. Group business was again the star segment so Barclays is expecting that to help Marriott and Hilton deliver the best RevPAR growth results.

According to Tourism Economics, U.S. travel appears healthy across all of the major hotel demand segments. According to consumer surveys, projected leisure traveler spending in the next 12 months is off the charts. The positive sentiment around travel spending is carried by the higher income of baby boomers and Gen Xers. Leisure travel intentions are becoming bifurcated between income classes. Higher-income classes continue to plan to travel in the coming months, but lower-income classes are traveling less. Upper-upscale and luxury hotels are still building back occupancy lost from the pandemic, while both demand and supply are shrinking in the economy sector. Midscale and economy hotels are losing ground to inflation in the weaker demand environment. Urban markets are still building back demand lost from the pandemic downturn. Resort hotels, on the other hand, had a strong initial recovery of RevPAR, but that growth is now subsiding and is evening off. Remote work isn't as popular as it was during the pandemic, but the amount of at-home workers has gone from 5% to its current level of 27%. More than half of fully remote workers, 58%, are meeting with colleagues in person quarterly. Business travel intentions are growing, especially among higher-income tiers. As for group travel, the segment hasn't quite hit a full recovery to 2019 levels, but it is only 5% below those levels. Global travel, in general, has not just returned to pre-pandemic levels; it has backed up on prior growth trends. International travel, however, is taking longer to get back on track compared to domestic travel.

STR reported a tough week for U.S. hotels, the week ending July 13 as RevPAR fell -5.2% with both ADR and occupancy in negative territory with RevPAR negative in all chain scales. Group RevPAR was down over -15%. Whether this was just a carry over from the weird timing of the July 4 holiday probably won't be known until we get another holiday like that.

Sunstone Hotel Investors, Inc. and Marriott Hotels announced the opening of the new Marriott Long Beach Downtown in Long Beach, California. The 12-story hotel showcases 376 guestrooms and suites, a rooftop pool and deck, lobby market, M Club, exercise facility, an all-day restaurant and more than 21,000 square feet of meeting space across 14 flexible event rooms and 18 breakout rooms.

Located against the backdrop of Miami's Brickell district, the DUA Miami, Autograph Collection offers elevated accommodations and amenities. The newly minted member of Autograph Collection's portfolio features 124 rooms and suites, DUA Spa, onsite dining, DUA Lounge, an expansive rooftop pool and 58,000 square feet of indoor and outdoor event space.

Vakos Companies and Greenwood Hospitality Group announced the July 18 opening of The Publisher, a Tribute Portfolio Hotel in Fredericksburg, VA. The Publisher Hotel features 98 suites and guestrooms, 2,000 square feet of indoor event space and a destination bar and restaurant.

Texas Western Hospitality announced the opening of their newest property, Home2 Suites by Hilton in Laredo, Texas. The hotel features 107 suites, inviting communal spaces, a laundry room, a business center, a market, an outdoor saline pool, a fitness center and an outdoor patio with a fire pit.

Hilton Garden Inn Washington DC/Georgetown Area has completed a multimillion-dollar renovation, updating all 238 guestrooms, express check-in, fitness center, and outdoor patio. The property also features a rooftop pool and 3,165 square feet of new, flexible meetings and event space, with enhanced facilities, including 4 meeting rooms.

Host Hotels & Resorts closed on the $233.8 million purchase of the 1 Hotel Central Park, according to New York property records. The previous owner, Starwood Capital Group, will still operate the property, based on a 25-year management agreement signed by the two companies. This marks Host's latest investment in SH Hotel & Resorts' 1 Hotel brand, following the purchase of the 1 Hotel Nashville and Embassy Suites by Hilton Nashville Downtown earlier in the year. The REIT also announced a deal to purchase the 450-room Turtle Bay Resortin Kahuku, Hawaii from Blackstone Real Estate for $725 million, with plans to convert it to a Ritz-Carlton.

Raines has welcomed the Sea Palms Resort in St. Simons Island, Georgia, to its management portfolio. This addition, owned by RREAF Holdings, is now part of Woven by Raines, the company's lifestyle division, and includes a golf course, marking the second golf course managed by Raines. The 121-room, recently renovated property offers an outdoor pool, tennis courts, fitness center, bike rentals, a full-service restaurant and the Sea Palms Golf Club.

Red Roof announced the opening of the HomeTowne Studios in Greenville, South Carolina. The 50-room extended-stay hotel is located adjacent to the 52-room Red Roof Inn Greenville. Owner Surya Hotel Corporation invested more than $1 million in a full renovation of the property. The Red Roof Inn also underwent a full renovation.

Just five months ago, the San Diego County Regional Airport Authority ruled that the planned density of the 60-room hotel planned by CH Projects, along with offices, a wellness center and restaurant, posed too great a risk for diners and guests should there be a plane crash. The San Diego City Council, however, has the power to override the airport's determination, and it did just that, clearing the way for the project CH Projects, which is called Dreamboat. A second vote of the council, likely in September, is required before CH can move ahead with designing what would be the company's first ground-up hotel. Because Dreamboat has yet to be designed, there are not a lot of details beyond a hotel with a wellness center, two restaurants, a rooftop garden, and underground parking.

The Jamul Indian Village Development Corporation celebrated a milestone in the construction of Jamul Casino's new 16-story hotel tower with a ceremony to place the structure's final beam. The hotel, scheduled to open in the spring of 2025 in Jamul, California, features 200 rooms, 52 suites, and a collection of leisure experiences. Amenities include a restaurant, retail space, meeting and banquet facilities, a full-service spa and salon, and a fitness center.

In Newmarket, Ontario, The Postmark Hotel is now available for bookings starting August 9. The hotel opened its lobby restaurant to the public for the first time last week but is still putting the finishing touches on the rooms as well as a planned rooftop event and restaurant space.

LuxUrban Hotels Inc. completed a series of transformational changes to usher in the next stage of growth and evolution, a project named Lux 2.0. This project creates an operational framework focused on evolving a unique lodging and hospitality model into a sustainable, profitable platform business. The company re-defined itself as a provider of long-term Master Lease Agreements that offer an attractive alternative to the current industry standard by eliminating high third-party management fees, aggressive franchise costs, and redundant consulting fees that have burdened hotel owners for years. The new management team has leveraged its industry contacts to build a significant pipeline of opportunities for LuxUrban's future portfolio growth.

Simon Property Group will celebrate the groundbreaking of a mixed-use multifamily project at Seattle's Northgate Station on Thursday. The 234-unit building is the latest phase of development on the former Northgate Mall site, where Simon is planning about 1,000 apartment units, two hotels, shopping, offices and more than an acre of green space. The seven-story building will have 25,000 square feet of ground-floor retail and dining and will be complete in 2026. This is Simon's second new project at Northgate Station. In spring 2023, Simon broke ground on a 167-room, $50 million Residence Inn by Marriott that is expected to finish in 2025. The hotel is the first of two that are planned. The second, still in the planning stages, will be a 173-room AC Hotel by Marriott.

HREC Investment Advisors has arranged the $40mm refinance of the 168-room SpringHill Suites by Marriott Boston Logan Airport Revere Beach located in Revere, Massachusetts. Loan proceeds were provided by a national mortgage REIT, and the land was used to pay off construction debt.

Europe Highlights

A new joint venture between Bob W and Osborne+Co Investment Management announced the launch of a £120 million equity raise to acquire and repurpose hotel and office assets into high-quality short-term serviced apartments. The £120 million value-add fund will mirror OCIM's European footprint of offices, targeting key European markets including Ireland, Portugal, Spain, Poland and the UK. The joint venture plans to transform 20-25 buildings into 1,500 to 2,000 modern apartments and is targeting a GDV in excess of £400 million for its initial development pipeline. The joint venture will leverage the strengths of both companies to deliver this rollout, increasing its presence in strategically important markets and providing high-quality and tech-enabled serviced apartments, with Bob W operating all assets developed under the partnership.

INNSiDE by Melia has opened its first property in Portugal, the INNSiDE Brago Centro, in the iconic Retiro das Convertidas building. The hotel boasts 109 rooms, pristine pools, a gym and spa.