From the desks of the Hotel News Now editorial staff:
- US unemployment at 16-year low
- More Chinese investment regulation expected
- Hyatt defends asset strategy
- RLJ and Ashford report Q2 earnings
- On-demand food delivery pressures roomservice
U.S. unemployment at 16-year low: The U.S. economy added a seasonally adjusted 209,000 jobs in July, according to a report from The Wall Street Journal citing the U.S. Department of Labor, and the unemployment rate of 4.3% matches a 16-year low last reached in May.
The jobs report wasn’t entirely good news, though, as The Journal reports that wage growth remains relatively slow at 2.5% year over year for July. The newspaper says the overall good report could increase the likelihood of another interest-rate increase from the Federal Reserve later in the year.
Underemployment for the month remained steady at 8.6%.
More Chinese investment regulation expected: Reuters reports today the Chinese government is expected to tighten regulatory oversight on foreign spending and borrowing by Chinese companies. Those companies are now being told by regulatory bodies “to justify terms, including target valuations, deal premiums and financing arrangements.”
The New York Times had previously reported investment regulations in the country were a significant roadblock for HNA Group in its mandatory bid for Rezidor Hotel Group shares in Europe. And Reuters claims the regulations are already having a noticeable impact on foreign deals volume for Chinese companies.
“China's outbound M&A volumes nearly halved in the first six months of this year to $64.2 billion following a crackdown on capital outflows, after Chinese companies spent a record $221 billion on assets overseas in 2016, according to Thomson Reuters data,” Reuters reports.
Hyatt defends asset strategy: Analysts continue to question whether Hyatt Hotels Corporation is looking to shift to an asset-light strategy similar to many other hotel brand companies, but President and CEO Mark Hoplamazian said his company is committed to keeping a pool of owned assets. Executives don’t want to grow that pool at the speed or breadth of Hyatt’s fee-based franchise and management business, he said, but they still need a pool of capital to help grow brands.
He pointed to the growth of the company’s two select-service brands, Hyatt Place and Hyatt House, of evidence of this strategy working.
Their growth is “not by happenstance,” he said. “That’s not by coincidence or luck. We actually were aggressive through the use of capital to significantly expand those brands, and we did it in a deliberate way to reach critical mass and penetrate urban markets.”
RLJ and Ashford report Q2 earnings: RLJ Lodging Trust and Ashford Hospitality Trust are two of the latest companies to report their second-quarter performance numbers to investors. Here’s a look at how they fared in Q2:
RLJ: The company saw decreases in net income (-27.7% to $42.5 million), occupancy (-2.1%), average daily rate (-1.2%) and revenue per available room (-3.4%). The company pointed to the Easter holiday shift and “convention center closures” as headwinds for the quarter. RLJ officials revised their RevPAR guidance for the full-year lowering the range to between -2% and -1% from -1% to 1%.
Ashford: RevPAR was at least positive for Ashford, with all hotels up 0.5%. That number was dragged down by renovations, as RevPAR growth for hotels not under renovation was 1.4% for the quarter.
On-demand food delivery pressures roomservice: The Chicago Tribune reports some hotels in Chicago have reinvented their approach to roomservice, and now use partnerships with local restaurants to deliver directly to rooms as opposed to operating their own kitchens.
"The economics of running a food-and-beverage operation can be a strain, so (some hotel operators) are looking for more creative ways to serve guests," said Scott Berman, the U.S. hospitality and leisure practice leader at PwC, told the newspaper.
For example, The Kinzie Hotel in Chicago partnered with the gastropub Public House next door as the only provider of roomservice meals to its guests.
Compiled by Sean McCracken.