Home HOTEL INDUSTRY INSIGHTS Hotel Brands Expand Their Empires as Earnings Reports Stay Upbeat

Hotel Brands Expand Their Empires as Earnings Reports Stay Upbeat

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Hotel Brands Expand Their Empires as Earnings Reports Stay Upbeat


Skift Take

Hotel companies seem bullish on the recovery and are acting aggressively to expand their presence. Plus, more highlights from this week’s news in hotel deals and development worldwide.

Every week, Daily Lodging Report sends subscribers updates on hotel deals and developments along with analyst report summaries and updates on personnel moves. Sign up here now.

Here are a few interesting patterns we noticed in Daily Lodging Report’s newsletters this week:

  • Major hotel brands like Hyatt, Hilton, and Rosewood are expanding their portfolios by adding newly built or rebranded independent hotels.
  • A few hotel assets — both large resorts and select-service assets — changed hands. Transaction volume seems healthy, pointing to an active investment market.
  • Several companies reported improved performance metrics like RevPAR (revenue per available room) and EBITDA (a measure of profit) compared to last year and even 2019 levels.
  • One hospitality company, Selina, got creative with shareholder incentives like discounts and loyalty programs. This indicates a competitive environment where brands are trying differentiated approaches to attract investor interest.

Brands Expanded Their Empires

Hotel companies see an opportunity to grow their footprints, as announcements this week reflected. Having a larger system also gives brands more power to drive bookings and negotiate with online travel agencies.

  • Hyatt brought the Fordson Hotel in Oklahoma City into its luxurious Unbound Collection.
  • Hilton added a new Home2 Suites in Florida, further expanding its select-service footprint.
  • Rosewood was announced as the new operator of the iconic Raleigh Hotel in Miami after major renovations. This gives Rosewood a marquee property in a top luxury market.
  • Sonesta highlighted 13 new hotel openings across its brands in the first half of 2023.
  • MCR has acquired two hotels in Phoenix, Arizona, the 169-room Holiday Inn Express & Suites Scottsdale – Old Town and the 121-room Hampton Inn by Hilton Phoenix – Biltmore, located in prime, high-barrier-to-entry submarkets.

Hotels Feel Stronger Than Airbnb This Cycle

During the pandemic’s depth, hotel bookings plummeted while short-term rental bookings through Airbnb and similar online travel agencies soared. Yet dynamics are shifting, and hotels are feeling more competitive now.

Barrons published a story: “Travel Enters a New Phase. Pick Hilton and Hotel Stocks Over Airbnb, Analysts Say.” The piece had very interesting timing given Fortune’s recent story about how one of Airbnb’s founders has been selling stock, Airbnb continuing to hit new highs despite all that, and Marriott and Hilton leading the charge of C-Corp lodging stocks, also to new highs.

The article quoted Melius’ analysts as saying the asset-light/fee-based model by hotel brands is a more resilient revenue stream and more defensive relative to other travel sectors. They also expect the international expansion to make up for any real or imagined concerns about the impact of any slowness in bank financing for new hotels. Melius has Buy ratings on Hilton, Marriott, and Hyatt. They have Hold ratings on Airbnb and Expedia.

Hotel Earnings Were Upbeat

Here’s a handful of the earnings reports Daily Lodging Report covered:

  • Marriott International followed Hilton’s lead with a beat, raise and increase in capital returns. For MAR, the strong report was also led by international strength. Even without the new MGM deal, MAR’s pipeline grew quarter-to-quarter. Including MGM, the pipeline in 547,000 rooms. 203K rooms were under construction at the end of 2Q.
  • Earnings included Xenia Hotels & Resorts with an in-line to a modest miss result and a narrowing of guidance.
  • Chatham Lodging Trust reported a 5% increase in RevPAR year over year and a 5% AFFO rise. CLDT said their RevPAR was still down less than -2% from 2019, but the trend to 2019 improved each month of 2023 through June. They were busy in the quarter repaying debt, and that seems to be continuing in July so far.
  • Ashford Hospitality Trust said comparable RevPAR for their hotels was up 6.7% during the quarter, with comparable Hotel EBITDA up 5% over the prior-year quarter. 
  • Braemar Hotels, more resort-oriented, went in the other direction with comparable RevPAR down -4.2% over the prior-year quarter. 

Hyundai Bought a Hotel

Hyundai Motor America is the new owner of an hourly-rate hotel that the NY Post called “Manhattan’s most famous cheaters’ paradise.” Hyundai paid $22.5 million to buy the 27-room Liberty Inn in mid-July. The sale is believed to represent the highest price per square foot for a building in NY’s Meatpacking District.

The building has a high visibility location across from Genesis House, a showroom for Hyundai’s luxury brand. Hyatt told the NY Post they would give details regarding their plans later.

We would bet money that Hyundai won’t keep that property as an hourly rate hotel.

However, it’s not unheard of for non-travel companies to own hotels. Samsung, for instance, owns hotels in Korea both under its brand name and under the Hotel Shilla brand. Porsche has lent its name to a series of hotels dubbed Steigenberger Porsche Design Hotels.

Independent Hotels Traded Hands

A few hotels unaffiliated with the global hotel groups also changed hands in deals revealed this week.

  • DiamondRock transformed an independent hotel into The Dagny lifestyle brand. Converting independents to capture more market share.
  • The Inn at Rancho Santa Fe, a luxury resort near San Diego, has sold for about $100 million in the region’s largest hospitality transaction this year by price. GEM Realty Capital acquired the property with 80 rooms from Steve Hermann Hotels of Montecito, California. Hermann acquired the property in May 2022 for about $42.7 million.

Omni Revealed a New Look

Omni Hotels & Resorts said it continues its dynamic growth and evolution, unveiling a new visual identity.

Over the next 5 years, Omni will focus on its vision of creating unique places and spaces with plans to invest in existing properties and new products, including ground-up development and significant portfolio upgrades and re-imaginations.

In 2023, Omni Tempe Hotel at ASU and Omni PGA Frisco Resort opened their doors, with Omni Fort Lauderdale currently under construction.

Selina Rewarded Shareholders

Selina Hospitality may have found the secret to shareholders liking them again, at least a few minutes. SLNA launched Selina Members Club, a shareholder benefit program.

Depending on their membership tier, shareholders can get accommodation and food and beverage discounts, room upgrades, complimentary breakfasts, access to co-working spaces, and exclusive event invitations. All you have to do is verify that you’re a shareholder from a U.S.-based brokerage account, and they give you your membership tier.

It certainly worked on the day, with the stock up over 50% (after the announcement) to $1.62, only to plunge again to under $1.

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