5 things to know: 10 May 2019
5 things to know: 10 May 2019
10 MAY 2019 8:17 AM

From the desks of the Hotel News Now editorial staff:

  • Pockets of strength overcome headwinds for RLJ
  • US increases tariffs on Chinese goods
  • Preliminary April data for US hotels
  • Santa Monica developer fined $15.6m for luxury hotel
  • Traverse City hotels face labor challenges

Pockets of strength overcome headwinds for RLJ: RLJ Lodging Trust saw a softer first quarter for some of its hotels, but assets in Northern California, Atlanta and Louisville made up for that, HNN’s Robert McCune writes. 

Revenue per available room grew 1.3% year over year across RLJ’s portfolio during the quarter, which was “lifted by gains in its Northern California (+15.5% RevPAR) and Louisville (+13.5% RevPAR) markets. Atlanta, which typically is not a top-10 market for RLJ, recorded a 20.9% increase in RevPAR as a result of demand from Super Bowl LIII,” McCune writes.

Headwinds such as the impact of the government shutdown in Washington, D.C., and disruptive renovations at hotels in some of RLJ’s top-10 markets created a drag on performance.

“While the overall economy expanded at a robust clip in the first quarter, components of the economy that closely correlate to our industry, such as business and consumer spending, decelerated,” RLJ President and CEO Leslie Hale said.

U.S. increases tariffs on Chinese goods: The Trump administration raised tariffs on $200 billion of Chinese goods to 25% on Friday, The Wall Street Journal reports.

The tariff increase went into effect after the U.S. and China met on Thursday “in hopes of getting the troubled trade talks back on track,” the news outlet reports. Trade talks between the two countries will resume on Friday, but the U.S. government isn’t delaying the tariff increase from 10% to 25%.

China has rejected claims from the U.S. that the country tried to renegotiate in trade talks.

Preliminary April data for U.S. hotels: Preliminary April hotel figures from STR, HNN’s parent company, show that the total U.S. hotel industry should see occupancy for the month range between a 1% decrease to a 1% increase, and average daily rate and RevPAR growth to range from flat to a 2% increase.

Occupancy for the luxury hotel chain scale is expected to decline between 3% to 1% for the month. ADR is projected to grow between 1% a 3%, but RevPAR growth will range from down 1% to a 1% increase, preliminary data shows.

The economy segment is expected to see an occupancy range from flat 0% to up 2%; however, ADR is expected to come in between down 1% and up 1%, and RevPAR is expected to be flat to down 2%.

Santa Monica developer fined $15.6m for luxury hotel: A hotel developer in Santa Monica, California, is being fined $15.6 million by the California Coastal Commission for building a luxury boutique hotel without a permit, The Associated Press reports.

The developer, Sunshine Enterprises, was given a permit in 2009 to tear down two budget motels and replace them with two other affordable hotels. The developer’s permit expired, and the company carried on on with its plan to build, but instead built the Shore Hotel, a luxury boutique property, in place of the motels.

The developer was in violation of a state law “that enshrines public access to beaches,” the Coastal Commission told the AP. Members were concerned the higher price point of the boutique property would exclude travelers with smaller budgets as there are a “dwindling number of affordable accommodations along a tourist-heavy strip of pricey hotels near the Santa Monica Pier.”

The commission has yet to decide if it will charge Sunshine Enterprises $5.9 million more in mitigation fees that tie into new permit approval.

Traverse City hotels face labor challenges: Hotels in Traverse City, Michigan, are having a hard time finding seasonal labor due to low unemployment rates, The Ticker reports. Adding to the issue is “new competition for the popular H-2B visas for foreign workers.”

With a shortage of people looking for jobs in the U.S., some local hoteliers have relied on H-2B visas, which allow companies to employ temporary nonimmigrant foreign workers, to staff their properties.

Trevor Tkach, president of Traverse City Tourism, told the news outlet that H-2B visas are needed in destinations driven by tourism, such as Traverse City.

“H-2Bs help destinations with extreme seasonal demand swings and limited local workforce to supplement employment needs,” Tkach told the news outlet. “They are often jobs that would otherwise go unfilled if not for the H-2B program.”

Compiled by Danielle Hess.

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