Hotels Could Benefit From Cut in Interest Rates

Thee DJIA rose 84 points, Nasdaq was up 100, the S&P 500 was up 14 points and the 10-year treasury yield was pretty much unchanged at 3.74%. Lodging stocks were mostly higher but modestly so. SOND was the big winner, up 6% while VCSA was the big loser, down 5% on the day.  

Analysts are positive on the impact of the Fed cutting interest rates as it pertains to the hotel sector. Baird predicted that lower short-term interest rates would boost hotel REIT earnings. Most have floating rate debt exposure via credit facility borrowings and bank term loans. They believe the biggest beneficiary of lower rates will be Ashford Hospitality Trust and Braemar Hotel Trust. They also mentioned Chatham Lodging Trust and DiamondRock having 60% floating rate exposures while Sunstone is approximately 50%. On the refinancing front, they believe the lower interest rate environment will help DiamondRock, Xenia Hotels, Summit Hotels as well as Pebblebrook Hotel Trust.  

Jefferies said they believe Lodging REITs should benefit from reduced refinancing costs and an improved cost of capital, which will reopen the transaction market. Jefferies said the positive impact of C-Corps on the financing environment and hotel construction will be balanced by rising competition for net unit growth.  

Bricton Group has assumed management of the Renaissance Chicago North Shore Hotel located in Northbrook, Illinois. The hotel has recently undergone a comprehensive renovation, enhancing its 391 guestrooms and suites and over 20,000 square feet of event space. The property features a fitness center and multiple dining options.   

Le Meridien Hotels & Resorts announced that an iconic property in Downtown Washington, D.C. has joined the brand portfolio following a $15 million renovation. Completing the renovation in September, the Le Meridien Madison, Washington, D.C. is owned by Crescent Real Estate and operated by HEI Hotels & Resorts. The renovation includes a redesign of the lobby, communal spaces and 356 deluxe guestrooms. Le Meridien Madison features a signature restaurant and cocktail lounge as well as a newly renovated concierge lounge.  

An AC Hotel is in the works as part of Fulcrum Development and GrayStreet Partners’ expansive mixed-use project north of downtown San Antonio. The proposed 211-room hotel is spearheaded by Merritt Development Group in partnership with DLR Group. Although the AC Hotel is still in its early stages, the project could mark a significant addition to the area’s ongoing transformation.    AXIS Architecture + Design announced the completion of their latest new-build hospitality project: the AC Hotel Sacramento. A significant addition to downtown Sacramento, California, the eight-story hotel features 179 guestrooms.  

District Hospitality Partners announced the acquisition of the Hilton Washington DC/Rockville Hotel and Executive Meeting Center. The 315-room full-service property boasts nearly 40,000 square feet of event space encompassing 26 rooms. Additional amenities include a fitness center, business center, restaurant, bar and café.   

Hospitality America has been selected by Windsor Aughtry Company to manage the Hotel Avail Tapestry Collection by Hilton in Rogers, Arkansas. Scheduled to open in the second quarter of 2025, the 170-room hotel will feature a rooftop restaurant, café lobby bar, meeting space and a fitness center.  

HEI Hotels & Resorts added Beacon Hotel & Corporate Quarters to its growing portfolio of luxury, upper-upscale and upscale independent and brand hotels and resorts. Located in the heart of Washington D.C., the Beacon Hotel features 199 guestrooms, a bar & grill, a sky bar, a fitness center, a business center and over 10,000 square feet of event space. Owned by Three Wall Capital, LLC, the Beacon Hotel & Corporate Quarters will soon undergo a multimillion-dollar renovation, which will include a top-to-bottom update of all guestrooms and bathrooms, re-imagining of the food and beverage outlets, refurbishment of meeting spaces and enhancements to the fitness center.   

Mandarin Oriental Hotel Group announced it will manage a luxury beachfront resort with branded residences on Mexico’s Riviera Maya in the Yucatan Peninsula. Mandarin Oriental Kanai, Riviera Maya is expected to open in 2028 with 120 guestrooms and suites with private pools and fifty branded residences, with access to a private resident-only beach club. Amenities will include The Spa at Mandarin, a wide range of dining options and three outdoor pools. The resort is being developed by GIM Desarrollos.   

Four Seasons Resort and Residences Vail announced the grand opening of its newly redesigned Spa. The transformation encompasses 13 enhanced treatment rooms, modernized lounges and dressing rooms, a rejuvenated hot tub, sauna, steam room and relaxation space.   

Sonesta International Hotels Corporation announced the opening of the 200-room, upper-midscale Sonesta Essential Rapid City in Rapid City, South Dakota.

A seven-story, 181-room extended stay hotel to be built in Colorado Springs, Colorado, would be the centerpiece of a new, $100 million-plus development project in downtown’s trendy New South End. Norwood Development Group and Sage Hospitality Group have proposed that the Catbird be built on Norwood-owned land, anchoring a 2.61-acre, irregularly shaped urban renewal district that Norwood has proposed.   

Choice Hotels International, Inc. has opened 17 MainStay Suites and Suburban Studios since January 2024, breaking into the key markets of Las Vegas, Nevada; Moreno Valley, California; Orlando and Tampa, Florida. 16 of the 17 hotels opened across the two brands are conversions. Half of the nearly 70 properties in the pipeline for MainStay Suites and Suburban Studios are conversions, expected to open between September 2024 and March 2025.   

Harrah’s Cherokee Valley River Casino & Hotel in Murphy, NC is nearing completion for a new hotel tower. This is the second hotel tower that is under construction as part of a $275 million project. The new Valley Tower will have 296 rooms, complementing the existing River Tower. It will offer rooftop, indoor and outdoor dining with views of the mountains. It is expected to be ready for occupancy by early 2025.  

CooperWynn Capital announced the successful loan modification for the DoubleTree Suites Fort Shelby on behalf of the ownership group. Located in downtown Detroit, Michigan, the hotel features 203 suites, over 18,000 square feet of meeting space, three food and beverage outlets and a fitness center. 

Personnel Moves

Alana Kobayashi Pakkala has been named CEO of Kobayashi Group LLC, a Hawaii-based, family-owned real estate development firm. The decision was made by her two brothers and partners B.J. and Patrick Kobayashi. Patrick previously served as CEO and will remain as Chairman of the Kobayashi Group Board of Directors.

Berkadia announced the addition of Managing Director Jennifer Dakin to Berkadia Hotels & Hospitality. In her role, Jennifer will be responsible for providing creative financing solutions to commercial real estate owners and developers throughout the United States, with a focus on the lodging sector. Prior to joining Berkadia, Jennifer worked in the commercial real estate group at Wells Fargo Bank, N.A.