Transaction about to heat up: This year is about to get interesting as private equity giants, including Blackstone, Lone Star and KKR & Co., are sitting on more than US$300 billion of unspent cash and preparing to start spending on commercial real estate, according to a Bloomberg report citing Preqin data. Hotels, leisure parks and malls are struggling and about US$146 billion of commercial real estate is in distress with serious risk of bankruptcy or default, according to Real Capital Analytics “We are increasingly seeing owners who are losing interest, losing money or losing hope, and are now considering transacting,” said Bill Benjamin, head of real estate at Ares Management Corp. “There will be some very exciting cyclical opportunities to buy assets at deep values.”
Marriott grows all-inclusive: Marriott International has signed an agreement with PGA Hotel Management Group to introduce the first Westin all-inclusive resort to South America. Expected to welcome its first guests in September 2021, the Westin Porto de Galinhas will serve as the first Westin Hotels & Resorts-branded property in Brazil after undergoing an extensive renovation. The resort is slated to feature 128 rooms and 36 suites, some of which will include private decks and jacuzzis. The property is set to include five pools with direct access to the beach and a spa. Plans also call for adult and children’s programming seven days a week and quality food and beverage offerings.
Baltimore Port Covington financing: JLL has arranged a US$189 million construction loan for the development of the first phase of Port Covington, which, at up to 18 million square feet, will be one of the largest mixed-use urban redevelopment projects in the nation. The project is situated along Baltimore’s waterfront and will consist of a mix of office, retail, mixed-income residential, hotels, marinas, public spaces and more. JLL represented the developers, Sagamore Ventures and Goldman Sachs Urban Investment Group, and their development partner, Weller Development Co. The first phase of Port Covington comprises more than 1 million square feet across five properties and will anchor the project. The city of Baltimore issued the first US$138 million tranche of the Port Covington TIF (US$660 million total) to fund infrastructure improvements for the project. The Port Covington TIF represents the largest Tax-Increment Financing package in the city’s history.
Hyatt response to CPAC event: Hyatt Hotels Corp. released a statement on Sunday expressing concern about reports that the CPAC stage at the Hyatt Regency Orlando was shaped like a rune used by the Nazis. It also condemned CPAC guests who disrespected Hyatt staff for attempting to enforce social-distancing measures meant to curb the ongoing pandemic. “We were extremely disappointed by the disrespect many individuals involved in the event showed to our colleagues, as it is reflective neither of our own commitment to care for members of the Hyatt family nor of how we wish to conduct business,” Hyatt said in a statement. “We are tremendously grateful to our colleagues for their resilience and the care they demonstrated keeping people safe in circumstances that became increasingly difficult as the event evolved.”
STR data on Chinese New Year: Mainland China’s hotel industry performance showed improvement from last year’s pandemic-affected Lunar New Year period, but still fell well short in comparison with 2019 levels, according to preliminary data from STR. Daily occupancy in the market sat in the 30% range for most of the festival period (11 February-17 February) then rose to as high as 37.6% on Saturday, 20 February.
Bourne Leisure deal financing: Starwood Capital Group has originated a £1.8 billion Term Loan as Mandated Lead Arrangers to Blackstone Capital Partners and Blackstone Real Estate Partners for the acquisition of Bourne Leisure, a premier UK holiday company. Starwood Capital will hold £720m split evenly between two of its investment vehicles, Starwood Real Estate Income Trust, a non-traded REIT managed by Starwood REIT Advisors, a subsidiary of Starwood Capital, and Starwood Property Trust. Bourne Leisure is the largest provider of caravan holidays and holiday home ownership in the U.K., operating three well-known brands — Haven, Butlin’s and Warner Leisure Hotels. The company employs over 16,000 team members, hosts 25,000 holiday home owners, and attracts 4.5 million guests to 56 sites across the UK every year.
Mideast construction pipeline update: According to the latest published Construction Pipeline Trend Report for the Middle East from Lodging Econometrics (LE), the hotel construction pipeline in the Middle East declined again to 542 projects/156,921 rooms. This is the sixth consecutive quarter project counts have dropped in the region. Fluctuations in oil and gas prices, access to vaccines, the new U.S. administration, and lack of tourism are ultimately having an impact on hotel development.
Projects currently under construction stand at 351 projects/113,063 rooms, a 2% by project and 3% by rooms drop year-over-year (YOY). Projects scheduled to start construction in the next 12 months dropped more drastically YOY, and are down 36% by projects and 41% by rooms YOY to end the fourth quarter at 82 projects/19,206 rooms. Projects in the early planning stage are at 109 projects/24,652 rooms, also a decrease YOY. While hotel construction has dropped YOY, hotel renovations and conversions are on the rise, hitting a project count peak in Q4 ’20.
In the fourth quarter, the Middle East opened only 18 new hotels accounting for 6,174 rooms, the highest hotel count in any quarter of 2020 for the region. For the year, the Middle East opened 51 new hotels/16,391 rooms. LE is forecasting 96 hotels/23,322 rooms to open in 2021 and another 138 hotels/39,929 rooms to open in 2022. Countries with the most projects in the construction pipeline are Saudi Arabia with 186 projects/66,866 rooms and the United Arab Emirates with 161 projects/45,753 rooms.
Dalata CEO to step down: Dublin-based Dalata Hotel Group has reported a 68% reduction in revenue leading to a loss after tax of €101 million (US$121 million) for the year to the end of December, which it described as an unprecedented year of challenge for the industry. The hotel group said its revenue for the year sank by 68% to €136.8 million (US$165 million) from €429.2 million (US$517 million) in 2019. It reported an occupancy rate of 30.9% for the year, down from a rate of 82.6% in 2019. Dalata also said its chief executive Pat McCann plans to step down from the role. McCann has been CEO since 2007.
Hawaii hotels hit hard: A new report from Colliers indicates that Hawaii’s commercial real estate and hotel sector has been especially hard hit by the pandemic, with occupancy rates falling to 23% from 2019’s 77% and December ADR declined from US$265.65 in 2019 to US$222.71 in 2020.
New hospitality grant: Cleveland-based real estate advisory company The Revision Group will provide US$100 million or more in short-term funding to real estate developers and owners of hospitality assets around the country in an effort to keep their businesses afloat in the aftermath of the coronavirus pandemic. The funds, which will come from two private equity firms, will be used as a preferred equity investment and may provide the only alternative to infuse capital into small businesses that have been overlooked during the pandemic. The company is focusing on three key metrics when determining which businesses will receive funding: current equity, current debt, and 12 months of net operating income.
Hard Rock to add Reverb in Kalamazoo: Hard Rock Hotels will redevelop the Gibson Mandolin-Guitar Manufacturing site in downtown Kalamazoo, Michigan, into a new hotel. With an anticipated fall 2023 opening, the Rerverb by Hard Rock Kalamazoo would include a Body Rock Fitness gym, a bar, brewery and restaurant, banquet facility, auditorium, and museum. Hard Rock representatives said they plan to maintain the historic parts of the Gibson site to offer a hub for music fans, locals and travelers.
First Hyde Hotel and residences in Mexico: Accor has announced Mexico’s first Hyde hotel and branded residences to be built in Mazatlán, a Mexican coastal resort town along the Pacific shoreline in the state of Sinaloa. The project is being developed in collaboration with owner, Daniel Cárdenas Family, an international agriculture company based in Sinaloa. The 150-room hotel is scheduled to break ground in late 2021 and will open in late 2023.
Wyndham’s ‘Member Month’: Wyndham Hotels & Resorts is launching “Member Month,” a way to reach out to Wyndham Rewards members with exclusive deals. Every Wednesday from March 3 through March 31, Wyndham will reveal a new deal ranging from discounts on hotels in popular destinations to bonus point offers and more. The first deal entails a large bonus on Wyndham Rewards points purchases: from March 3-April 5, 2021, purchases will come with a 40% bonus.