The Strong State of U.S. Hotels

The DJIA fell 143 points on Friday while Nasdaq was down 43, the S&P 500 fell 9 points and the 10-year treasury yield was up .07 to 3.52%. Lodging stocks were modestly lower. VCSA and SOND both traded down to new all-time lows. AHT was down -5%.

Baird said that with industry wide March RevPAR being better than expected, it de-risked 1Q23 earnings a bit, and the trade is likely higher into the earnings prints as investors continue to price in less bad near-term outlooks. Growth rates are normalizing and Baird expects expense pressures to persist which keeps them selective. Baird said HST and SHO are the two that they believe risk/reward and the 1Q23 setup have become more attractive for.

Jefferies hosted investor meetings with senior management of Host Hotels which they said primarily confirmed their long-term thesis. Jefferies said they continue to believe HST is best-positioned among peers to generate growth and expanding cash flows irrespective of macro challenges and has yet to receive valuation credit.

CBRE released its US Hotels State of the Union March 2023 Edition. Key takeaways include February marked nine consecutive months of easing inflation. Job openings per hotel decreased to 26 in January, down slightly from 29 in December. CBRE revised its 2023 GDP forecast from 0.2% to 0.8%, but lowered 2024 based on more difficult comparisons. GOP margins expanded in January reaching 26% up from last year’s 21%. Large branded hotel search trends reached a post-pandemic high. High-end travel indicators also reached an all-time high. February RevPAR increased 13% Y-o-Y. CMBS spreads are below pre-pandemic levels and interest rates are close. Contrary to popular narrative, real consumer credit levels remain below pre-pandemic highs, representing 6.5% of real personal disposable income.

The $25-an-hour minimum wage proposed by Los Angeles City Council Member Curren Price is a short-sighted, industry-specific mandate for political gain, that ignores accepted living wage policies and far less pay for teachers and city workers. It is proposals like these that have led to the city’s reputation as a difficult place to do business and to work, all according to the California Hotel & Lodging Association. The Asian American Hotel Owners Association stated that increasing the minimum wage would be a significant hardship for family-owned businesses who care deeply about their employees. The $25 minimum wage proposal is a lose-lose situation for all involved. The Hotel Association of Los Angeles asked the City Council to set aside this political expediency and help the entire tourism industry recover from the pandemic so that Los Angeles regains its role as a global destination. In recent years, Los Angeles hotels have endured numerous costly burdens imposed by city leaders. And now, Price’s $30 per hour minimum way, that’s what it will become by 2028, will be a hardship for LA’s hotels, and in order to stay in business, they will be forced to reduce costs, offer fewer services, and no longer fund community activities.

W and B Hospitality broke ground on a new dual-brand hotel in Sikeston, Missouri. Expected to be completed in the spring of 2024, the new 52-room Fairfield Inn and 49-room TownePlace Suites will offer a bar area for guests during evening hours.

The Wigwam, located just outside Phoenix, Arizona, is embarking on a multi-million dollar renovation, breathing new life into its ground and room and suite interiors The Wigwam is known for its southwestern-style casitas, pools, family-friendly amenities and golf courses. The comprehensive renovation begins this spring and is set to debut in the fall 2023. 

Ennismore has entered into exclusive negotiations to build a long-term partnership with Cain International to drive forward the global expansion of the Delano hotel brand. The partnership will see Cain acquire a minority stake in the Delano brand, collaborate with Ennismore to support Delano’s global growth ambitions and deliver its current expansion pipeline, including Seoul, Istanbul, and Cartagena, with several other locations under negotiations. As part of the partnership, the iconic Delano South Beach will undergo a substantial renovation and reopen as the brand’s flagship location. Ennismore will continue operating all existing and future Delano properties globally.

TRT Holdings is hoping to begin a $217 million expansion of the Omni Fort Worth Hotel in 12 to 14 months and finish construction in about two years. The project will add 400 new hotel rooms and a parking garage to the Fort Worth, Texas hotel. When complete, including a refresh of the existing hotel, the Omni Fort Worth will have 1,008 rooms.

The Fairmont Palliser Hotel, located in Calgary, Canada, has completed a $3.1 million renovation of its meeting rooms. The hotel added heating systems, air purification and electrical, all upgraded and improved for the meeting space. Dubbed Calgary’s Haunted Castle, the luxury hotel has been a historical landmark since June 1914.

The 38-room Incline Lodge will debut in early summer as Incline Village’s first and only boutique hotel property. Located adjacent to The Hyatt Regency Hotel in North Lake Tahoe, Nevada, The Incline Lodge has undergone extensive renovations. Formerly The Parkside Inn, the property will also feature a new lobby offering beer, wine and elevated grab & go food, a downstairs concierge lounge that can accommodate private parties, and an indoor heated pool. 

Kimpton The Forum Hotel, IHG Hotels & Resorts luxury and lifestyle brand’s first on-campus property, opened on the ground of the renowned University of Virginia Darden School of Business. The five-story, 198-room hotel boasts more than 22,000 square feet of meeting and event space, including a ballroom, dynamic classrooms of various sizes, and a large lecture hall. Additional meeting spaces include an arboretum boardroom as well as executive meeting rooms with an intimate wine room next door. Just behind the property sit expansive botanical gardens and an arboretum with 17,000 square feet of outdoor function space, an outdoor amphitheater and a 4,000-square-foot event lawn. The property also offers two restaurants and a modern fitness center. 

Lee & Associates - LA North Ventura closed a transaction for two adjacent parcels that includes a fully entitled, mixed-use development in Thousand Oaks, California. The Lee & Associates - LA North Ventura team represented both the seller and the buyer. The buyer for the 7.1-acre site was MBK Rental Living and the buyer for the 2.6-acre hotel site is MG Hospitality. The seller was undisclosed. The hotel will be a three-story, 120-room Marriott Residence Inn with a meeting room, fitness center and an outdoor pool. 

The parent company behind the construction of Banyan Cay Resort & Club in West Palm Beach, FL, filed for Chapter 11 bankruptcy reorganization, marking the latest twist for the still unfinished hotel. By filing Chapter 11, Banyan Cay’s owner halted a foreclosure action by the project’s lender, an affiliate of Calmwater Capital. The Chapter 11 filing is also a way for the development to work through its debts, clearing the way for a new owner to finally complete the project. Banyan Cay recently revealed in court documents that Westside Property Investment Company Inc. has bid $102.1 million for the development. Westside’s bid sets the floor for a price at auction although another bidder could buy the property if the price is at least $5 million more than the Westside bid. The proposed sale would include the hotel and golf course, as well as land for 22 resort villas, plus a separate parcel for condominium development. Other parcels, including those set aside for single-family homes, could be sold in separate transactions. The total price for all the Banyan Cay holdings could reach $114 million. The 150-room hotel and resort was expected to open as a Destination by Hyatt property.

The Withanage family has partnered with Colley Hospitality to launch a series of investment vehicles to develop luxury brands in the hospitality industry. The Withanage family has invested $200m as the management company commitment for Park Lane’s first permanent capital vehicle. 

JLL Hotels & Hospitality Group has advised Inzigna Capital on the brand selection for the new Mondrian Hotel & Residences development in Tulum, Mexico. Opening in 2025, Mondrian Hotel & Residences Tulum will be the second Mondrian in Mexico. The property will feature a 64-guestroom hotel with four restaurant concepts, a spa, fitness center and outdoor pool. The residential portion will comprise 151 units in a variety of layouts.

Personnel Moves

Accor announced Martine Gerow has been appointed as Group Chief Finance Officer. Martine will assume the role from July 1, 2023 and will also become a member of the Management Board at this time. Martine will lead the Group’s Corporate financial function and manage relations with the market regulatory authorities and financial community. Martine replaces Jean-Jacques Morin, who remains Group Deputy CEO and Premium, Midscale & Economy Division CEO. Martin joined the travel industry in 2014 and since 2017 was CFO of American Express Global Business Travel. 

Vacasa, Inc. announced director Eric Breon decided not to stand for re-election at the end of his current term. Breon has served on the Company’s board of directors as the director designee of his controlled affiliate, Mossytree Inc., since December 2021. Mossytree Inc. has selected Kimberly White, a former employee of the Company, to serve as its designee on the Company’s board of directors, subject to her election as a director at the Annual Meeting, expected to occur on or about May 23, 2023.

Europe Highlights

Bulgari Hotels & Resorts announced the opening of Bulgari Hotel Roma will happen on June 9. The new hotel will be the ninth gem of the Bulgari Hotels & Resorts collection.

InterContinental Rome Ambasciatori Palace will open on May 2023. The hotel features 160 rooms and suites and multiple culinary delights.