Hotel Worker Strikes Could Pick Up Steam

The DJIA fell -1.5 % or 626 points, the Nasdaq was down -3.3 % or 577 points, and the S&P 500 was down -2.1 % or 119 points to welcome you to September. The 10-year treasury yield was down .07 to 3.84%, and lodging stocks were down across the board. SOND and SHCO were the only real big movers, both down -11% today.

See chart below for recent performance.

Morgan Stanley resumed coverage of Soho House with an Equal Weight rating and $5.50 price target. Kind of weird to have an Equal Weight rating on a stock that is nearly $1 higher than your target price.

Piper Sandler cut their price target on Sotherly Hotels to $1.50 from $2. They maintained their Neutral rating.

STR gave its review of U.S. Hotel Performance for July 2024. Top-Line Metrics (July 2024 vs. July 2023): Occupancy: 68.8% (-0.5%) ADR: $161.69 (+0.5%) RevPAR: $111.18 (flat). Demand growth for the Top 25 Markets (+0.8%) maintained a lead over all other markets (-0.5%) despite decelerating for the second month in a row. While demand is up, the Top 25 Markets trailed the remaining markets in ADR growth for the fifth consecutive month. The Top 25 Markets outperformed the remainder of the country in RevPAR (+0.5% vs. -0.4%) thanks to the strong demand growth. Occupancy in the Top 25 Markets increased 1.4% on Sunday & Thursday and +0.8% on Friday and Saturday, with no growth on Monday - Wednesday. The weekday results were impacted by lower occupancy during the first two weeks of July. Strong RevPAR performance in the Top 25 Markets was led by Houston, New Orleans, and Minneapolis. New Orleans posted a huge shift this month, moving from the bottom of the Top 25 Markets in RevPAR performance in June (-13.7%) to second place in July (+17.4%).

We have not said much about the nationwide strike that has been gaining steam in various states. While targeting Hilton, Marriott, and Hyatt properties mostly, the owners will be impacted even more. Baird published a report on this, saying Park Hotels, Sunstone Hotels, and Host Hotels have hotels currently experiencing strikes, but unless something changes soon, that could expand. Baird said the longer this goes on, the greater the impact, especially for owners. We never like to see this, but even worse, we hate seeing the response of hotels giving into contracts that have an even longer negative impact. The casino industry, particularly in Las Vegas, is going through this right now. We don’t know which way is better: giving in early and letting the Unions get even more brazen next time or having a damaging strike over the last of the summer weekends when leisure travel is already weak.

Hilton continues to expand its global presence, driven by new market entries and significant advancements in its lifestyle portfolio. The addition of Small Luxury Hotels of the World properties to Hilton’s portfolio is also playing a crucial role in this growth. Just over two years after opening its 7,000th hotel, Hilton now has more than 8,000 hotels operating globally. Following a series of additions to its portfolio, including NoMad, Graduate Hotels, Small Luxury Hotels of the World, and Autocamp, Hilton is unlocking hundreds of new ways for guests and owners to benefit from the company’s expansive network. The integration of Small Luxury Hotels of the World properties into Hilton’s portfolio has opened up new opportunities for both guests and property owners. The collaboration not only enhances Hilton’s portfolio but also strengthens its appeal to a broader audience.

American Hotel Income Properties REIT LP announced strategic dispositions. On September 2, 2024, the Board of Directors approved the dispositions of five hotel properties with total gross proceeds of $45.9 million. These properties include two hotels in Statesville, North Carolina, and one hotel in each of Melbourne, Florida; Kingsland, Georgia; and Houston, Texas. AHIP has received total non-refundable deposits of $4.7 million under such agreements, and the dispositions are currently expected to close in the fourth quarter of 2024. The dispositions of the five hotel properties bring the total gross proceeds of the hotel properties that have been disposed of or are currently under agreements for dispositions in 2024 to $162.0 million. These sales are a key component of the Company’s previously announced plan to address 2024 loan maturities and reduce leverage. Specifically, AHIP intends to use proceeds from the disposition of these five hotel properties to pay off the CMBS mortgage debt secured against three of the properties and to pay down the term loans that form part of AHIP’s senior credit facility.

The former Dearborn Hyatt, once the second-largest hotel in Michigan, is set to go to auction this fall. A notice about the October 7-9 auction is now live on the Ten-X commercial auction website for the 18-story, 773-room hotel building that has sat empty since December 2018. The auction appears to specifically be for the property’s note and the deed from a June 20 sheriff’s sale. The starting bid is $2.5 million. The sheriff’s sale happened after the hotel’s owner, a limited liability company linked to Rhodium Capital Advisors, defaulted on the property’s 2021 mortgage. The winning $9.85 million bid was from an LLC linked to Bloomfield Capital, which was the lender for the $16.5 million mortgage. Under Michigan law, the hotel’s owner has six months, or until December 20, to buy back and redeem the property after a sheriff’s sale.

HEI Hotels & Resorts has added the Kimpton Sylvan Atlanta Buckhead to its portfolio, bringing the total number of hotels managed in the state of Georgia to 17. The Kimpton Sylvan provides 217 guestrooms, 4,250 square feet of meeting and banquet space, a fitness center, an outdoor pool and three distinctive food and beverage experiences.

According to Hotel Management Network, Auerbach Funds has sold the Hotel Becket in South Lake Tahoe, California for a total valuation of $24.5m. This transaction represents the fourth fully realized deal within the Auerbach Opportunity Fund III portfolio.

A vacant building on N. Farwell Avenue in Milwaukee, Wisconsin, is about to be razed, making way for an 11-story, 130-room hotel. According to the Milwaukee Journal Sentinel, the development team, led by Klein Development Inc. and Brady Street restaurant and tavern owner Jeno Cataldo, has been planning a fall construction start. The hotel would take about two years to build. An April press release from the International Luxury Hotel Association identified it as a Hilton Tapestry that would be operated by BLVD Hospitality. Along with the hotel, the developers plan to build a parking structure on what are now vacant lots on the east side of North Farwell Avenue.

The long-vacant Ambassador Hotel building in Downtown Jacksonville, Floridais the subject of a foreclosure lawsuit against the St. Augustine-based developer behind a failed effort to revive the historic building. The suit, filed in Duval County Circuit Court by Good As New Ventures LLC, involves a $9 million construction loan to Axis Hotels LLC from DLP Lending Fund LLC. The loan was finalized in 2021, the suit states, with the property offered as security. Axis Hotels LLC is an affiliate of the Augustine Development Group, which acquired the building in July 2018 for $5.4 million as part of a five-lot, 1.5-acre purchase. Plans for the property included converting the Ambassador into a 127-room La Quinta Inn and Suitesand demolishing the Central National Bank building, replacing it with a 200-unit apartment building and parking garage. Total construction costs were estimated at $38 million, and the original estimated time of completion was 14 months. The city approved permits for the project in March 2019.

As 2024 draws to a close, Tavistock Development Company, owner-developer of the historic Pier Sixty-Six resort in Fort Lauderdale, Florida, is on the cusp of reopening its landmark property after a dramatic $1 billion redevelopment project that started in 2020. The 32-acre destination will boast a revamped version of its iconic 17-story tower with the revolving Pier Top Lounge, a 10-story hotel addition, two condominium projects, residential resort units, as well as 30,000 square feet of commercial office and retail space. A Tavistock spokeswoman has confirmed the resort is now booking hotel rooms for occupancy starting on January 1, 2025. The revamped Pier Sixty-Six will open with 325 rooms and suites, a 13,000 square foot fitness and spa facility, 12 culinary venues including restaurants along the waterfront promenade, the tower’s 17th-floor observation deck and a 164 deep-water slip marina.

Life House announced the spin-out of its software business unit into a new independent business, Diamo. This strategic move allows both companies to reinforce their respective core missions. Diamo’s suite of products delivers an all-in-one solution to address the challenges independent hoteliers face in maximizing their revenue. The projects have been meticulously developed and tested over the past several years, proving to drive position revenue outcomes across North America, Europe, and Asia. The offerings include expert digital marketing, conversion-optimized website templates, a custom booking engine, and an AI-powered dynamic pricing engine. Life House remains committed to advancing the management and operations of its growing portfolio, refining its technology infrastructure to streamline and personalize the hospitality experience while ensuring robust financial returns.

Personnel Moves

Extreme Hospitality announced the appointment of John A. Rubino as Chief Executive Officer. John, a co-founder of Extreme Hospitality, brings over 30 years of experience in the hotel industry to his new role where he will oversee the company’s strategic direction and continue to enhance its reputation as a trusted partner for hotel owners. As CEO, John will focus on expanding the company’s service offerings, strengthening client relationships, and driving growth across new and existing markets.

Peachtree Group announced the promotion of Steve Mackenzie to Executive Vice President of Hotel Operations in the firm’s Hospitality Management Division. In his expanded role, Mackenzie will assume a central role overseeing Peachtree’s hotel portfolio financial performance while ensuring franchise procedures, regulations, and standards are adhered to while growing company culture and teams. Mackenzie most recently served as Area Director for Hilton Worldwide.

Europe Highlights

Radisson Hotel Group continues to deliver on its progressive growth plan during the first half of 2024, welcoming over 130 new signings and openings across EMEAand APAC. This includes the Group’s Radisson Red brand expanding into several new markets, such as Ireland, New Zealand, Thailand, Laos, and China, bringing its global portfolio to nearly 90 hotels. In EMEA, Radisson Hotel Group achieved significant portfolio growth across key destinations. Highlights include the signing of the first Radisson Collection in Paris, France, and the opening of the Radisson Collection Hotel, Roma Antica, in Rome, Italy. Reinforcing its presence in Saudi Arabia, Radisson Hotel Group also announced the signing of the Radisson Collection Residences in Riyadh. Targeted to open later in 2024, this will be the Group’s 10th property in the city and 44th in the Kingdom of Saudi Arabia. In the first half of 2024, the Group has signed nearly 20 new Radisson Blue hotels. Additions to the portfolio include new signings in Montenegro, Italy, Tunisia, Tanzania, and the world-famous Radisson Blue Das Triest Hotel in Vienna, which will open in the coming months. The first six months of 2024 also marked the introduction of the Radisson Individuals brand in the Cote d-Azur region of Franceand the expansion of its footprint in the UK, including the signings and openings of new properties in Folkestone and Surrey. In Collaboration with their longstanding strategic partner, PPHE Hotel Group, Radisson Hotel Group opened the doors to art’otel Hoxton in London, UK. In APAC, Radisson Hotel Group accelerated its growth with significant developments in China, adding over 5,000 keys through new openings in key cities such as Beijing, Shanghai, and Chengdu. Strengthening its regional footprint, the Group continues to cater to growing demand with new signings in key Southeast Asia markets such as the Philippines, Vietnam, Cambodia, Indonesia, and Laos. India remains a strategic focus area for the Radisson Hotel Group following the signings and openings of nearly 25 hotels in 2024 so far, including India’s first Cricket Stadium Hotel and the prestigious Radisson Collection in Udaipur. The recent grand opening of Radisson Collection Hotel & Spa, Riverfront Srinagar, also underscores the Group’s strategic advancement in the Indian market. Radisson Hotel Group also continued to grow its upscale resort destinations with signings and openings in locations such as Sardinia, Poland, Montenegro, Indonesia, Vietnam, and India.