5 things to know: 28 July 2017
5 things to know: 28 July 2017
28 JULY 2017 9:51 AM

From the desks of the Hotel News Now editorial staff:

  • US GDP up 2.6% in Q2
  • Regulators nix HNA deal, casting pall over future deals
  • Host enjoys a strong Q2 but points to future weakness
  • Starwood Capital buys Jeremy West Hollywood
  • Rate pushes modest RevPAR increase for US hotels

U.S. GDP up 2.6% in Q2: Those who worried about slow economic growth during the first quarter of 2017 got good news this morning with the U.S. Commerce Department’s announcement that gross domestic product grew 2.6% during the second quarter, according to a report in The Wall Street Journal.

The Journal points out it’s hard to discern whether the growth, which outpaced the 1.2% seen in the first quarter, “is a sign of momentum or simply repeating a familiar pattern of weak winters followed by a stronger spring and summer.”

This current economic growth period is now the third longest since World War II but also the slowest, with growth numbers averaging just more than 2%.

Regulators nix HNA deal, casting pall over future deals: A deal by China-based HNA Group to buy a U.S. in-flight services provider has been killed by an American regulatory body, according to a report from Reuters. HNA has been active in the hotel industry lately with the purchase of Carlson Hospitality Group, NH Hotels and stakes in Hilton and Park Hotels & Resorts.

The Chinese conglomerate had a deal in place to buy Global Eagle Entertainment, but that deal fell apart after the Committee on Foreign Investment in the United States didn’t complete a national security review by a deadline set in the deal. Reuters reports there appeared to be security concerns over HNA Group’s potential handling of consumer data passing through Global Eagle’s WiFi systems.

It is unclear how this could affect HNA’s other deals in the U.S., including plans to buy a majority stake in new White House Communications Director Anthony Scaramucci’s SkyBridge Capital investment firm.

Host enjoys a strong Q2 but points to future weakness: For the second quarter in a row, Host Hotels & Resorts has enjoyed stronger than expected performance numbers in Q2, but is warning analysts that there could be a bumpy road ahead for the balance of 2017, writes Hotel News Now’s Danielle Hess.

The company saw revenue per available room increase 1.7% year over year for the quarter with average daily rate up 0.8% and occupancy up 0.7%. As a result, officials shifted full-year 2017 RevPAR guidance to 1% to 1.75% from flat to 2%.

In a call with investors, President and CEO James Risoleo warned that the third quarter could be demonstrably weaker, largely due to calendar shifts. He said his company could see stronger performance if there is more strength in business transient travel.

“As long as consumer confidence remains strong and unemployment remains low and (travelers) feel good about their wallet and their balance sheet, we expect to see the leisure traveler continuing to spend money,” he said. “We’d like nothing better than to see the business traveler return and put us in a better position to yield rates in an even more aggressive manner at (our hotels).”

Keep an eye out for further Q2 earnings coverage from HNN.

Starwood Capital buys Jeremy West Hollywood: Starwood Capital Group announced it has acquired the 286-key Jeremy West Hollywood in West Hollywood, California, and plans to rebrand the property under its 1 Hotel luxury lifestyle brand, according to a news release.

Company officials said the hotel will open in August and over the course of a year “be transformed into the 1 West Hollywood,” marking the fourth property for the brand. No price was announced in the deal.

“The opportunity to acquire this new extraordinarily located real estate in such an important destination with all of its amenities was extremely compelling to our brand and team,” Chairman Barry Sternlicht said in the news release. “We can’t wait to launch The Jeremy and later bring our award-winning luxury sustainability focused brand to a city and state that cares so much about the environment.”

The property will be operated by Starwood Capital’s management wing, SH Group.

Rate pushes modest RevPAR increase for U.S. hotels: U.S. hotels saw little year-over-year change among the key performance indicators for the week ending 22 July, according to the latest data from STR, parent company of Hotel News Now.

Revenue per available room growth remained slightly positive, up 0.4% to $102.85, pushed completely by a 0.5% increase in average daily rate to $131.86 as occupancy dipped 0.2% to 78%.

Among the top 25 markets, RevPAR growth was highest (+9% to $235.25) in San Francisco/San Mateo, California, which lately has been hampered by the closing of the Moscone Center for renovations. That market was helped by strong rate growth of 7% to $249.79.

Compiled by Sean McCracken.

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