HotelNewsNow.com each week features a news roundup from a different region of the world. Today’s review covers the Americas.
Performance metrics up in Americas
The Americas region recorded positive results in the three key performance metrics when reported in U.S. dollars for April 2012, according to data compiled by STR and STR Global.
The Americas region reported a 1.4% increase in occupancy to 61.8%, a 4.3% gain in average daily rate to $108.25 and a 5.8% jump in revenue per available room to $66.95.
Among the region’s key markets, Santiago, Chile, reported the largest occupancy increase, rising 7.3% to 74.2%, followed by Chicago, Illinois (+6.1% to 66.3%), and Los Angeles, California (+6.1% to 75.2%). Panama City, Panama, fell 8.8% in occupancy to 54.8%, ending the month with the largest occupancy decrease, followed by Sao Paulo, Brazil, with a 6.7% decrease to 65.5%.
Three markets experienced double-digit ADR increases: Santiago (+21.1% to $209.66); San Francisco, California (+11.3% to $152.44); and Chicago (+10.1% to $119.96). Panama City fell 15.4% in ADR to $118.14, reporting the only double-digit decrease in that metric.
Santiago (+29.9% to $155.57) and Chicago (+16.8% to $79.50) achieved the largest RevPAR increases for the month. Panama City fell 22.9% in RevPAR to $64.77, posting the largest decrease in that metric.
Accor sells budget brands to Blackstone
Accor has taken another step in the evolution of its hotel portfolio via the sale of its North American Motel 6 and Studio 6 brands to a Blackstone Group affiliate for $1.9 billion.
The 1,102 hotels, acquired by an affiliate of Blackstone Real Estate Partners VII, comprise 107,347 rooms in the United States and Canada.
“I am delighted by the transaction signed with Blackstone, which ensures the future of Motel 6 and its teams in North America, where we will remain present with luxury and upscale flagships under the Sofitel and Novotel brands,” Accor Chairman and CEO Denis Hennequin said in a news release. “This deal will provide Accor with additional resources to address the tremendous growth potential in the Asia Pacific region, in Latin America and in Europe, where the leadership of our brands is one of the key drivers of our future growth.”
A Reuters report said the deal is the biggest in the U.S. hotel industry since the $3.93-billion acquisition of Extended Stay America in 2010, which also included Blackstone.
Blackstone is already an industry heavyweight and owns several hotel brands, including: Hilton Worldwide, La Quinta Inns & Suites, Extended Stay America and Mint Hotels. As of November 2010, it was reported the company owned, managed, franchised, leased or had joint-venture interest in 5,950 hotels with 892,608 rooms.
Marriott acquires Gaylord brand, management company
Gaylord Entertainment Company has triggered a radical reorganization, selling its management company and brand to Marriott International while at the same time transforming itself into a real-estate investment trust.
Marriott acquired the rights to manage Gaylord’s four hotels and its brand in a cash transaction for $210 million. Gaylord will continue to own the hotels post-deal. Meantime, Gaylord will reorganize and elect to be treated as a REIT focusing on group-oriented hotels in urban and resort markets.
The hotels will be managed under the Gaylord flag. Marriott will take a management contract with an initial 35-year term, 2% base management fee and an incentive fee linked to improvement in hotel profitability.
Marriott will work to grow the Gaylord brand, said Arne Sorenson, president and CEO of Marriott, during a conference call with analysts Thursday.
Marriott would take over management of the company's assets if Gaylord's shareholders approve the deal in a vote, which is scheduled for the third quarter.
"I can't think of another company that is as good a cultural fit as Gaylord," Sorenson said, adding the plan is to manage the hotels as a separate brand.
Colin V. Reed, Gaylord's chairman and CEO, said during the conference call the company had three other offers, but Gaylord's board unanimously chose Marriott because of its expertise as it relates to group meetings and Marriott's ability to drive transient demand, too.
Manhattan market still growing
In the first three months of 2012, Manhattan's occupancy levels saw significant improvement, while average daily rates continued to recover slowly, resulting in a robust increase in revenue per available room levels, according to a Manhattan Lodging Index by PricewaterhouseCoopers.
During the first quarter of 2012, Manhattan's occupancy levels increased 6.7% to 76.9%, continuing the trend seen in the second half of 2011. Manhattan hotels continued to regain pricing power, although at a slower rate, resulting in a 1.4% increase in ADR. This combination led to an 8.2% increase in RevPAR in the first quarter, compared to year-ago levels.
All segments experienced increases in RevPAR from year-ago levels during the first quarter, driven in most cases by a combination of occupancy and ADR growth. The upper midscale segment ended the first quarter with the highest increase in RevPAR, experiencing a 14.5% improvement over the prior year period, due to a 9.2% increase in occupancy, coupled with 4.8% growth in ADR. The upper upscale, luxury and upscale segments experienced RevPAR increases of 8%, 6%, and 5%, respectively, with the luxury segment being the only segment experiencing an ADR decrease for the quarter.
Caribbean hoteliers face issues, opportunity
Thanks to the long-lasting effects of the recession, there are many opportunities for investors looking to pick up distressed hotel assets in the Caribbean region.
Speakers at the Caribbean Hotel & Resort Investment Summit said the environment is rife with good deals as owners of troubled hotels are in some cases scrambling to unload them.
“This is the best time,” said Ralph Taylor, president and CEO of Almond Resorts—which has a handful of hotels on the market after getting into financial troubles of its own. “I do not believe you will see this movie again in our lifetime. You have entry prices that make a lot of sense.”
Taylor said would-be investors can turn to governments of many of the region’s island nations for help in acquiring assets.
“The governments in the Caribbean are running scared,” Taylor said, explaining that the increased unemployed caused by troubles in the hospitality industry are wreaking havoc for many countries. “Now is the time to talk to governments. Make them bring some of the money they have control of and put together joint deals.”
Steve Joyce, president and CEO of Choice Hotels International, responded to moderator Mark Lunt’s request to provide advice to investors by saying flexibility is key. Investors have to consider how their plans might change if it takes a year or two longer to execute a deal then they originally expected, he said.
Study: San Mateo tax hike would hurt business
Proposed travel tax hikes in San Mateo County, California, would damage the local economy, make San Francisco International Airport less competitive and generate far less revenue than county officials estimate, according to an economic impact study released conducted by Rockport Analytics.
Economists found that SFO could lose 100,000 vehicle rentals a year if just one of the measures were to pass.
"This study sends a clear message to San Mateo County voters: 'Vote No on new travel taxes,'" said Roger Dow, president and CEO of the U.S. Travel Association, in a news release. "Visitors spend more than $21 billion a year in the Bay Area. It is self-defeating to slap new taxes on travel goods and services because ultimately these taxes hit business travelers, families on vacation, or folks attending a convention or conference at the very time when their business is needed most."
The study analyzes two measures that San Mateo County voters will consider when they head to the polls on Tuesday: Measure T, a proposal to raise taxes on all SFO car rental receipts, and Measure U, a proposal to boost the hotel occupancy taxes on SFO-area hotels.
Opportunities abound in Latin America
Hotel investors are becoming increasingly captivated with the outlook for investment opportunities in Latin America, according to the results of Jones Lang LaSalle Hotels’ first Latin America Hotel Investor Sentiment Survey. The survey, conducted in April, found that a majority of the top 500 investors active in Latin America are targeting the gateway markets for purchases while broadening their scope to secondary cities for development.
Highlights from the survey:
- Investors’ outlook for hotel performance fundamentals across Latin America is exceedingly positive, with respondents most bullish on Mexico City, Brazilian metropolitan areas, Los Cabos and Cancun/Riviera Maya.
- Respondents’ targeted capitalization rate for the acquisition of an international-grade hotel averages 10.2% across Latin America.
- Hotel assets in gateway markets represent the biggest ‘buy’ targets; the highest sentiment to ‘build’ new hotels is reported for secondary cities; the survey suggests a considerable increase in the number of investors reviewing development feasibility in markets outside of the countries’ capital cities.
- Surging home-grown demand is dramatically boosting the performance of the lodging industry across Latin America, creating an attractive environment for growth.
Hyatt realigns in effort to lift performance
Executives of Hyatt Hotels Corporation are restructuring the company this year in an effort to increase performance and effectiveness.
The reorganization includes a realignment of the company’s operations and development teams and several senior management changes. Most notable is the departure of Hyatt’s CFO Harmit J. Singh.
Singh will remain in his position until 15 August and then move on to an executive VP position until 31 December. He will then move on to new opportunities. Gebhard F. Rainier, the company’s managing director of Europe, Africa and Middle East, will move to the CFO position effective 15 August.
Additional changes include the establishment of three operating regions—Asia; the Americas; and Europe, Africa and the Middle East—to be supported by a new global operations center.
A real-estate and capital strategy group also was formed to manage Hyatt’s hotel assets and provide development support around the globe.
Hilton bullish in Peru
Hilton Worldwide will open a Hilton Hotel in Lima, Peru, by the end of 2012, according to a news release.
Hilton has entered into a management agreement with JGJ Proyectistas SAC for the 207-room Hilton Lima Miraflores, located 13 miles from the international airport in Lima.
Chris Nassetta, president and CEO, said, “Peru, with its stable economy and continued growth, is a prime market for international travel, and we are delighted to be working with JGJ Proyectistas on bringing this exceptional property to one of Latin America’s most important cities.”
Hotel Nikko Mexico becomes Hyatt Regency
A Hyatt Hotels Corporation affiliate has completed an acquisition of the 756-room Hotel Nikko Mexico from Japan-Mexico Hotel Investment Co., Ltd. for approximately $190 million and the hotel has been rebranded as Hyatt Regency Mexico City.
Ramping up its expansion in Latin America, Hyatt also announced plans for eight Hyatt-branded hotels in Latin America, in addition to four previously-announced hotels under development, for a total of 12 Hyatt-branded hotels under development in Latin America. When these properties open, there will be a total of 20 Hyatt-branded hotels in the region.
Over the next three years, a Hyatt affiliate is expected to invest approximately $40 million to renovate Hyatt Regency Mexico City to strengthen the hotel’s competitive position as the preferred business and leisure hotel in Polanco, Mexico City’s most desirable area.