The DJIA rose 547 points on Friday while Nasdaq was up 269, the S&P 500 rose 75 points and the 10-year treasury yield was up .10 to 3.45%. Lodging stocks were higher. VCSA was up 12% while SOND was up 10% but both of them rose less than a dime per share. On the earnings side, RLJ’s reaction was positive, up 5%, while PLYA was negative, down -5%.
The earnings report from IHG Hotels & Resorts was good but overshadowed by the news of the resignation of Keith Barr. DiamondRock Hospitality reported a small EBITDA beat and the repurchase of 56,400 shares for $0.4 million. RLJ Lodging Trust reported a solid beat on strong margins. RLJ repurchased $27.5 million of stock in 1Q plus an additional $12.5 million already in 2Q. Sunstone Hotel Investors had a beat and raise report with year-over-year RevPAR growth of 32%. SHO has spent $10.5 million on share repurchases so far in 2023.
Playa Hotels & Resorts reported a 1Q beat and repurchased 5 million shares for $42.6 million in 1Q as well as another 2.1 million shares for $20 million in April. Bluegreen Vacation Holding Corp. also reported an adjusted EBITDA beat. They did not repurchase any shares in the quarter.
Compass Point raised their rating on Host Hotels to Buy from Neutral with a $22 price target.
During Q1 2023, RevPAR grew 13% compared to 2019, fueled by higher ADR and growth in business and group demand as well as strong leisure travel, according to JLL’s latest U.S. Hotel Investment Trends report. Other key takeaways include: performance surged in top-25 markets, surpassing pre-pandemic levels by 7% largely due to a boost in corporate and group demand. While debt market turbulence resulted in a lower U.S. hotel investment volume relative to last year, total liquidity finished in-line with pre-Covid numbers driven by increased single-asset sales, particularly for select-service and luxury assets. Expect investment activity to accelerate in the short-to-medium term catalyzed by impending loan maturities, interest rate cap renewals, and fund-life expirations. JLL’s Americas Hotels Research team said the industry has proven to be a defensive sector, as shown by average U.S. ADR growth surpassing inflationary growth by 55 bps from 1988 to 2022. Hotels have been a superior hedge against inflation due to their capacity to alter selling rates on a daily basis. This pricing flexibility allows hotels to generate stable revenue streams that may exceed inflation and protect against its adverse impacts. During the elevated inflationary period of 2022 and the first quarter of 2023, the U.S. hotel industry has been able to significantly outpace inflation growth. In Q1 2023, ADR growth exceeded inflation growth by 4.3 percentage points. This out-performance is attributed to robust leisure demand and the resurgence of group and corporate travel.
As reported in the recently released Construction Pipeline Trend Report for Canada by Lodging Econometrics, at the close of Q1, 2023, the country’s hotel construction pipeline currently stands at 283 projects/37,683 rooms. Canada’s total construction pipeline increased 10% by projects and 5% by rooms YOY. Accelerated by the return of travel demand, new project announcements surpassed totals for each of the previous five quarters, to stand at 27 projects/ 3,806 rooms at the Q1 close. At the Q1 close projects that are under construction stand at 47 projects/5,802 rooms, while projects scheduled to start construction in the next 12 months are at 91 projects/11,298 rooms. Additionally, combined renovation and brand conversion projects in Canada reached a record-high total this quarter with 105 projects/11,598 rooms. Ontario continues to lead Canada’s construction pipeline with record-high project and room counts of 162 projects/21,945 rooms. British Columbia follows with 55 projects/8,670 rooms, followed by Quebec with 21 projects/2,555 rooms. The top cities in Canada, with the most projects in the pipeline at Q1, are Toronto with 61 projects/8,763 rooms, Vancouver with 23 projects/3,634 rooms and Niagara Falls with 16 projects/5,088 rooms. Marriott International leads Canada’s construction pipeline at the close of the first quarter with 78 projects/10,305 rooms, followed by Hilton Worldwide with 64 projects/7,850 rooms, and InterContinental Hotels Group with 43 projects/4,347 rooms. The top franchise brands in Canada’s pipeline are Hilton’s Hampton by Hilton brand with 24 projects/2,795 rooms, IHG’s Holiday Inn Express with 20 projects/2,159 rooms, and TownePlace Suites by Marriott with 20 projects/2,017 rooms. Other notable brands in Canada’s pipeline are Marriott’s Fairfield Inn with 19 projects/1,805 rooms, Tru by Hilton with 14 projects/1,350 rooms, and Hyatt Place with 11 projects/1,582 rooms. LE’s forecast for new hotel openings in Canada calls for a total of 31 new hotel projects with 3,744 rooms to open in 2023. In 2024, LE analysts expect 68 new hotel projects with 4,048 rooms to open by year-end.
Sonesta’s Red Lion Inn & Suites brand announced the May 15 opening of a Philadelphia, Pennsylvania location. Franchised by Chandrakant Shah, the 45-room building is leased from Millennium Hotel Group LLC, the current owner of the property.
Adventurous Journeys Capital Partners announced Memoir Residential, a collection of dynamic multifamily residential properties. AJ Capital’s first community will open fall 2023 in Portland, Oregon, followed by Nashville, Tennessee; New Orleans, Louisiana; Austin, Texas; and Miami, Florida. Amenities will include food and beverage programming, entertaining areas, pools, fitness studios, bicycle storages, pet grooming stations, co-working spaces, and, in select markets, adjacency to like-minded hospitality brands like Soho House and Common House.
IHG Hotels & Resorts announced the beginning of a significant, multi-phase renovation across its Crowne Plaza hotel in Suffern, New York. Conducted in collaboration with owner The Lynmark Group and management company Valor Hospitality Partners, the project is scheduled to include upgrades across common areas, the implementation of the brand’s Plaza Work Space individual and collaborative work areas, and the re-imagination of the hotel’s food and beverage concept. Featuring 229 guest rooms, the Crowne Plaza Suffern – Mahwah boasts more than 25,000 square feet of meeting and event space and a fitness center.
Demolition is complete at 750 Fifth Avenue in Midtown, Manhattan. Developed by Extell, the project could either unfold as a 78-story hotel and condominium tower or as a 47-story office yielding more than 1.5 million square feet. A complete date for 570 Fifth Avenue has yet to be confirmed, although speculative reports have put it around 2027 should construction begin this year.
Taylor Hospitality announced the September 2023 opening of the Tygart Hotel located in Elkins, West Virginia. Set to become a part of the Choice Hotels Ascend Boutique Hotel Collection, the Tygart Hotel will have 56 rooms, a full restaurant and bar, an outdoor patio seating area and a small banquet room.
Simon Property Group expects to spend roughly $1.5 billion building 2,000 multifamily units and hotel rooms as its looks to add density and expand some of its retail properties like the company’s successful redevelopment of Phipps Plaza in Atlanta, a mall that now has a Nobu Hotel and restaurant and Life Time fitness center on its site. Simon Property Group estimates it will have the construction of the projects completed over a five-year span. According to the company CEO David Simon, some of the residential units are planned for Austin, Texas; Orange County, California; and Seattle. In terms of hotels, they will be headed for Florida, as will some residential units. The REIT is also considering building a hotel on Cape Cod, Massachusetts, because there would be demand for it there. Simon feels the company will do selective joint ventures on certain of the residential development, and also may bring in third-party equity, too. They will look at each deal individually. Last October, Simon Property acquired a 50% stake in developer Jamestown as it looks to expand and wring new revenue from its portfolio by diversifying its shopping centers.
Drury Southwest plans to build a Drury Plaza hotel in College Station, Texas. The project is estimated to cost nearly $20 million and plans are being finalized and information will be released in July. Construction is expected to start in June, with full buildout expected in the third quarter of 2024.
The Harbor Winds Hotel, in Sheboygan, Wisconsin, has been sold by Pride Hospitality to Adventure Hospitality.
The Benson Hotel and Faculty Club, a new boutique hotel, has opened as the hospitality center for the University of Colorado Anschutz Medical Campus in Aurora, Colorado. The Benson Hotel, a Preferred Hotels & Resorts member, features 106 rooms, a full-service restaurant, meeting facilities and a ballroom. The Faculty Club at The Benson Hotel is a members-only space providing a discrete setting with indoor seating, intimate conference rooms, and a full-service bar. Members will have priority access to the services offered at The Benson Hotel.
The 200-acre Banyan Cay hotel, residential and golf project in West Palm Beach, Florida is now slated for auction through U.S. Bankruptcy Court. The auction is to take place on June 13, with the results subject to court approval at a June 15 hearing. The judge also approved the $102.1 million stalking-horse bid from Westside Investment Partners. The initial overbid must be $3.25 million. If the stalking horse doesn’t win the auction, it would be owed a $2.25 million break-up fee plus an expense reimbursement of up to $400,000. The judge also ruled that Bellefrau Group and ZJC LLC would receive $1.6 million and $1 million respectively, from the sale price as they are secured creditors with interests in specific pieces of the property within Banyan Cay. The debtor owns the 150-room Hyatt-branded hotel under construction at 2020 Banyan Resort Way, a 130-acre golf course, and development sites approved for 179 condo units, 28 single-family homes and 22 villas. The auction covers everything aside from the single-family estate lots which were sold separately for $10.5 million.
A new, nearly 100-room hotel may soon be breaking ground in Liberty Township, Ohio if it gets approval from the Trumbull County Planning Commission. A major corporation with a flag name hotel is looking to build a new hotel with between 89-99 rooms, and is hoping, if approved, to break ground later this year. Steel & Liberty LLC is the developer.
The Astro Motel, in Meridian, Mississippi, is being demolished this week. TheLala family is now looking forward to building a new Holiday Inn Express Hotel and Suites. Lala says the new hotel will take around 16 months to build and will have over 100 rooms.
A mixed-use development that will include a hotel, office, medical, commercial and residential space is planned for Fort Mitchell, Kentucky. Proposed by Buttermilk Pike Development, the mixed-use project will be built on a long-vacant site of the former Drawbridge Inn on Buttermilk Pike. The construction process is broken up into three phases and will take place on five different lots, each of which will be designated for a different use. Work is expected to begin at the end of 2023.
The Cordish Companies and Caesars Entertainment announced their Pompano Beach, Florida development, The Pomp, which willl be anchored by a dynamic Live! dining and entertainment district. The 223-acre project is one of the largest developments in South Florida. The Pomp will feature 1.3 million square feet of retail and entertainment space, 4,000 luxury residential units, two hotels and 1.35 million square feet of Class A office space upon completion.
Tafer Hotels & Resorts announced the adults-only Hotel Mousai Cancun is set to debut in May 2024. Located on Cancun’s white sand beach, the resort will offer 88 suites, several gourmet restaurants, two pools and a gym.
RobertDouglas and Berkadia announced they have accepted stalking horse bids on three hotels that are part of a five-property portfolio, located in Orlando, Florida from Monarch Alternative Capital LP totaling $111.25 million. The properties, being sold by AD1 Global, include the Crowne Plaza Orlando Lake Buena Vista, Staybridge Suites Orlando Royale Parc Suites, and the dual-brand Aloft/Element Orlando International Drive. Additionally, the Home2 and Hyatt Place Palm Bay in Melbourne, FL will also be sold at the auction in mid-May.
Sotherly Hotels Inc, announced the Company has executed a $10.0 million secured loan with Citi Real Estate Funding Inc., collateralized by a first mortgage on the DoubleTree by Hilton Laurel in Laurel, Maryland. The interest-only loan, which has a principal balance of $10.0 million, matures in May 2028 and carries a fixed interest rate of 7.35%. Proceeds from the loan were used to repay the existing first mortgage and for general corporate purposes.
Personnel Move
InterContinental Hotels Group announced Keith Barr has informed the Board of his decision to step down from his role as Group Chief Executive Officer and from the IHG Board. Keith intends to return with his family to the U.S. His final day as CEO will be June 30, after which he will remain available to support and advise the business until the end of 2023. Keith will be succeeded by Elie Maalouf, a member of IHG’s Board and Executive Committee, who has led IHG’s Americas business as regional CEO for the past eight years. Elie will take up his new position on July 1 and will be based in the U.K. to lead the business.
HVS Hodges Ward Elliott announced Tim Barbrook has joined as head of Debt Advisory, launching the firm’s hotel & leisure debt advisory capabilities across the UK and Europe. The division will provide transaction execution support. Tim joins HVSHWE from Crosslane Fund Managers where he was head of Debt Finance.