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1. Flynn and Värde Acquire 80% Interest in 89 US Hotels
A joint venture of Flynn Properties and Värde Partners has acquired an 80% interest in 89 select-service and extended-stay hotels in the U.S. with an implied total enterprise value of $1.1 billion, reports HNN's Bryan Wroten. The sellers, affiliates of Highgate and Cerberus Capital Management, will retain the remaining 20% interest. Highgate will continue to operate the properties.
The portfolio comprises 58 hotels from Marriott International, 24 from Hilton, four Radisson Hotel Group, two from IHG Hotels & Resorts and one from Choice Hotels.
2. US, UK Face Continued Labor Headaches
In the summer, hoteliers in the U.S. started to see the pain of labor shortages begin to ease, but there remain staffing shortfalls, notably in housekeeping and culinary departments, reports HNN contributor Danny King. Hoteliers are benefiting from a loosening labor market as perks such as higher salaries, retention bonuses and more flexible work schedules appear to be drawing workers back into the hospitality industry.
In the United Kingdom, Keir Starmer, the leader of the opposition Labour Party, said the country needs a dual focus on paying higher salaries to offset the need for immigration, long a bone of contention of many voters, while at the same time realizing the need that some immigration is needed to fill some roles, according to the BBC. Speaking to business leaders at the annual conference of the Confederation of British Industry, Starmer said, “We will expect you to bring forward a clear plan for higher skills and more training, for better pay and conditions, for investment in new technology. But our common goal must be to help the British economy off its immigration dependency. To start investing more in training up workers who are already here.”
3. Invasion of Ukraine to Dampen Global Growth At Least Through 2024
According to the Organization for Economic Co-operation & Development November Economic Outlook, the global economy is expected to slow further across the rest of 2022 and through 2023 and 2024. Russia's invasion of Ukraine in particular "has provoked a massive energy price shock not seen since the 1970s," and the increase in energy prices is taking its toll on global growth.
In its latest Economic Outlook, the OECD said, “tighter monetary policy and higher real interest rates, persistently high energy prices, weak real household income growth and declining confidence are all expected to sap growth.”
4. PwC Forecasts Stronger Hotel Headwinds in 2023
The U.S. hotel industry has enjoyed a mostly steady recovery from the pandemic, with revenue per available room growth driven primarily by strong average daily rates, reports PwC. The company’s latest Hospitality Directions U.S., however, points to several challenging economic factors that could change that trajectory next year.
The report cites continuing interest rate increases, inflation and potential increases in unemployment as reasons for concern.
“Tightening financial conditions, continually heightened inflation levels, and recent, as well as expected future policy rate increases are resulting in a worsening short-term outlook for the U.S. economy, increasing the likelihood of a recession beginning late this year,” according to the report.
5. Woman Sentenced to 20 Years For Hotel Fraud
A woman convicted of fraudulently soliciting large sums of money from investors to construct a Southern California hotel that never existed has been sentenced to 20 years in prison, according to a news release. She pleaded guilty in October 2021 to one count of wire fraud.
According to the release, Ruixue Shi had entered an agreement with developer Dakota Development, a subsidiary of Los Angeles-based hotel firm SBE Entertainment, part owned by Accor, to open a property its Hyde Resorts brand. Between 2015 and 2018, Shi was accused of taking money from investors, most of whom were investors from China, to build a 207-room hotel and condominium property in the California city of Coachella. Instead of starting work, she spent the money on luxury cars, travel, clothing, dining and shopping. She also spent $800,000 at a full-service styling agency in Beverly Hills.
Along with her prison sentence, she was ordered to pay back more than $35.8 million.