Watermark sells NYC Holiday Inn at loss: Watermark Capital has reportedly sold the 226-room Holiday Inn in New York City’s Chelsea neighborhood to Chicago-based Two Kings Real Estate for US$70.3 million. Carey Watermark Investors acquired the property in June 2013 for US$113 million, representing a 30% decline in value based on this sale. Watermark Capital reportedly has been trying to sell the property all year. It fell behind on its mortgage payments in October 2020 and the loan was transferred to a special servicer in January 2021.
Beaumier adds in Ibiza: Beaumier, the France-based boutique hotel group, has announced the addition of the 42-key Petunia in Ibiza, Spain, to its portfolio. The family-owned hotel is located on the southwest coast of Ibiza and offers views of the Mediterranean Sea. It would not say whether it has taken an equity position or if it plans to rebrand the property. Beaumier’s portfolio currently comprises eight hotels across France and three hotels in Wengen, Switzerland.
Walton Global acquires Smoke Tree Resort: ST Holdings, a subsidiary of Scottsdale, Arizona-based Walton Global, has acquired the Smoke Tree Resort in Paradise Valley, Arizona, for US$14 million. The deal closed on Wednesday with Walton planning to build a new boutique hotel. The hotel, which was built in 1954, was subject to bankruptcy. Attempts to reopen the hotel’s restaurant, The Other Place, under new management failed and the restaurant has remained closed for more than 10 years. Walton said it would add a new design to the resort and avoid controversial elements that have hindered Smoke Tree and other hotel developments, like rooftop bars, condominiums, height, density, for-sale units, and other issues that have challenged past revitalization attempts.
US performance continues to improve: Hotel performance across the U.S. steadily climbed with yet another weekly record in RevPAR on a nominal basis, according to STR’s data through June 25.
- Occupancy: 72.3% (-4.1%)
- ADR: US$157.05 (+17.1%)
- RevPAR: US$113.55 (+12.3%)
The country’s occupancy level was the highest since August 2019, while ADR (nominal) was the highest since the week ending January 1, 2022. Dallas posted the highest occupancy increase over 2019 (+5.8% to 74.1%), among the top 25 markets. New York City (87%), Seattle (85.9%) and San Diego (85.6%) led the major markets in absolute occupancy for the week. Philadelphia saw the largest occupancy decline (-20.1% to 67.3%). Miami recorded the largest ADR gain over 2019 (+37.9% to US$207). The steepest RevPAR deficits were in San Francisco (-21.4% to US$162.70) and Philadelphia (-21% to US$102.51).
Japan’s third Hyatt Centric: Hyatt Hotels Corp. has entered into a management agreement with Tokyo, Japan-based NTT Urban Development Corp. for the Hyatt Centric Sapporo in Hokkaido, Japan. The 216-key hotel will open in 2024 and become the third Hyatt Centric property in Japan, following Hyatt Centric Tokyo and Hyatt Centric Kanazawa. The hotel will be part of a new 26-story building complex which is under construction. Hyatt Centric Sapporo will constitute the building’s upper floors, featuring rooms with panoramic views, two dining venues and event spaces.
Penn State to sell campus hotels, retain land ownership: Penn State University has unanimously approved the sale of campus hotels and retaining ownership of land on which the buildings are located. The Board of Trustees have greenlit the entering into a purchasing agreement and ground lease for two of the school’s University Park campus properties — The Nittany Lion Inn and the Penn Stater Hotel and Conference Center. Once the deal is finalized, Ardmore, Pennsylvania-based Scholar Hotel Group will operate and own the hotels. The Penn Stater will remain open during the ownership transition. The Nittany Lion, which has not operated as a hotel since 2020, will remain closed and open in 2024. Nittany Lion, which failed to get guests since the pandemic, was recently repurposed as a student residence hall and classroom facility as the university reconfigured buildings to meet safety and health standards.
Impact of inflation on hotel real estate: The heat of higher inflation and interest rates on hotel real estate assets are being felt as development cost, operational performance and asset valuation in the U.S. and European markets getting impacted by the inflationary conditions, revealed an analysis by PKF hospitality. There has been a 10% to 25% rise in construction costs over the last 12 to 24 months, which has impacted all areas of construction — materials, labor wages and machinery hire rates. Developers of greenfield projects, where margin for errors are relatively less, have also been affected by rising costs. Rising travel costs, amid recent surge in air fares and rental car rates, is likely to result in reduced consumers’ spending power for hotels. To overcome this, hotels, particularly the small operators, have begun practicing ‘shrinkflation,’ where hotels deliver fewer services and products at the same price to bypass inflation. U.S. hotel REITs are not sensitive to rise in treasury bonds yields. Hotel REITs have been insensitive to increasing rates due to pricing flexibility, indicating that hotel real estate investments provide a degree of hedge against inflation. Luxury hotel clients are less price-sensitive, making luxury hotels more flexible to adjust ADR and a more promising inflation-hedge adjustment.
Travel volume to US surges: International inbound travel volume to the U.S. in April 2022 saw a YOY jump of 216.5% and a 61.5% increase from April 2019 arrivals, showed data released by the National Travel and Tourism Office. Overseas visitor volume to the country stood at 2,043,604, a 348.5% increase from April 2021. April 2022 was the 13th consecutive month that total non-U.S. resident international arrivals to the country surged on a YOY basis. With 1,247,395 visitors, Canada led as the country with the highest number of international travelers, followed by Mexico (1,039,372), the U.K. (328,200), France (141,421) and Germany (134,973). Together, these five source markets represented 66.8% of total international arrivals. International outbound travel volume from the U.S. in April 2022 was 6,033,156, registering a YOY growth of 97% and around 80% of April 2019 departures. Mexico saw the largest outbound visitor volume of 2,717,341 (45% of total departures), while Canada recorded a significant YOY increase of 1,739%.
Summer travel intent: Travel intent is on the rise as 56% of respondents to Deloitte’s State of the Consumer Tracker plan to spend on leisure travel in the next four weeks. With the U.S. dropping the COVID-19 testing mandate for international travelers, the study found that not many Americans are planning to travel overseas. Intent to fly internationally stood at 24% in June compared to 20% in May. About 52% feel safe about flying while 66% said they feel safe staying at a hotel. There has been a growing concern about increasing costs, with 28% of those planning a summer holiday planning to spend more than before the pandemic. For Americans planning to stay home, cost is a significant influence compared to pandemic-related concerns.
Air travel recovery trends: Global air travel is expected to reach 65% of pre-pandemic levels in this year’s third quarter, showed the World Travel Market report by ForwardKeys. The revival of air travel, however, will not be consistent as some parts of the world will outperform others and some types of travel, especially beach holidays, being more popular than sightseeing and urban city visits. Africa and the Middle East are projected to recover more strongly, with its arrivals in Q3 set to touch 83% of 2019 levels, followed by the Americas where summer arrivals will touch 76%. This is followed by Europe (71%) and Asia Pacific (35%). In the Americas, Q3 bookings for air travel to the Caribbean, Central America and Mexico were 5% more than pre-COVID levels, while flight bookings to South America and to the U.S. and Canada were at 25% and 31% behind respectively. American travelers are planning to spend more time that they did in 2019 but less than what they did during the pandemic. The average planned length of stay is 12 days, rising from 11 days in 2019. At 15%, there are more people flying premium cabin class in Q3 than in 2019 (12%), although it reached 19% in 2021.
Expedia Group, Bilt Rewards launch travel portal: Expedia Group has collaborated with Bilt Rewards to introduce Bilt Travel Portal which will be exclusively available to Bilt Rewards members. Members can use their Bilt points to cover the entire or a part of the cost of their holiday and can book every aspect of travel, flights, hotels, theme parks and even Broadway show tickets, directly through the Bilt Rewards app. Bilt Rewards, which was launched in June 2021, is a co-brand credit card for renters in the U.S. which allows members to earn points on their biggest monthly expense with zero fees. Expedia will provide the technology platform, White Label Template, and travel inventory for the portal, which will enable members to access over 700,000 properties, 500 airlines, 120 car rental companies and several activities globally.
Research on continuing labor shortage: The NYU School of Professional Studies Jonathan M. Tisch Center of Hospitality and Boston Consulting Group have released ‘Overcoming the Talent Shortage in the US Hotel Industry,’ a white paper which focuses on the continuing challenge of the shortage and effects while making suggestions to accommodate worker priorities. As per the research, the hotel industry in the U.S. continues to be impacted by the labor crunch which has resulted in the industry cutting down concierge and shuttle services, food and beverage offerings and other benefits to counter high costs. The research also discussed the most important factors when considering a hotel job by cohort, leading routes into the U.S. hotel industry, current employees’ perceptions about the industry and primary reasons why former employees left the industry.