In this week’s roundup of news from the Americas region: Spring break hotel markets disrupted; what owners should know about the dip in California’s transactions; and Ashford-FelCor deal hit obstacles.
Hotel News Now each week features a news roundup from a different region of the world. Today’s review covers the Americas.
Transactions dip in the Golden State
The most recent California hotel sales survey by Atlas Hospitality Group shows sales volume decreased by 30% from 2015 to 2016 to $6.6 billion, after riding years of record transaction numbers, writes HNN’s Bryan Wroten. Atlas President Alan Reay said he foresees this trend will continue.
“In large part I think it’s because we had such a phenomenal year in 2015, there really was nowhere to go but down,” Reay said. “It’s unusual to have $9 billion a year for California sales.”
Looking ahead in 2017, Robert Hazard III, SVP of acquisitions and development at Hersha Hospitality Trust, said buyers need to be cautious when acquiring certain assets in the California market. It can be difficult to get a return at an acceptable level with the way hotels have been operated in the past, he said.
Ashford-FelCor deal faces obstacles
While analysts seem optimistic about the possible combination of FelCor Lodging Trust and Ashford Hospitality Trust, the back-and-forth of the deal, which began 21 February and is not yet a sure thing, has roadblocks to overcome, writes HNN’s Sean McCracken and Bryan Wroten.
Currently, Ashford has two ways in which the deal could be handled: Try to meaningfully re-engage FelCor officials or persuade investors towards the deal voting in the proposed slate of pro-sales directors.
“The challenge is, historically, proxy advisors have not looked favorably at externally advised (companies in) deals,” said Mike Bellisario, VP and equity research senior analyst at Robert W. Baird & Company. “That’s a big hurdle that Ashford has to overcome.”
Park Hotels eye profit, not portfolio growth for now
Officials at Park Hotels & Resorts said the company, which presently owns 67 properties that were formerly owned by Hilton prior to the spinoff, put its current, primary focus on building more group business and improving profit margins, not increasing its portfolio, writes HNN’s Sean McCracken.
“Over the next six to nine months, we’re focused on … operational excellence and the embedded (return-on-investment) opportunities we believe can yield value,” said CEO Tom Baltimore. “But make no mistake about it, I would not have taken this assignment—this is a dream opportunity for me—if I didn’t think there was a huge opportunity for growth over time.”
Baltimore added that the industry is nearing the end of the cycle, and competitors may have overestimated “how aggressive they can be.”
Spring break hotel markets suffer from booze ban
The month of March is the peak time when spring breaks occur, and with police enforcing a ban on alcohol on several destination beaches, this could cause some disruption in the hotel market.
Panama City Beach, Florida, a popular spring break destination, enacted an alcohol ban on 31 March 2015, and according to data from STR, HNN’s parent company, the area’s hotels saw a double-digit declines in both average daily rate and occupancy. And what was once a steady increase for revenue per available room ended up with a one-time decline of 28.5% due to the restrictions.
Other markets included in this report are within Alabama, Georgia, Kentucky, Louisiana, Michigan, South Carolina, Tennessee and Virginia.
Deals and developments
- Brazil Hospitality Group announced an agreement with AccorHotels on 3 March citing that Accor will manage a portfolio of 26 hotels in Brazil totaling to 4,400 rooms.
- TRYP by Wyndham opened the newly constructed 95-room TRYP by Wyndham Sebastian St. Augustine in St. Augustine, Florida, on 9 March. This is the brand’s first location in Florida.
- Hyatt Hotels Corporation announced on 1 March that a 1,800-room Grand Hyatt Baha Mar Hotel will open in late April.
- Kimpton Hotels & Restaurants announced on 9 March a mixed-use property in San Jose, California, at Museum Place. Museum Place will include a 173-room Kimpton, 300 residential units and an expansion of the Tech Museum.
Compiled by Dana Miller.