The DJIA fell 63 points while Nasdaq was down 85, the S&P 500 was down 9 points and the 10-year treasury yield was flat at 4.42%. Lodging stocks were modestly lower. HLT traded up to another new high, while SLNA fell to another new low, down -5%. AHT was down -9%, SHCO fell -7% and BHR was down -5% on the day.
Due to the Thanksgiving Holiday, there will be no Daily Lodging Report from Thursday, November 23rd to Sunday November 26.
Short of taking out a billboard or skywriting, we have no idea how much more Wyndham Hotels & Resorts can do to tell Choice Hotels to go away on its bid. WH said they received a letter from CHH CEO Pat Pacious on November 14th in which Pacious sought to restart negotiations and strike a deal with WHbefore the end of the year. WH classified the letter as a step backward, and that the terms CHH outlined are not in the best interest of WH or its shareholders. CHH did not raise its bid or change it to more or all cash, so with CHH’s lower stock price, the bid is down to $86 a share instead of the $90 they said it represents. CHH, which kept telling WH that they did not expect any regulatory issues, now offered a 2-year period to get regulatory approval and a 6% reverse termination fee. In the response to CHH, once again rejecting the offer, WH criticized CHH for letting their franchise sales team and executive leadership allegedly exploit the uncertainty around WH to try to seek a competitive advantage in the market for franchisees and development partners. WH once again told CHH that their franchisees do not want to be a part of CHH’s programs, noting the AAHOA, which represents about two-thirds of their respective franchisees, expressing their opposition. There is more, but WH continues to make clear they don’t want these advances from CHH.
Morgan Stanley upped their price target on Soho House to $7 from $6.50.
MS maintained their Equal Weight rating on SHCO.
With the Fed expected to be done with its interest rate hike cycle, we expect the attention will turn to the Lodging REITs shortly. The recent NAREIT was timely in that respect. Baird summarized their findings, saying they found hotel REIT management teams relatively upbeat regarding the top line outlook for 2024 and the building blocks that are in place for 3%-4% RevPAR growth. Baird said this is not necessarily the range to which management teams will guide. The bull case is that business transient continues to steadily recover, group remains strong, inbound international improves, fewer US travelers vacation abroad particularly in summer 2024, and leisure/resort comps will be less of a headwind. Baird said investors seem upbeat but not as much as management teams with consensus looking like 2% to 3% RevPAR growth and investors NOT pricing in a recession next year. The bad news is expenses are likely to be up at least 3% next year with Baird thinking a 4% range is more likely. The bear case is expense pressures persist and margins remain negative on a year-over-year basis. That is typically not a good recipe for valuation multiple expansion. Baird said they have a slightly more positive sector view, particularly as the toughest year-over-year comparisons remain in the rearview mirror and as interest rate headwinds begin to abate in 2024. They believe several portfolios should benefit from stronger convention calendars and less renovation disruption. Baird is incrementally positive on Host Hotels. They said management was very positive and HST shares do not reflect any upside potential from capital deployment opportunities that might arise. They calculate that Hotel REITs are trading at 26% and 16% median discounts to their NAV and GAV estimates, respectively.
Marriott International’s Aloft Hotels said Aloft Lake Nona announced its December opening in the Lake Nona community of Orlando, Florida. With 205 guestrooms and 15 suites, a sports-themed restaurant, and the 10,000 square foot Althea Lake Nona Events Center, Aloft Lake Nona will open as the closest hotel to the largest tennis facility in the world, the United States Tennis Association National Campus. With a total of 17,032 square feet of event space, Althea Lake Nona Events Center and Aloft Lake Nona offer versatile indoor and outdoor options. The hotel offers multiple dining options, a natural saline Splash Pool and the Re:Charge gym.
KWC Management, the hospitality investment management company of Kemmons Wilson Companies, purchased the Montage Kapalua Bay in Lahaina, Hawaii, from Lantern Asset Management. The sale price has not been disclosed. The 146-room luxury resort has a total of 2,205 square feet of meeting space, four restaurants, and a collection of privately-owned residences. Montage will continue to manage the property, and KWC Management will bring in White Label Asset Management to assist in asset managing the property.
Inland American Lodging Group announced the two-tower, 545-room Fairmont Hotel, located in downtown Dallas, Texas, is getting an updated exterior. In 2020, the hotel completed a multimillion-dollar upgrade of its 70,000 square feet of meeting space, and now exterior improvements are being made with lighter-colored paint and stone refurbishment.
IHG Hotels & Resorts celebrated the grand opening of a new Crowne Plaza hotel in Saint John, New Brunswick, Canada, following a conversion and extensive renovation. Crowne Plaza Saint John Harbour View provides 135 premium guestrooms, 5,500 square feet of meeting space, a business center, a heated indoor pool and hot tub, a fitness center, arcade, and an on-site restaurant. The hotel is owned and managed by Devansh Group of Hotels.
The Hotel Chalet at the Chattanooga Choo Choo reopened this month in Chattanooga, Tennessee after completing an extensive property-wide renovation. Developed by Trestle Studio, the Hotel Chalet offers 127 guest rooms inclusive of 25 train carriage rooms, an alpine pool, outdoor courtyard serviced via a caboose, a 3,000 square foot ballroom with an adjacent outdoor events Arbor, and an onsite restaurant.
RH announced the opening of RH Indianapolis, The Gallery at the DeHaan Estate. The estate spans 151 acres and offers over 60 rooms, an onsite restaurant, a Wine Bar and Terrace.
Personnel Moves
The Kessler Collection announced the addition of Peter Wu to the new role of President of Hospitality Operations. In this new role, Wu will lead the company’s hotel management and operations division, overseeing the corporate commercial, marketing, human capital, and information technology functions. Over the years, Wu has managed, developed, opened, and advised luxury resorts and destinations across the U.S., Asia, the Caribbean, and the Middle East.
Club Quarters Hotels announced three new leaders to its executive team. The new hires include Joseph Turano as Chief Operating Officer; Shawn Usami as Vice President of Revenue Management; and Kendall Viola as Vice President of Marketing. In his role as Chief Operating Officer, Turano will oversee all operations, including hotel and club management, food and beverage, marketing, and revenue management. Most recently, Turano served as Vice President of Freehand Generator Hotels. In his role as Vice President of Revenue Management, Usami will lead the deployment and execution of revenue and distribution strategies. Most recently, Usami served as Vice President of Revenue and Distribution at EOS Hospitality. In her role as Vice President of Marketing, Viola will oversee all aspects of marketing including brand management, digital marketing, customer acquisition, and market research. Prior to joining Club Quarters Hotels, Viola served as the Director of Marketing and Public Relations for Sir Richard Branson’s luxury-lifestyle flagship hotel in New York City.
Europe Highlights
Lodging Econometrics said Europe’s total construction pipeline showed a slight year over year increase in project counts as of the end of the third quarter of 2023. The total construction pipeline stands at 1,673 projects/249,264 rooms, up 1% by projects year over year.
Chain Scale Project Growth in Europe Q3 2023
| Chain Scale | Projects (Q3 2023) | Rooms (Q3 2023) |
|---|---|---|
| Luxury | 139 | 18,515 |
| Upper Upscale | 284 | 46,717 |
| Upscale | 439 | 71,178 |
| Economy | 157 | 20,042 |
Construction Status in Europe Q3 2023
| Construction Status | Projects | Rooms |
|---|---|---|
| Under Construction | 759 | 114,842 |
| Scheduled to Start in Next 12 Months | 411 | 63,154 |
| Early Planning | 503 | 71,268 |
Year-Over-Year Changes in Europe Q3 2023
| Change Type | Projects | Rooms |
|---|---|---|
| Brand Conversions (YOY) | 374 | 49,893 |
| Construction Starts (YOY) | 91 | 11,436 |
| New Project Announcements (YOY) | 107 | 13,536 |
Top European Countries by Project Counts Q3 2023
| Country | Projects | Rooms |
|---|---|---|
| United Kingdom | 322 | 44,259 |
| Germany | 201 | 32,889 |
| Portugal | 125 | 15,055 |
| France | 121 | 13,613 |
| Turkey | 114 | 16,907 |
Top European Cities by Project Counts Q3 2023
| City | Projects | Rooms |
|---|---|---|
| London | 79 | 14,078 |
| Istanbul | 48 | 7,936 |
| Lisbon | 37 | 4,070 |
| Dublin | 34 | 6,492 |
| Dusseldorf | 30 | 5,465 |
Forecast for New European Hotel Openings Q3 2023
| Year | New Hotels | Rooms |
|---|---|---|
| 2023 | 99 | 13,519 |
| 2024 | 356 | 48,888 |
| 2025 | 406 | 56,127 |
