The DJIA fell 38 points while Nasdaq was down 103, the S&P 500 fell 17 points and the 10-year treasury yield was down .01 to 3.42%. Lodging stocks were lower. SOND plunged another -11% to a new all time low but at this point, -11% is only a drop of -$0.07 per share. VCSA fell -7%, also to another all time low.
Heading into the upcoming 1Q earnings season, JP Morgan said they expect relative upside in 1Q23 RevPAR results and, for the C-Corps, at least in-line net rooms growth with both operating metrics benefiting from improvements in China. They don’t expect much more than modest updated full-year 2023 outlooksdespite likely stronger 1Q results given the increased uncertainty associated with a likely tighter credit environment for third-party hotel developers and owners and a murky macro than a quarter ago. JPM remains cautious on the lodging sector even while current trends remain strong, given tougher year over year comps, with inevitable decelerating RevPAR growth and potential effects from tightening credit conditions. Most of the stocks have already pulled back since 4Q22 earnings so JPM feels the risk-reward is a bit more in balance. They still see lodging REITs as underperformers versus the C-Corps.
STR reported US lodging data for the week ended 4/8. With the Easter shift in play, US hotel RevPAR was down -6.7% on a year over year basis. When compared to 2019, RevPAR was down -2.2%.
Corporate travel spending is tracking toward full recovery to 2019 levels by 2024 or 2025, but higher costs and climate concerns will keep trip volumes smaller than pre-pandemic levels in real terms, according to a Deloitte study. The study, consisting of 106 U.S. travel managers and 228 European travel managers, showed that spending volume should reach about 57% of 2019 levels in the first half of this year and increase to about 75% by the end of the year.
A record number of loyalty program members should help hotel brands lower their customer acquisition costs, increased direct-to-consumer engagement and offset any occupancy shortfalls during an economic downturn. According to CBRE, loyalty members redeemed a record number of points in 2022 that were earned and saved during the pandemic. The number of loyalty program members has been growing faster than total room supply over the past 10 years, helping to expand the potential base of guests and reduce customer acquisition costs. The 35% growth in the average number of loyalty members and 22% increase in the number of members per room since 2019 means that the major brands now have the largest database of potential guests in their history. This should continue to reduce customer acquisition costs and help provide “occupancy insurance” should the economy falter.
Data recently released by the National Travel and Tourism Office showed that in February 2023: International visitors spent nearly $16.9 billion on travel to, and tourism-related activities within, the United States, an increase of 64% compared to February 2022. Conversely, Americans spent a record-setting $17.4 billion traveling abroad, yielding a balance trade deficit of more than $480 million for the month. Purchases of travel and tourism-related goods and services by international visitors traveling in the U.S. totaled $9.5 billion during February 2023, an increase of 97% when compared to the previous year. Fares received by U.S. carriers from international visitors totaled $3.1 billion in February 2023, double the amount spent last year during the month. Expenditures for education and health-related tourism, along with all expenditures by border, season, and other short-term workers in the United States totaled $4.3 billion in February 2023, an increase of 9% when compared to the previous year.
In an excerpt from CoStar, online travel agencies are taking back some of the distribution market share they lost to hotel chains during the years leading up to the pandemic, as companies such as Expedia Group and Priceline parent Booking Holdings have ramped up marketing investment and product improvements to sell more room nights to prospective U.S. lodging guests. According to travel-research firm Phocuswright, online travel agencies’ share of bookings dropped to as low as 49% before the pandemic, but has since rebounded to 52%. While such gains appear incremental, one percentage point of online gross bookings can account for as much as $1 billion worth of business and anywhere between $100 million and $200 million in commissions swapped between the hotel companies and OTAs. In recent earnings calls, Expedia’s total lodging bookings increased 48% year over year in 2022. The number of room booked on Booking Holdings’ channels increased 52% last year to almost 900 million, an annual record for the company.
Ashford Hospitality Trust, Inc. expects to report occupancy of approximately 68% for the first quarter of 2023 with ADR of approximately $184 resulting in RevPAR of approximately $125. This Comparable RevPAR reflects an approximate increase of 30% compared to the first quarter of 2022. Additionally, for the month of January 2023 Comparable RevPAR increased approximately 49% versus January 2022. For the month of February 2023, Comparable RevPAR increased approximately 30% versus February 2022. For the month of March 2023, Comparable RevPAR increased approximately 19% versus March 2022. AHT said that after 1Q results are finalized they expect 40% of its hotels will remain in cash traps under their respective loans, compared to 79% at the end of 4Q22. At the end of the first quarter, AHT extended its BAML Highland Pool Loan until April 2024. As part of the extension they paid down the existing loan balance by $45 million. They are working with the lender on the refinancing of the La Posada de Santa Fe and the Hilton Alexandria loans, the company’s only final debt maturities in 2023.
Marriott Vacations Worldwide Corporation introduced The Marriott Vacation Clubs vacation ownership portfolio. The rebranded portfolio brings together the signature vacation ownership brands Marriott Vacation Club, Sheraton Vacation Club, and Westin Vacation Club under one name. The collection of more than 90 premium resorts offers Marriott Bonvoy members and guests more options for leisure travel. Each of the three trusted brands offers its own unique personality and amenities. Eligible Owners of The Marriott Vacation Clubs vacation ownership plans can elect to participate in Abound by Marriott Vacations, a new Owner benefit and exchange program allowing seamless travel among the three brands, access to properties within The Marriott Bonvoy portfolio, and other travel experiences such as cruises, guided and culinary tours, premier events, outdoor adventures, and more. The Marriott Vacation Clubs’ three premium brands offer something for everyone: Marriott Vacation Club resorts are designed to spark moments of adventure and inspiration. Each encourages guests to make the most of their time with personalized attention and local experiences. Each premium Sheraton Vacation Club resort curates local experiences and programming meant for families to engage in together, nurturing relationships while crating lasting memories. Resorts within the Westin Vacation Club portfolio are designed with balance and well-being in mind. Intentionally located in each, mountain, island and desert settings, each resort’s signature wellness programs and rituals help guests feel renewed, refreshed and reinvigorated.
Deadwood Mountain Grand, a Holiday Inn Resort in South Dakota, revealed renderings of its renovation. Located steps from historic downtown Deadwood, the property’s upgrades will include its 93 guestrooms and five suites as well as common guest areas such as the lobby and restaurant. The renovations at Deadwood Mountain Grand are expected to be complete by summer 2023.
Magnuson Hotels announced a 77.83% growth in RevPAR since pre-pandemic (2019) for the Independent Collection. This represents 10 times the USA industry average of 7.6% as reported by STR. According to CEO Thomas Magnuson, this is a direct result of the company’s “unique” OTA-alternative distribution strategydesigned for enhancing occupancy levels as well as its Fair Franchising policies that ensure owners retain a higher percentage of revenue. Magnuson Hotels is on a strategic growth path that includes on-boarding distinctive hotels offering exceptional value in key cities across the country.
As Drury Hotels Company turns 50, it ushers in the next phase of the family-owned and operated hotels’ legacy with continued growth. In the past five years, Drury Hotels has opened 16 new hotels including downtown Nashville, Tennessee; Milwaukee, Wisconsin; Richmond, Virginia; St. Paul, Minnesota; and Dallas, Texas. In addition, three new hotels are currently under construction in Tallahassee, Florida; Savannah, Georgia; and Arlington, Texas.
First Capital Real Estate Investment Trust sold Toronto’s upscale Hazelton Hotel and three other properties for a total of $184 million, the latest step in a plan to raise up to $1 billion for investment in new developments. First Capital sold the boutique Hazelton property in Toronto’s Yorkville neighborhood and a 50% stake in the attached One restaurant for $110 million to Hennick & Co. First Capital projects the four sales will close by the third quarter of 2023.
After selling four of its San Francisco hotels since 2020, Pebblebrook Hotel Trust may be entertaining offers to unload more. Recent public records suggest that two of the REIT’s hotel properties, the 221-room Hotel Zoe Fisherman’s Wharf and the 196-room Hotel Zeppelin may be on the market. Requests were made at both properties for zoning verification letters, which are records of permitted uses and compliance information that are typically employed in the due diligence process for a prospective sale. Pebblebrook currently owns eight hotels in San Francisco.
The Sandman Signature Hotel has opened for business in a historic downtown Fort Worth, TX,-high rise. The premium hotel opened March 31 in the Waggoner Building with the lobby bar to open in about two weeks. The Asian fusion restaurant Musume in the hotel’s basement level is expected to open in June or July. The construction on the 20-story, 245 room hotel preserved and restored the interior finishes of the tower, listed on the National Register of Historic Places. This is the second Sandman Signature Hotel in the US with the first built in Plano. The brand is part of Vancouver-based Northland Properties.
A $70 million, mixed-use project including a boutique hotel, multi-family, office and retail development is planned for Frisco, TX. The 352 unit multi-family building is being planned by Stillwater Capital with construction expected to begin on July 1, 2023 and completed by November 1, 2025. The Link Multi-Family is a mixed-use development spanning 240 acres adjacent to the new PGA of America headquarters. Upon completion, The Link will include Class A office, high end residential, retail, a boutique hotel, expansive parks and sports-focused entertainment uses. The project includes two 18 hole golf courses, a short course, a retail village and a 500 room Omni PGA Resort hotel with 127,000 square feet of meeting space,
Applications recently filed with the city of Scottsdale, AZ, could pave the way for the Fairmont Scottsdale Princess to expand its guest room and meeting space capacity. The plans call for an expansion and enhancement of the resort’s conference and meeting rooms, 155 new guest rooms, a new on-site Italian restaurant and an indoor/outdoor coffee shop. There will also be a new 1,000 space three-story parking garage. The meeting space capacity would be expanded to an additional 9,000 square feet of meeting rooms plus a new single story conference building that will house a 25,000 square foot ballroom. Right now the Princess has 316,000 square feet of meeting space, the most of any hotel in the Fairmont brand. The expansion plans also include a new four story building with 155 new guest rooms and a high end Italian restaurant and a coffee shop.
Best Western Hotels & Resorts announced the opening of the Best Western Grantville/Hershey in Grantville, PA. The all-suite hotel features 96 rooms including king suites and double suites. There is a heated indoor saltwater pool, onsite exercise facility, business center and a nearly 1,500 square foot conference room.
DSH Hotel Advisors announced they arranged the sale of the 198 room, 7 story Comfort Suites Maingate East in Kissimmee, FL for $22 million on March 30. 2023. DSH represented both the buyer and seller in the transaction.
HVS Brokerage & Advisory announced the sale of the lender-owned (REO), 111 key, former Quality Inn & Suites Houston – Sugar Land, located in Sugar Land, TX. The property was purchased by Shree Property Investments LLC from b1 Bank. At the time of the sale, the hotel had over 40 rooms out of order and needed a full-scale renovation to bring it back to operating condition. It had also lost its Choice Hotels affiliation.
Airbnb has denied reports it is acquiring Scottish property portal Letting Cloud. It had been reported that ABNB acquired Letting Cloud for its technology that verifies short term rental licenses and permits held by landlords.
Personnel Move
HREC Investment Advisors announced Beau Mullenix has joined the firm as a Senior Vice President in a newly opened brokerage office in St. Louis, MO. He will focus on full and select service hotel portfolio and individual transactions nationwide with concentration on the Midwest region.