5 things to know: 12 February 2016
12 FEBRUARY 2016 9:34 AM
From the desks of the Hotel News Now editorial staff:
• Conflicting warning signs of next US recession
• Asian hotel sector might see fewer deals in 2016
• Preliminary January data shows mixed US figures
• Global growth, lighter model in Loews’ plans
• Liverpool bank to undergo £50m hotel transformation
Conflicting warning signs of next US recession: While the markets are showing signs that a U.S. recession may be in the near future, the economic data disagrees, the Wall Street Journal reports.
The Dow Jones industrial Average dropped 14.5% from its high in May 2015, yields on risky bonds are climbing while investors seek safety in the U.S. treasury and oil is at its lowest in more than a decade, the newspaper reports. In contrast, January saw healthy job growth and employers are still trying to fill vacancies.
“This dichotomy is neatly captured by two indexes compiled by Cornerstone Macro,” according to the Wall Street Journal. “One, using financial indicators such as the stock market and corporate bond yields, puts the probability the U.S. is now in recession at 50%. The other, which adds in macroeconomic data such as loan delinquencies and inflation-adjusted income, puts the probability at just 28%.”
Asian hotel sector may see fewer deals in 2016: Although 2015 was a year full of deal-making in the Asian hotel sector, Jones Lang LaSalle predicts 2016 will be a cooler year with volumes reaching $8.5 billion, according to Channel NewsAsia. That total would be an 8% decrease from the previous year.
The real estate consultancy believes hotel transaction volumes hit their peak in Hong Kong in 2015 and investors will take a “wait and see” approach this year, the publication reports. Singapore also will likely have fewer deals as there is a lack of available assets.
However, JLL sees Japan, Australia and India as brighter spots in the region, the publication reports.
Preliminary data shows mixed US figures: The preliminary data for the U.S. hotel industry for January 2016 shows decreases in occupancy with increases in average daily rate and revenue per available room, according to STR’s preliminary report. STR is HNN’s parent company.
Overall occupancy in the U.S. dropped between 0% to 2% in January, according to preliminary figures, with the midscale and economy sectors seeing the largest percentage decrease of between 1% and 3% each. ADR in January overall increased by 2% to 4%, with upper upscale, upscale and economy sectors seeing increases in that range. RevPAR overall for the industry grew by 1% to 3% for the month, with the upper upscale, upscale, upper midscale and economy sectors increasing within that same range. Luxury was the worst performer for both rate and revenue, dropping between 0% and 2% in both ADR and RevPAR.
Global growth, lighter model in Loews’ plans: Loews Hotels & Resorts intends to take its three-pronged brand platform and leverage it for worldwide expansion, writes HNN’s Jeff Higley.
Higley spoke with Loews President and CEO Kirk Kinsell at January’s Americas Lodging Investment Summit to learn more about the company’s plan for growth. Kinsell said the company intends to move from being asset-heavy to asset-medium with a mix of management contracts and an owned position in a hotel.
“Ideally we could find a multi-hotel acquisition,” Kinsell said. “Yes, we’ve looked at (merger and acquisition) opportunities, but again not to be a player on the big, big landscape but more so just making sure that we can find a way forward that puts us in those strategic markets in the top 25 gateway markets in the U.S. and for that matter globally.”
Liverpool bank to undergo £50m hotel transformation: The Martins Bank, a historic building in Liverpool, will go through a £50-million ($72.3 million) renovation into a 227-room luxury hotel, Move Commercial reports.
Hotel and conference center provider Principal Hayley Group will develop the property with the goal of creating the city’s first 5-star accommodations. The company purchased Castlewood Securities, the owner of Martins Bank. The property is expected to open in late 2017 or early 2018.
Transforming historic buildings into hotels has grown increasing popular recently in the U.K.
Compiled by Bryan Wroten.