From the desks of the Hotel News Now editorial staff:
- FelCor open to cash deal with Ashford
- HNA avoids NH takeover mandate
- Execs worry over rising financing and operating costs
- OTAs’ online booking share on the rise
- Extended Stay America, Belmond share Q4 results
FelCor open to cash deal with Ashford: In an open letter to Ashford Hospitality Trust Chairman Monty Bennett, incoming FelCor Lodging Trust CEO Steven Goldman wrote that he is “encouraged” by Ashford Trust CEO Douglas Kessler’s recent comments that his company would consider a cash transaction to buy the real estate investment trust. FelCor officials had previously balked at an all-stock proposal from Ashford, but officials with the latter company said the deal makes strategic sense.
“FelCor has consistently communicated its concerns regarding both the inadequate value and uncertainty of AHT's all-stock, fixed exchange ratio proposal,” Goldman wrote. “Those concerns were underscored by the decrease in the market value of AHT’s shares last week once the full details of the proposal were made public. However, an all or substantially all cash proposal provides much greater comfort and certainty and could alter our analysis of AHT’s proposal. If AHT is willing to consider making such a revised proposal, FelCor stands ready to re-engage with AHT as soon as is practicable.”
It is worth noting that Kessler stated during his company’s fourth-quarter earnings call with investors and analysts that Ashford officials structured the deal to be all stock because that was FelCor’s stated preference.
HNA avoids NH takeover mandate: HNA Group has sold down its ownership stake in NH Hotels to avoid a European Union directive that would require it to make a mandatory takeover bid for the company, according to Reuters. The mandatory takeover requirement is for any shareholder with 30% or more stake in the company.
HNA Group announced the sale of 541,931 NH shares Monday, leaving HNA with a 29.34% stake in NH and 29.98% of voting rights.
Execs worry over rising financing and operating costs: Rising costs were at the top of the minds of hoteliers at the recent Memphis Lodging Industry Update, and HNN’s Jeff Higley writes the costs of operations and financing were particularly worrisome for those in attendance.
Warren Fields, principal and chief investment officer for Pyramid Hotel Group, said financing is still available but things are noticeably worse than the recent past.
“Twenty-four months ago you probably got eight to 10 term sheets (from potential lenders)—today you might get four or five,” Fields said. “You can still (get) deals done but it’s not as fluid as it had been.”
OTAs’ online booking share on the rise: The latest research from Phocuswright indicates that, despite hotel companies’ efforts to drive direct bookings, online travel agencies are increasing their online bookings at a greater pace and are expected to do so through 2020.
OTAs’ share of online bookings is expected to hit 41% by 2020, which represents $81.4 million in online gross bookings.
“Hotels now account for more than half of OTA domestic gross bookings and will continue to increase through 2020 as OTAs focus on growing the hotel segment and widening hotel inventory,” writes Phocuswright analyst Maggie Rauch.
Extended Stay America, Belmond share Q4 results: Earnings season is winding down for the hotel industry, but there are still some publicly listed hotel companies issuing their fourth quarter and full-year 2016 results. Extended Stay America and Belmond are the latest to do so, and here are their Q4 highlights:
Extended Stay America: Comparable RevPAR grew 4.1% year over year to $45.52 in Q4 and 3.9% to $49.23 for 2016. Comparable hotel adjusted earnings before interest, taxes, depreciation and amortization were up 7.2% for the year to $615.7 million.
Belmond: Net earnings were $36.3 million for the year, up $20 million from 2015. RevPAR was down 7% in Q4 but up 3% for the full year.
Compiled by Sean McCracken.