Truist Lays Out Projections for Earnings Season

The DJIA rose 134 points while Nasdaq was up 262, the S&P 500 was up 43 and the 10-year treasury yield was down .03 to 4.51%. Lodging stocks were modestly higher. VCSA was the biggest gainer, up 5% while WH and PLYA both traded up to new highs.

Wells Fargo said they are expecting EBITDA beats across the board for lodging C-Corps for 4Q24 earnings season. They expect the FY25 guides will likely reflect conservative RevPAR forecasts given elevated uncertainty, with solid unit growth bolstered by partnerships/conversions. They described C-Corps multiples as showing they are a port in the storm, with Hilton and Marriott multiples above their averages. WF believes the FY25 guides will likely leave an upside but that this optionality is already mostly reflected in valuations.

Truist said they expect Hilton will set the pace for the fourth-quarter earnings season this week, and they are primarily focused on two things - fourth-quarter results and 2025 outlooks/expectations. They believe the latter is more important. For the C-Corps, Truist sees RevPAR-driven earnings upside for the sector versus initial company guidance and current consensus expectations. They expect final fourth-quarter results to be close to the +3% to +4.5% RevPAR year over year. During the third-quarter earnings season, most companies were guided to +1% to +3%. Truist cited hurricane-related demand, pent-up demand after the election, and group demand holding better than initially expected. Truist said they continue to forecast +1% - +3% 2025 RevPAR but said +2% - +4% is still possible. So far, they have not seen a Trump bump for bookings/pricing except for the one right after the election, one they called a sigh of relief the election was decided that night. Truist believes China will be the wild card again, and it would not surprise them to see China'sRevPAR up in the low single digits year over year in 2025.

Hawaii seems to be the big focus for hotel REITs as numerous analysts visited there and came back either cautiously optimistic or cautiously pessimistic. Park Hotels seems to be receiving the cautiously pessimistic thumbs down from Wall Street as PK's dividend yield is now a nifty 7.63% after yesterday's 52-week low. The concerns in Hawaii vary but the Japanese Yen weakness is a prominent one. Impact from renovations is another common theme. The hopeful offset is the Hawaiian government launching a promotion campaign.

Vacasa, Inc. has received an unsolicited, non-binding proposal (free read for DLR subsribers) from Davidson Kempner Capital Management LP to acquire all company outstanding shares at a price of $5.25 per share. On December 30, 2024, Vacasa entered into a definitive agreement (Merger Agreement) pursuant to which Casago will acquire all outstanding shares of the company held by public stockholders at a price of $5.02 per share. The Merger Agreement remains in place, and the Board of Directors of Vacasa has not withdrawn or modified its recommendation that the shareholders of Vacasa vote in favor of the adoption of the Merger Agreement. Vacasa's Special Committee of the Board will carefully review the Proposal in consultation with its outside legal counsel and financial advisors, including evaluating the contingencies, due diligence and documentation requirements and implications for transaction timing, to determine whether it is or would reasonably be expected to result in a Superior Proposal as defined in the Merger Agreement. PJT Partners serves as a financial advisor, and Vinson & Elkins LLP acts as a legal advisor to the Special Committee. Latham & Watkins LLP is Vacasa's legal advisor. VCSAshares are traded above the $5.25 per share price, which means plenty of investors feel the bidding can go even higher.

Sandpiper, LLC announced the grand opening of ECHO Suites Extended Stay by Wyndham in Richmond, Virginia. The hotel was developed from the ground-up by Sandpiper and represents the first ECHO Suites hotel in its portfolio. Sandpiper Hospitality will be managing the day-to-day operations of this hotel.

On Monday, the town council of Fort Myers Beach, Florida, voted to approve the expansion of the Pink Shell Hotel. The project will convert an employee parking lot into 40 hotel units, each with two bedrooms. The new six-story building will stand just under 80 feet tall - double the town's standard zoning limit. The ground floor will primarily be used for parking spaces for future guests. The $40 million expansion will also develop a public boardwalk around the marina and increase the total number of parking spaces by 23. The resort also plans to add two standalone home units on a neighboring lot, three stories each. The Pink Shell says it could take up to two years to get shovels in the dirt, given the size of the project.

A new hotel with 142 rooms is on track to open later this year in Bentonville, Arkansas. The Compton, developed by Blue Crane, will include a skylit lobby, two retail spaces, and 3,750 square feet of meeting and event space with a grand ballroom. Ropeswing Hospitality Group will bring The Compton's restaurants and bars to life. Parking will be provided by a new 491-space parking structure, 62 of which are reserved for the hotel. Practice Hospitalitywill handle operations at The Compton.

My Place Hotels of America announced the opening of My Place Hotel-Las Vegas South/Henderson, NV in Henderson, Nevada. The hotel is owned by St. Rose H9 LLC and is managed by National Hospitality Management. With 94 keys, My Place Hotel-Las Vegas South/Henderson, NV is the largest My Place Hotel built to date. The property offers an onsite laundry, a grab-and-go market, and free parking.

The owners of Shutters on the Beach and Casa del Mar in Santa Monica, California, are exploring a capital raise to develop branded residences on adjacent land. The hotel's owners, Edward and Thomas Slatkin, are working with Eastdil Secured on a recapitalization that could value the hotels at about $700 million, according to Bloomberg. Additional land attached to a deal could be worth $100 million.

Colosseo Development Group plans to redevelop the former Atlantic Club Casino Hotel in Atlantic City, New Jersey. Plans call for it to be transformed into a "condo-tel." One tower would become a 330-room hotel under either Hyatt or Hilton brands. The other would consist of 108 residences. The building would include new separate entrances and lobbies and 250,000 square feet of banquet facilities, food and beverage outlets, and retail stores. Colosseo Development Group hopes that permits and related approvals can be obtained in four or five months, and if all goes well, the project could be completed and opened in the first quarter of 2027.

Personnel Moves

On a sad note, Jack Penrod, founder of Nikki Beach Hospitality, passed away at the age of 85. His wife Lucia, CEO of Nikki Beach Hospitality since 2022, said his legacy will continue through the company.

Access Point Financial has named Michelle O'Brien as managing director of structure finance. In her new role, she will pursue opportunities within the capital markets community, including APF's new mezzanine GAP financing products for hotels in the conduit world. Prior to rejoining APF, O'Brien held multiple positions with Trilogy Investment, culminating with Senior Vice President, Investments & Operations.

Raffles Hotels & Resorts announced the appointment of Claudia Kozma Kaplan as Chief Brand Officer for Raffles and Fairmont Hotels. Claudia has led Raffles' global network of 23 hotels, plus many more under development. In addition to her current responsibilities, Claudia will be responsible for shaping and driving the future of the Fairmont brand, ensuring that the brand positioning continues to inspire and resonate with guests and stakeholders globally.

Europe Highlights

OYO Hotels & Homes plans to invest £50 million into the UK (free read for DLR subscribers). The hospitality chain says that over the next three years, it will focus primarily on premium hotels, adding that it is in advanced discussions with several large hotel chains and real estate companies. In 2024, OYO announced plans to open 40 new hotels in the UK. The company already has over 200 hotels across 65 cities in the country, including London, Manchester, Birmingham, and Cardiff. OYO has also progressed its expansion plans outside the UK. In September 2024, it agreed to buy the Motel 6 chain from Blackstone for $525 million.

The Fairmont Grand Hotel Geneva will host in February 2025 the largest and most comprehensive auction of hotel contents ever held in Europe. The hotel is home to 412 guestrooms and suites, several high-end restaurants, a spa complex, a 1,400-seat theatre and the Java nightclub. The Fairmont hotel temporarily closed its doors at the end of 2024 to undergo a major transformation starting in Q2 2025. Every part of the hotel, from the basement to the penthouse, is being put up for auction.

HVS announced the opening of its Israeli office, marking a significant expansion of its global presence in the Europe and Middle East region. Located in Tel Aviv, and led by Ronit Copeland, HVS Tel Aviv will deliver world-class international expertise tailored to the needs of the local market.