Fontainebleau among those seeking new lender terms
Miami’s Fontainebleau is among those seeking to renegotiate terms with lenders, highlighting how deeply the coronavirus pandemic has cut into a popular segment of deals that concentrate investors’ risk into a single asset. Low interest rates, rising markets and easing credit-rating standards fueled the growth of these deals, known as single-asset, single-borrower bonds. Sold as gold-plated debt backed by trophy properties, they grew to almost 40% of the commercial mortgage market’s US$120 billion of non-government-backed bond issuance in 2019, according to mortgage tracker Trepp. (That number is up from 21% in 2012.) That borrowing frenzy has now come to an end. As hotels, restaurants, stores and other businesses adjust to the pandemic’s prolonged closures, issuance has ground to a near halt.
Vienna’s Sacher converts suites into pop-up restaurants
Vienna’s Hotel Sacher has been closed for 10 weeks due to the coronavirus outbreak. Now that it is reopening, it hopes to lure locals and guests coming by car or train from within Austria and neighboring countries to bring up revenue to 10% of pre-crisis levels. The plan? Up to four guests plus two children can rent one of the hotel’s 152 suites or rooms for up to three hours and have breakfast, lunch or dinner served by a private butler. Prices are from €45 (US$50) per person for breakfast and from €75 per person for lunch and dinner.
U.S. hotel profits fell 116.9% in April
U.S. hotel gross operating profit per available room fell 116.9% during April, according to the latest monthly profit and loss data release from STR. In a year-over-year comparison with April 2019, the industry reported the following:
GOPPAR: -116.9% to US-$17.98
TRevPAR: -92.9% to US$17.39
EBIDTA PAR: -140.2% to US-$32.30
LPAR (labor costs): -72.8% to US$20.80
Among top markets, Houston reported the steepest year-over-year GOPPAR decline (-135.3%), followed by Chicago (-134.6%) and San Francisco/San Mateo (-133.6%). At a class level, luxury properties saw the worst decrease in GOPPAR (-124.5%).
U.K. performance declines hold steady
Each week, STR analysts have been providing a video deep-dive into U.K. hotel performance. Key highlights from the most recent video, highlighting performance for the week of May 18-24, include:
• ADR declines in the U.K. remain steady
• Daily RevPAR dropped 81%-89% during the week of May 18-24
• Among key U.K. markets, Aberdeen (40%) experienced the highest occupancy level during 1-24 May, while Dublin (11%) saw the lowest
Chinese domestic air travel breaks 50% barrier
Domestic air travel in China, which has been recovering slowly in the wake of the COVID-19 outbreak, has now reached more than 50% of what it was at the equivalent moment in 2019, based on issued air tickets, according to data from travel analytics company ForwardKeys. Analysis of flight ticketing data reveals a significant uptick in last-minute domestic flight bookings in China between May 11-24. During that period, the lead time between ticketing and travel shortened dramatically — 72% of flight tickets were issued within four days of the travel date, compared with 51% at the equivalent point in 2019.
Elsewhere: David Beckham’s future hotel empire
David Beckham is set to launch his own range of hotels and restaurants. The 45-year-old former soccer ace has registered a trademark to protect his name, with the legal documents explaining he may wish to use a monogrammed DB in the hospitality industry. The news comes a few months after it was revealed Beckham had become an ambassador for The Londoner hotel, which will open in Macau, China, next year and also features a restaurant from his friend Gordon Ramsay.