The DJIA rose 269 points while Nasdaq was up 189, the S&P 500 rose 50 points and the 10 year treasury yield was down .07 to 3.55%. Lodging stocks were higher led by AHT, up another 10%. ABNB and PLYA were both up 7% on the day while VCSA was up 6% and HST rose 5%.
Truist gave their 2023 lodging preview, saying they see a mixed bag for demand/pricing/supply trends for the lodging companies. Similar to the past nine months, they see “macro over micro” at the moment. They see the main driver/wildcard coming from the economic impact from the interest rates and inflation. Last year it was mostly about Covid and its variants. They don’t see Covid as zero risk but Truist believes it is now secondary to macroeconomic considerations for most investors and public company executives. Truist said they do see pressure on individual corporate bookings and stagnant pricing. While Pebblebrook Hotel Trust is the only company so far that has called out this concerning trend but Truist feels inevitable acknowledgement will begin to creep into more discussions/earnings commentary going forward with such trends most concerning for the hotel REITs. Forward-looking leisure RevPAR trends continue to be resilient, almost entirely driven by ADR at this point as new competitive supply from short term rentals and the reopening of international markets such as Europe, the Caribbean and Canada combined with favorable FX or American travelers and the return of cruising are putting some pressure on domestic hotel occupancy. Group trends are the same with the good news being the last minute booking volumes are strong. The negative is Truist is seeing the outlook more than two quarters out for corporate group business is below the levels for 2022 that they saw at the same time in 2021.
Supply is encouraging and China could finally see their RevPAR catch up to 2019. Truist sees Hyatt as the outperformer from the C-Corps while Wyndham may be the only hotel C-Corp they cover to see positive organic net unit growth percentage increase in 2023. Truist is Neutral to Cautious on the Lodging REITs for 2023. They maintain Buy ratings on PK, RLJ and RHP.
DiamondRock Hospitality said their preliminary 4Q22 comparable revenue grew 23.4% year over year and 8.5% compared to 2019. For all of 2022, revenue was up 56.3% and 6.2% respectively. DRH said they saw continued strength in travel demand in 4Q with room rates exceeding pre-pandemic levels at both their urban and resort properties.
Hilton announced the launch of Spark by Hilton, the newest addition to its portfolio of brands. Spark by Hilton provides a simple, reliable and comfortable stay for every guest, all at an accessible price, described as a premium economy lodging option. For developers, Spark by Hilton leverages an innovative conversion model to offer a compelling investment option for owners. Signature elements of Spark by Hilton will include: simple, inspired design with splashes of color and cheer that bring the outdoors in. Guest rooms will be comfortable and relaxing with streamlined furniture including an open close, in-room refrigerator, multi-purpose work surface and bright bathroom. Warm and inviting hotel team members provide reliable service. Guests will be empowered with the tools needed to make the most of their stay, such as 24-hour digital check-in and Digital Key. Spark by Hilton will help add value to the guest experience by offering a simple complimentary breakfast. The brand will also offer a 24-hour retail market. To ensure the goal of a consistent, quality guest experience, each hotel will be required to complete a full renovation, encompassing all guest-facing areas of the hotel, prior to joining Spark by Hilton and the Hilton family. HLT said they already have more than 100 deals in various stages of development across the US, with the first properties anticipated to open this year.
The developer behind the Moxy Hotel in uptown sold the project last year to another ownership group. Plans remain mostly the same with a 13-story, 208-room hotel to be built at 125 S. Brevard St., Charlotte, North Carolina. The project is on track to open late next year. Guests will check in on the thirteenth floor with a complimentary drink. There will be live music and games in the lobby that leads out to a rooftop terrace. TMGOC Ventures is now leading the project. The Montford Group and Opterra Capital make up TMGOC. The venture purchased the property last October for $6.5 million from BPR Properties. One update to the uptown Moxy is that there will be a Starbucks coffee shop on the ground floor. The TMGOC venture is also building a Moxy hotel in Charleston.
ZMC Hotels, LLC announced the opening of the newly built Home2 Suites by Hilton Colorado Springs I-25 Central, in Colorado Springs, Colorado. The 90-room, all-suite extended stay hotel, owned by Zenith Asset Company, LLC, was built by ZMC who was selected to manage the property. The hotel is ZMC’s first property in Colorado.
Plans have been submitted to the planning board of Wilmington, North Carolina for a new Tru by Hilton hotel. The hotel would include 101 guestrooms, a breakfast bar, 24/7 market, game area, work spaces and fitness center in a four story building. Parks Hospitality Group is the project developer.
IHG Hotels & Resorts announced the opening of voco The Cadence in Niagara Falls, NY. The 57-room boutique hotel features an onsite restaurant and bar and an outdoor patio. voco The Cadence is owned by River Edge Niagara, LLC and managed by Rupal Hospitality.
TPG Hotels & Resorts has assumed management of ten properties previously operated by PeachState Hospitality. The portfolio consists of eight Marriott Select Service Hotels and two IHG Select Service Hotels, all located in the state of Georgia. TPG Hotels & Resorts will managed the properties owned by PeachState Hospitality. The parties entered into a strategic agreement for the management of additional hotels in the current and future pipeline to be developed by PeachState Hospitality.
Aimbridge Hospitality has been retained to manage the White House Inn Napa Valley recently acquired by Cambridge Lansdowne. Located in Downtown Napa Valley, California, the property is managed through Aimbridge Hospitality’s Evolution Lifestyle operating division. Future plans include renovations of the interior and exterior of the resort-style hotel. Upon completion, the hotel will be the center for events and weddings in Downtown Napa. The inn offers a private outdoor pool and hot tub, courtyard fire pit, full-service spa, guest lounge, on-site yoga, and personalized concierge.
Crescent Hotels & Resorts announced the addition of the 33 Seaport Hotel, in New York City, to its Latitudes: Lifestyles by Crescent portfolio. The property features 66 lavishly appointed guest rooms and suites.
AKA announced the opening of Hotel AKA Boston Common, the brand’s second hotel in Boston and sixteenth property in the portfolio. Previously Kimpton Nine Zero, the 190-room hotel will undergo a design refresh, while open for stays. The acquisition of the property is the result of Electra America Hospitality Group, a joint venture between AKA and Electra America, and marks EAHG’s seventh property. The property was acquired in an off-market transaction for an undisclosed price. EAHG will invest $15 million in renovations to the hotel.
HEI Hotels & Resorts assumed management of the 93-room Saranac Waterfront Lodge in Saranac Lake, NY.
Graduate Hotels announced the opening of Graduate Palo Alto, located in the heart of downtown Palo Alto, California. Formerly Hotel President, the storied property has been renovated and restored. The six-story Graduate Palo Alto features 100 keys and two restaurants. The property is the 33rd hotel in the Graduate Hotels portfolio.
Developers Michael Klein and Jeno Cataldo are proposing an 11-story hotel with approximately 130 rooms for a site just off East Brady Street, the first such development for the east side of Milwaukee, Wisconsin. According to state real estate records, the property was sold in August for $1.5 million to 1709 Farwell Propco LLC, Klein’s investment group. The group is seeking a zoning change at the site to accommodate the proposed hotel.
Swire Properties is proposing a two-tower development on Brickell Key, an island in Miami, Florida. It’s unclear if the proposed towers would be office, residential or hospitality, but the 1,049 foot tall building planned for the park site adds to a short list of supertalls in the pipeline in South Florida. The shorter 700-foot tall building would be built on the Mandarin property. Swire, which owns a majority stake in the existing 20-story, 326-key Mandarin Oriental hotel, has considered redeveloping it for years. The park property marks the last undeveloped waterfront lot on the island. Together with the Mandarin, the sites total more than 5 acres.
Billionaire investors Vladislav Doronin (OKO Group) and Len Bleating (Access Industries) scored a $277 million construction loan for a Miami Beach condominium and luxury hotel. OKO Group and Access Industries are teaming to build an 18-story beachfront tower with 22 apartments. They are also renovating the neighboring former Versailles hotel, which will have 56 rooms. The project is branded by Aman Resorts, a company Mr. Doronin acquired in 2014. The lender is Bank OZK.
Hunter Hotel Advisors announced the sale of the Hilton Garden Inn and Hampton Inn & Suites Savannah Midtown. MIG Real Estate Group sold both properties to HOS Management as a portfolio for an undisclosed amount.
HVS Brokerage & Advisory announced the sale of the 92-key Best Western Premier Houston Katy, located in Katy, Texas. The property was purchased by Mehr Consultancy from West Houston Lodging Group LLC.
Sonnenblick-Eichner Company, on behalf of Woodside Hotel Group, has arranged $26,750,000 of non-cross collateralized, fixed rate, first mortgage financing for the Lafayette Park Hotel & Spa and The Lodge at Bodega Bay, located in Lafayette and Bodega Bay, California, respectively. The $15 million loan on the Lafayette Park Hotel retired an existing life insurance company loan and provided for over $4 million of capital to renovate the guestrooms. The Lafayette Park Hotel & Spa is a full-service hotel offering 138 guestrooms. Proceeds from the $11.75 million loan on The Lodge at Bodega Bay paid off an existing bridge loan facility and provided for a return of partnership equity. The Lodge at Bodega Bay offers 83 guestrooms, a fining dining restaurant, a lounge, 6,285 square feet of indoor and outdoor meeting space and the Sonoma Coast Spa and Fitness Center. The properties are both members of the Woodside collection and are owned an operated by Woodside Hotel Group, Ltd.
Personnel Moves
Host Hotels & Resorts announced that Pat Li, senior vice president, feasibility & market analysis, unexpectedly passed away on January 4, 2023. During his more than 30 years at the company, Pat had helped to build and lead the feasibility function, and to facilitate the investment decision making process. We extend our condolences to HST and the Li family.
Noble Investment Group announced the appointment of Joel Eisemann as a Senior Advisor. Eisemann most recently served as Chief Development Officer, Americas for IHG Hotels & Resorts before retiring in 2022. Eisemann will work with the Noble team to develop and scale innovative investment strategies as the firm continues the meaningful growth of its platform that serves institutional investors around the world.
Victory Hotel Partners announced the appointments of Greg Mount as their first CEO of Victory Hotel Partners and Gary Sims as CEO of its subsidiary, Hay Creek Hotels & Restaurants. Greg began his career at Marriott, IHR, Starwood Hotels & Resorts, and as a President, and CEO in the global hospitality industry. As CEO of Victory Hotel Partners, Greg will be focused on leveraging Victory’s vertically integrated platform, execution on M&A, acquisition, development, and management of independent and boutique hotel properties. Gary Sims served as COO of RLH Corp with 1,000+ franchise properties, has operated several iconic resorts in the United States and as President/CEO of Nikki Beach Resorts. As CEO of Hay Creek Hotels & Restaurants, Gary will be focused on the acquisition, renovation, repositioning, and management of upper-upscale and luxury independent hotels and restaurants. Norman MacLeod, who remains as the Chairman, will continue to support the development efforts, owner relations and special projects for Hay Creek Hotels & Restaurants. Both Greg and Gary are co-founders and board members of Victory Hotel Partners.
Loews Hotels & Co has promoted Monica Xuereb to the role of Chief Commercial Officer. Xuereb was previously Chief Revenue Officer for the company, which owns and operates 26 hotels in the United States and Canada. As CCO, Xuereb will lead the company’s Commercial strategy, including oversight of the key disciplines of Revenue Management, Sales & marketing, Catering & Conference Services, Brand, Communications, e-Commerce, Distribution and the Customer Engagement Center.
Paramount Lodging Advisors welcomed Hunter Johnson as Senior Associate. Hunter will be based in Southwest Colorado with a focus on Colorado and Utah.