JP Morgan States Its Q1 Hotel Performance Expectations

Today, the DJIA fell 248 points, experiencing a 600 point swing from its morning highs. The Nasdaq was down 290 points, while the S&P 500 fell 62 points. The 10-year treasury yield jumped by 0.13% to 4.63%. Lodging stocks experienced a decline, with new 52-week lows hit by SOHO and VCSA. SOND was down 10%, and AHT fell by 8%.

JP Morgan said their expectations for the 1Q24 earnings season indicate slowing US RevPAR growth for the lodging group, stronger net rooms growth for the C-Corps, and moderating pipeline growth. They mentioned remaining selective in the lodging sector due to slowing 1Q24 RevPAR growth but suggested that most companies could slightly exceed guidance and Street estimates. They are broadly in line with consensus on 1Q24 EBITDA for C-Corps and timeshare companies but modestly below for lodging REITs. JPM said they are nearly a full point lower on C-Corp RevPAR for year over year growth. They see 1Q24 global supply up 3.7% year over year driven by strong APAC growth helping offset mixed US results.

JPM initiated coverage on Hilton Grand Vacations with an Overweight rating and $59 price target. They believe the proforma company (HGV, Diamond Resorts and Bluegreen) provides an opportunity for investors to gain exposure to the timeshare business model at a relatively and absolute attractive valuation level and that they can gain operating momentum in 2H24 through 2025.

Barclays said credit card data suggests Airbnb might be gaining market share, with its share of total leisure lodging spend regaining its pre-Covid trendline for the first time since March 2023 and exceeding 22% of total lodging spend, ex OTAs, for the first time in more than a year.

Wisconsin & Milwaukee Hotel LLC, the owner of downtown Milwaukee’s Marriott Hotel, filed for Chapter 11 bankruptcy protection. The 205-room hotel remains open while the owner reorganizes its finances under bankruptcy court supervision. The preliminary filing shows Wisconsin & Milwaukee Hotel with assets ranging from $10 million to $50 million, and liabilities in the same range. The company’s creditors include the Wisconsin Housing and Economic Development Authority. Wisconsin & Milwaukee Hotel owes $42.5 million to the authority, with $16.1 million of that classified as unsecured by collateral. The authority is listed as the largest unsecured creditor. The authority issued bonds used to help finance the Marriott. 

Rockbridge and DelMonte Hotel Group acquired the 219-room Courtyard Providence Downtown in Rhode Island. DelMonte will manage the property. The hotel will undergo a comprehensive makeover, featuring a full renovation of all guestrooms, extensive upgrades to all public spaces and modernization of the building’s exterior. Hunter Hotel Advisors represented the institutional seller.

In Florida, North Port city commissioners gave initial approval to annexing the Warm Mineral Springs Motel. Once a second approval of the annexation is completed, the motel built for the Florida Quadricentennial will join the list of structures in the city included on the National Register of Historic Places. The three other structures, includes a sales building, spa and cyclorama at Warm Mineral Springs Park, were built for the Florida Quadricentennial as well. The motel owners, North Port Investment One LLC, started a voluntary annexation process because the motel’s septic system is failing and they want to connect to North Port water and sewer utilities. 

Developers proposed building a convention hotel in Pittsburgh, Pennsylvania attached to the David L Lawrence Convention Center. Loews Hotels & Company would develop, build and manage the hotel. The project, estimated at more than $400 million would feature at least 500 guestrooms, meeting rooms, a ballroom, pool and fitness space, restaurant and bar, and an outdoor event space. Several levels would connect directly into the convention center. 

The city of Pensacola, Florida received four letters of interest in response to an advertising request for the “highest and best” use of the former Pensacola Sports headquarters. Pensacola Sports left the building last year to relocate to the Pensacola State College campus, and the building reverted to the city’s control. The four interested companies are: the Derbyshire Group, Goshen Cornerstone, Kerioth Corporation, and Waterview Hotel Development LLC. The Derbyshire Group is proposing to build either a hotel or a mixed-use retail center, which can include commercial or multi-family units. Goshen Cornerstone is proposing to build a multi-story residential development. An 80-unit building with a first floor that includes up to 3,000 square feet of retail space. Kerioth Corporation wants to develop the property as a mixed-use project that could include retail, restaurant, office, hospitality and residential uses. Waterview Hotel Development LLC is proposing to build a $66 million AC Hotel by Marriott with at least 150 guestrooms and its own parking garage. 

The Copper Queen Hotel, in Bisbee, Arizona, is now up for sale and is listed for $12.5 million. The hotel has a bar, restaurant and 48 remodeled rooms and suites with private bathrooms. It is one of the only hotels in Bisbee with a pool and elevator. The five-story hotel is owned by 11 Howell Avenue LLC.

JLL’s Hotels & Hospitality group announced today that it arranged the $171 million sale of the Hilton Back Bay hotel, a 390-key hotel in Boston. JLL worked on behalf of the seller, Ashford Hospitality Trust, and procured the buyer, which was a joint venture between Certares and Belcourt Capital Partners. JLL also secured acquisition financing for the buyer. The full-service hotel features an onsite, 209-space parking garage, as well as a restaurant and bar, fitness center and outdoor space.

The new Royalton CHIC is opening soon in Antigua and Barbuda. The CHIC, the first in the Eastern Caribbean, will be debuting on April 29, 2024. The adults-only resort will be just the third CHIC-branded Royalton in the Caribbean. The property will have 235 guestrooms, joining Royalton’s signature Royalton Antigua resort. Notably, the property will also include overwater suites.

Personnel Moves

DiamondRock Hospitality announced leadership changes. Jeffrey Donnelly, previously EVP and CFO, has been appointed CEO and is expected to join the Board of Directors following the annual meeting in May. He succeeds Mark Brugger who is leaving the company after 20 years. Briony Quinn, previously SVP and Treasurer, was named EVP, CFO and Treasurer while Justin Leonard, formerly EVP and COO, has been appointed President. He will maintain his COO role and will assume the responsibility previously overseen by Troy Furbay, EVP and Chief Investment Officer, who is departing the company. With the changes, DRH has reduced its executive team structure from six members to four, with the fourth being their EVP and General Counsel.

Highgate expanded its Hawaii leadership team. Gary Spencer has been named senior vice president of sales and marketing, luxury, lifestyle and Hawaii, while Erika Kauffman has been tapped as regional director of communications. Spencer will oversee an “integrated sales, marketing and communications strategy” for Highgate Hawaii’s portfolio. Spencer previously spent 20 years at Evolution & Aimbridge Hospitality. Kauffman will oversee Highgate Hawaii’s strategic communications, including partnerships such as those with TableOne Hospitality, under restaurateur and Highgate partner Patric Yumul, which is set to open 12 ventures across Oahu, Maui and Kauai this year. Prior to this, Kauffman was the founder and president of EPR+, an independent marketing, communications and public relations consultancy.

Concord Hospitality appointed Marsha Ray as its new Executive Vice President of Operations. Ray will oversee the opening and expansion of Concord’s newest full-service hotels and resorts across North America, while focusing on brand and owner relations, financial oversight, and talent management to ensure each asset aligns with its strategic objectives. Ray brings over three decades of invaluable hospitality experience spanning various hospitality sectors. 

International Highlights

Extendam acquired the Hilton Garden Inn Seville Hotel from Aliseda Inmobiliaria, an entity controlled by funds controlled by Blackstone. Located in the Torneo Empresarial business district of Seville, Spain, the 4-star hotel comprises 140-keys, a restaurant, fitness center, and meeting rooms. BPCE and CRE advised on the transaction. The hotel sold for nearly EUR 15 million.

Radisson Hotel Group announced its latest development update and continued growth strategy across the Group’s diverse portfolio of 10 leading brands. The Group’s current portfolio consists of more than 1,340 properties in 95+ countries. Following a record-breaking 2023, Radisson Hotel Group further extended its portfolio in Q1 2024 with strategic signings and openings across EMEA and APAC. The UK, India, and China continue to be the leading growth countries, along with exciting debuts in new markets and resort destinations such as Montenegro, Indonesia, and Laos, with the signings of respectively Radisson Blue Hotel & Resort, Kolasin; Radisson Resort Anyer, the Group’s first resort offering a glamping concept, and Radisson RED Vientiane in the capital of Laos. In Q1 2024, more than half of the Group’s signings and openings were achieved across APAC, in particular in India, China, and Cambodia, led by the Radisson RED and Radisson Blue brands. Key strategic signings included the Group’s first property and market debut in New Zealand, Radisson RED Auckland, along with additional signings such as Radisson RED Phnom Penh and Radisson Blue Hotel & Residences Phnom Penh (Cambodia), Radisson Blue Hotel, Ayodhya Uttar Pradesh and Radisson Blue Hotel, Lucknow Gomti Nagar, Uttar Pradesh in India. Looking ahead to the remainder of 2024, Radisson Hotel Group will continue to harness the power of its 10 global brands.