CBRE Expects 1% a Year Hotel Supply Growth Through 2027

The DJIA ended Friday up 134 points, while Nasdaq was down 12. The S&P 500 rose 6 points, and the 10-year treasury yield was up .04 to 4.42%. Lodging stocks were modestly lower. VCSA was the only mover of note, down another 11% to another new low.

Deutsche Bank updated their Lodging REIT models, leading to a handful of price target revisions. DB said the key to them coming out of 1Q earnings season is that investors are skeptical of guidance from several hotel REIT management teams that implies meaningfully better RevPAR growth in 2H vs. 1H. While this plays out, DB believes an uptick in transactional activity could be a meaningful catalyst. DB lowered price targets on RLJ to $14 from $15, BHR to $8 from $9 and AHT to $4 from $6.

CBRE expects RevPAR growth to improve in the second half of 2024, following a weaker-than-expected first quarter. The company's latest forecast projects a 2.0% increase in RevPAR growth for 2024, down from the 3.0% estimated in February 2024. RevPAR is now expected to grow by 3% for the remainder of the year, driven by international tourists, holiday travel and limited supply growth. CBRE remains optimistic that RevPAR will achieve a nominal record of $101 this year, 115% of pre-pandemic levels in 2019. The company expects muted supply growth in the medium term due to elevated financing and construction costs. For 2024, CBRE expects supply growth of just under 1%, with hotel supply projects to have a compound annual growth rate of 0.9% over the next three years.

Hilton Pensacola Beach, a beachfront property in Pensacola Beach, Florida, operated by Innisfree Hotels, has completely refreshed its common areas with $11 million in renovations to the lobby, front desk, restaurants, and bars.

The Hampton Inn in Fairmont, West Virginia is close to wrapping up a remodel project that has freshened up the interior of the hotel. The remodel included all 51 guestrooms, communal spaces, pool room, fitness center and the meeting room. Beginning in the fall, the breakfast serving area will have work done to it, as will several other areas of the hotel including some flooring and the addition of an outdoor patio.

With the completion of the resort pool, spa and additional food and beverage options, The Ritz-Carlton Dallas, Las Colinas completes the $55 million transformation of the Texas resort. The property-wide renovation also features refreshed meeting space and ballroom facilities spanning 80,000 square feet.

The Ritz-Carlton St. Louis, located in Missouri, has started construction on a lobby re-imagination project. The project, which will redesign the 299-room hotel's lobby, is expected to be completed by the fall. As part of the lobby redesign, the project will recreate the hotel's entrance, reception area, retail store, guest elevator landings, Lobby Lounge bar, sushi bar and grand staircase. The Ritz-Carlton is owned by an affiliate of Centene.

The 18-story Westin Tempe is set for the auction block this week after CAI Investments fell behind on the loan tied to the Arizona property. The lender, Hall Structured Finance filed a notice of trustee sale in January. A foreclosure auction was scheduled for April 25, then delayed six times until May 17. In 2019, CAI closed on an $86.5 million construction loan from Hall Structured Finance. CAI Investments, which owns the Tempe property under its CAI Tempe Hotel Partners affiliate, modified its loan agreement with Hall numerous times last year.

Amidst a $60 million investment, the 22-acre Outrigger Kona Resort & Spa introduces a revitalized resort honor its storied history. The property features 511 meticulously revitalized guestrooms and suites, upgraded lounge chairs and cabanas at the adults-only and oceanfront pools, a 200-foot waterslide, and a new Voyager 47 Club Lounge. The resort's expansive Kaleiopapa Convention Center has also undergone enhancements, solidifying its status as a premier event venue with more than 100,000 square feet of indoor and outdoor space.

The Sandman Hotel Group intends to build a hotel with 223 suites and two restaurants at the site of the former Ambassador Hotel in Sudbury, Ontario. Northland Properties owns the Sandman Hotel Group.

Grand Peaks announced the successful leasing of 93 units within its upcoming deluxe multifamily development, Skyline at Highlands, to Sonder. Skyline at Highlands, situated in Denver's LoHi district, is currently pre-leasing 533 units and is on track to establish itself as a diverse mixed-use hub, offering hospitality, premium residences, and a comprehensive range of amenities upon its opening in June. The 93-room establishment represents Sonder's fourth venture in LoHi.

The newest resort in Turks and Caicos, South Bank, is being developed by Windward and is joining the portfolio of Grace Bay Resorts. The property, with its own private lagoon, is a mix of 19 Ocean Estate Villas, 18 Lagoon Villas, and 18 boathouses located adjacent to the South Bank Marina. South Bank is slated to open in November.

Margaritaville and Grupo Los Pueblos announced a new, beachfront condo destination in Playa Caracol, Panama. Set to debut in mid-2027, Margaritaville Beach Resort & Residences Playa Caracol will feature classic Margaritaville amenities such as 5 o'Clock Somewhere Bar and License to Chill Bar & Grill. The development marks the debut of a new way to lodge within the Margaritaville portfolio. Developed by Grupo Los Pueblos, the property will feature a total of 261 residences, including 80 cottages and 181 high-rise multi-family units.

Personnel Moves

Wyndham Hotels & Resorts appointed Amit Sripathi as Chief Development Officer. Sripathi will lead Wyndham's North American franchise sales team as they help hotel owners tap into the power of the world's largest hotel franchise company and its iconic brands. After a successful career, Chip Ohlsson, Chief Development Officer, will be leaving the company in June.

DiamondRock Hospitality Company announced the promotion of Stephen Spierto to Chief Accounting Officer. Spierto joined the company in November 2023 and previously served as Vice President, Corporate Controller. Prior to joining the company, Spierto served as Senior Manager at Ernst & Young, LLP. In addition, the company announced that Anika Fischer will join the company as Senior Vice President and General Counsel on June 3, 2024. Fischer will assume legal responsibilities from William J. Tennis, the company's Executive VP and General Counsel, who previously announced his retirement effective June 30, 2024. Prior to joining the company, Fischer was Deputy General Counsel at Essex Property Trusts, Inc.

Europe Highlights

Ennismore announced the signing of SO/ Budapest, the brand's first destination in Hungary. SO/ Budapest will open in 2026, following extensive refurbishment of both the exterior and interior of its building. SO/ Budapest will feature 340 rooms, four food and drink establishments, over 740 square meters of meeting & events spaces and spa facilities with a pool and fitness/wellness space.

The latest addition to the NH Collection portfolio, NH Collection Helsinki Grand Hansa has officially opened, representing the debut of the NH Collection brand in Finland and is the second in the Nordics. NH Collection Grand Hansa combines two historically significant heritage buildings featuring 224 guestrooms and suites, the Hansa Café Bar & Brasserie, a spa with a Finnish sauna, steam room and infra-red sauna as well as a fully equipped gym, and more than 700 square meters of event space, and nine flexible meeting rooms. The Kupoli bar is expected to open in August 2024.

Travelodge has opened its 600th hotel, located at London Oval Cricket Ground. Developed in partnership with Surrey County Cricket Club, London Oval Cricket Ground Travelodge includes a redesigned reception area, next generation rooms and its new restaurant concept. The hotel is the first new opening for Travelodge in the UK this year, with a further six hotels currently under construction in Rotherham, Colchester and Bristol, as well as three more in London: Bermondsey, Beckenham and Chiswick.