From the desks of the Hotel News Now editorial staff:
- Labor, automation, distribution key issues for CEOs
- New overtime proposal expected from US labor officials
- Owner of Ace Hotel Chicago seeking $100m for hotel
- US hotel results for week ending 2 March
- ECB reverses policy, unveils plans for new stimulus
Labor, automation, distribution key issues for CEOs: Brand CEOs speaking on the “Adapting to survive and thrive” panel at the International Hotel Investment Forum in Berlin provided some insights into some of the biggest issues facing the hotel industry, reports HNN’s Stephanie Ricca.
“Every year there are more distributors connecting to our industry,” said David Kong, president and CEO of Best Western Hotels & Resorts. “You need your product on shelves, and there’s no end to it. You have to think about yield management. How do you yield-manage so many different channels with so many rate goals?
“You have to look at the history of pace, the dynamic bookings and the rate paid to all those,” he said.
There are tools that consolidate rate codes, making it easier for properties to assign inventory and set rate, Kong said.
New overtime proposal expected from U.S. labor officials: The U.S. Department of Labor is expected to release its new proposed threshold on overtime as early as this month, The Wall Street Journal reports. The current threshold of $23,660 a year set in 2004 is expected to increase to about $35,000 a year.
The Labor Department has been working on setting a new threshold since a federal judge halted its previous proposed rule of $47,476 a year under the Obama administration in 2016, the article states. The new proposal is also expected to require future increases in the threshold to come from rule-making, rather than a formula as under the Obama-administration’s proposal.
“It’s a more reasonable number,” said Glenn Spencer, head of the U.S. Chamber of Commerce’s employment policy division. “I don’t think employers will be out celebrating in the streets, but it’s easier to handle than $47,000.”
Owner of Ace Hotel Chicago seeking $100m for hotel: Developer Sterling Bay is seeking $100 million for the 159-room Ace Hotel Chicago, which opened in 2017, Crain’s Chicago Business reports. Should the hotel sell with a per-key cost of about $629,000 per room, it would be the second-most expensive traditional hotel sale in the city’s history.
Sterling Bay entered into an agreement with Google to build a hotel across the street from Google’s Midwest headquarters and purchased the two-story industrial building for $4 million in 2013, according to the article. The developer took out a $41.5-million loan in 2016 for the hotel and refinanced it last year with a $44-million loan.
The Ace Hotel Chicago is expected to see more business demand as other companies continue to open up in the area. It should also see more leisure travel as the city is experiencing a seven-year streak of record-high tourism. However, the area is also expecting additional competition from new hotels opening over the next several months.
U.S. hotel results for week ending 2 March: The U.S. hotel industry reported mixed year-over-year performance for the week ending 2 March, according to data from STR, parent company of HNN. Occupancy dipped by 1% to 65.3%, but average daily rate increased by 1.3% to $127.59, resulting in revenue-per-available-room growth of 0.3% to $83.36.
Among the top 25 markets, New Orleans, Louisiana, reported the largest increase in RevPAR, which grew 37.9% to $151.37 mainly due to the ADR growth of 33.1% to $199.22. STR attributes the growth in ADR and RevPAR to the Mardi Gras holiday calendar shift.
The Philadelphia, Pennsylvania-New Jersey, market recorded the steepest declines in the three key performance metrics. Occupancy dropped 10.7% to 63.6% and ADR fell by 4.7% to $121.42, resulting in RevPAR falling 14.9% to $77.17.
ECB reverses policy, unveils plans for new stimulus: The European Central Bank unveiled its plans for new stimulus measures in response to an economic slowdown in the continent, The Wall Street Journal reports. The central bank had phased out a €2.6-trillion ($2.9 trillion) bond-buying program three months ago.
The ECB will maintain current interest rates through the remainder of 2019 and offer less expensive long-term loans for banks later this year, according to the article.
“The persistence of uncertainties related to geopolitical factors, the threat of protectionism and vulnerabilities in emerging markets appears to be leaving marks on economic sentiment,” ECB President Mario Draghi said at a news conference Thursday.
Compiled by Bryan Wroten.