Service Properties Trust Shares Plunge

The DJIA was up 337 points while Nasdaq rose 51, the S&P 500 was up 27 points and the 10-year treasury yield was down .02 to 4.02%. Lodging stocks were modestly higher. CHH traded up to a new high while HGV and SOND were both up 5% on the day. The biggest mover was SVC, down -16% to a new low.

Service Properties Trust shares plunged on the news they were reducing their quarterly dividend from $0.20 per share to $0.01. The dividend reduction will result in $127 million of annual savings. SVC is also planning to sell 114 focused service hotels managed by Sonesta International Hotels Corporation with an aggregate of 14,925 rooms and an aggregate net carrying value of $850 million. SVC expects to sell the hotels next year and use the proceeds to repay debt. SVC expects the sales of the hotels to result in savings of $725 million in capital expenditures, which were forecast to be spent on the hotels over a six-year period. Of the 187 hotels SVC owns that are managed by Sonesta under five brands, 14 of them are in the process of being sold. After the 114 others are sold next year, SVC expects Sonesta will continue to manage 39 full-service hotels, 14 extended-stay hotels, and 6 select-service hotels owned by the company. SVC will continue to own 34% of Sonesta.

Ashford Hospitality said their Board of Directors approved a reverse split of the company’s stock at a 1 for 10 ratio. The purpose of the reverse stock split is to get their share bid price above $1 to regain compliance with NYSE listing requirements.

STR reported US lodging data for the week ended October 12. U.S. hotel RevPAR was up 3.8%, led by occupancy rising 2.4%. Group RevPAR was down -1.5%.

According to figures from CBRE, at the end of August 2024, Mexico registered the opening of more than 4,000 new hotel rooms, a figure that already exceeds the new annual supply for 2023 by 172%. Of the national total of openings, Cancun participates with 2,900 rooms (68%); Mazatlan with 900 (20%); and Los Cabos with 400 (10%). Recently, El Economista reported that so far this year, Quintana Roo has added around 3,000 new hotel rooms, which allows the state to exceed 133,000, mainly concentrated in the northern part of the state. The 2024 Regional Hotel Investor Intentions Survey conducted by CBRE highlights that around 64% of investors assure that luxury hotels will continue to perform well this year, as luxury travel trends have increased even more after the Covid-19 pandemic. This would partly explain the growth experience by the exclusive developments of Costa Mujeres and Isla Mujeres, areas adjacent to Cancun, but belonging to the municipality of Isla Mujeres, where there are already around 8,000 hotel rooms. More hotel openings are expected for the rest of the year. According to the Costa Mujeres Hotel Association, this year they will close at 10,000, due to the three hotels that are being finished and will be inaugurated this year. The construction rhythm will not stop there, because by the end of 2025 they expect the opening of luxury hotels such as the St Regis, Excellence, and Palladium. If there are no delays with these, Quintana Roo’s participation at a national level in terms of new hotel keys will far exceed the 68% assigned by CRE in statistical monitoring.

The owner of the Courtyard by Marriott in downtown Niagara Falls wants more than $2 million in tax breaks for a $14.3 million project to more than double the size of the four-story hotel in response to stronger demand from tourists. Nirel Patel’s Rupal Hospitality and Element Development plan to construct a four-story addition to the hotel. The project would be constructed on an adjacent parking lot, adding another 85 to 88 guestrooms, on top of the 83 rooms that already exist. It will also allow for additional restaurant and patio space. Patel also plans to upgrade the existing rooms with new amenities, bring in new wireless and other technology, and upgrade the current building’s façade. Costs include $6.9 million for the construction, $2.1 million for furniture and fixtures, and $1 million in professional fees and other soft costs. The project will be funded with a $9 million loan from Bank on Buffalo, plus $1 million from the company, but Patel says it’s not viable without the NCIDA help.

An East Coast hotel investor that bet on downtown Chicago during the Covid-19 pandemic is looking to unload its suburban Chicago properties as the local hospitality market continues its recovery from the crisis. Magna Hospitality Group has hired Berkadia to seek a buyer for the 369-room DoubleTree Chicago North Shore in Skokie, Illinois. Separately, Magna has tapped brokers from Jones Lang LaSalle to sell the 178-room Hilton Garden Inn Chicago North Shore Evanston, Illinois.

Hyatt Hotels Corporation welcomes Cheyenne Mountain Resort to the Destination by Hyatt brand. Located in Colorado Springs, Colorado, the 316-room resort boasts 40,000 square feet of versatile meeting space, various onsite dining experiences, five pools, 16 tennis courts, eight pickleball courts, an 18-hole golf course, a fitness center, outdoor courts for beach volleyball and basketball, and the Alluvia Spa and Wellness Retreat.

Oxford Capital Group, LLC announced the opening of Hotel Julian, a renovated 107-key property located in the Lower Nob Hill neighborhood of downtown San Francisco, California. The hotel features a brand-new two-story F&B venue slated to open in early November. The renovation of Hotel Julian includes new hard flooring, a central HVAC system, fully renovated guestrooms, a new fitness center, and restored historic lobby and meeting space.

The Red South Beach Hotel is set for a major transformation. Assouline-Busch Capital, the property’s owner, has secured a $49.3 million loan to redevelop the hotel, located in the heart of Miami Beach’s Faena District. Newmark brokered the deal, obtaining the loan from Goldman Sachs. The hospitality property, which will be rebranded, is set to be repositioned as a luxury lifestyle destination with 97 rooms, down from its original 110 rooms. Planned upgrades include high-end finishes, a ground-floor restaurant, bar, pool, and indoor/outdoor gym, and two recording studios. The redevelopment is expected to be completed by the fourth quarter of 2025.

A riverfront hotel, restaurant, and event center could be coming to a vacant property in downtown Davenport, Iowa. According to qctimes.com, a group of developers, led by Pete Stopulos, are planning two buildings at the site, a $19 million, 88-room, four-story Marriott TownePlace Suites hotel with a pool and rooftop patio, and a second four-story commercial building with a restaurant, two floors of office space, and an event center on the top floor. Pending financing and permits, the project would begin construction in the spring or summer of 2025 and plan to open by fall 2026.

In early 2025, Red Cloud, Nebraska will welcome the first guests to the charming, 27-room Hotel Garber. The new hotel, located within the refurbished Potter-Wright Building, will feature a finely appointed, lower-level creative hub. The space is being equipped to host culinary classes, literary lectures, and hands-on arts engagement experiences.

The previous notice of default for the Tahoe Biltmore Hotel and Casino site, in Crystal Bay, Nevada, has been rescinded. According to the Founder and CEO of EKN Development, the company is actively working through the restructuring of financing and as a result of these efforts, the notice of default has not been removed. EKN remains fully committed to the revitalization of the Tahoe Biltmore property as it continues to invest and make progress on site work in anticipation of demolition and groundbreaking by Spring 2025. In 2021, EKN bought the property for $56.8 million. It is set to become Lake Tahoe’s first Waldorf Astoria. As efforts to refinance its $82 million loan advance, it is continuing to prep the site for construction. The developers have completed the initial steps to abate the hotel structure and demolish the property’s cottages while mitigating pre-existing environmental impacts with preliminary site cleaning measures.

A plan has been approved to convert a historic 109-year-old building in downtown Sacramento, California to a hotel. Proposed by Hume Development, the plan calls for a 107-room hotel with a bar, restaurant, 2,140 square-foot banquet hall, private dining area, spa, and outdoor terrace. No timeline has been set for the project.

Marcus & Millichap Capital Corporation has arranged the refinance of a 118-key hotel in North Olmstead, Ohio. MMCC.