HotelNewsNow.com each week features a news roundup from a different region of the world. Today’s review covers the Americas.
July demand continues to impress
In July, the U.S. hotel industry reported the largest number of rooms sold during a month, reporting a 3.6% increase over July 2010, according to data from STR. The industry sold more than 105 million roomnights in July. This is only the second time the industry has sold more than 100 million roomnights in any given month, the last time being July 2010.
Overall the U.S. hotel industry’s July occupancy increased 2.9% to 69.9%, average daily rate ended the month up 3.9% to US$103.09, and revenue per available room rose 6.9% to US$72.07.
Among the top 25 markets, Tampa-St. Petersburg, Florida, reported the largest occupancy increase for July, rising 13.5% to 61.5%. New Orleans was the only market to report decreases in all three key performance metrics. Its occupancy fell 15.6% to 61.3%, ADR dropped 1.7% to US$105.45, and RevPAR decreased 17.0% to US$64.67.
• Read “July demand increases 3.6%, reporting most roomnights sold.”
Americas pipelines remain muted
Tightened debt markets throughout the Americas continue to have an effect on new hotel construction as supply pipelines in most regions remain quiet.
The total active U.S. hotel development pipeline comprises 2,990 projects totaling 323,070 rooms, according to the July 2011 STR/McGraw Hill Construction Dodge Pipeline Report. This represents a 10.1% decrease in the number of rooms in the total active pipeline compared to July 2010.
The Central/South America hotel development pipeline comprises 170 hotels totaling 27,457 rooms, according to the July 2011 STR Global Construction Pipeline Report. As of 30 June 2011, 12 projects had opened in the region, representing 1,711 rooms. There are 34 more projects expected to open in the remainder of 2011, representing 6,338 rooms. In 2012, there are 42 projects scheduled to open, representing 6,741 rooms.
The Caribbean/Mexico hotel development pipeline comprises 125 hotels totaling 18,709 rooms, according to the July 2011 STR Construction Pipeline Report. Among the countries in the region, Haiti reported the largest expected growth (29.4%) if all 492 rooms in the total active pipeline open. Five other countries reported expected growth of more than 5%: Anguilla; St. Kitts/Nevis; Turks & Caicos; the Bahamas; and St. Lucia.
Brazil hotels continue revenue success
Brazil’s strong economic growth is spurring RevPAR gains in the hotel sector for the second consecutive year, according to a Jones Lang LaSalle Hotels’ study.
In 2010, the country posted the highest RevPAR growth rate on record at 17.3%, and hotel performance in 2011 is tracking at a similar increase, with growth on pace to reach the double-digit mark again this year, according to JLLH.
“Booming domestic and international travel demand in the country continues to drive up occupancy and average daily rates, or ADR, in markets across Brazil,” said Ricardo Mader, executive VP for JLLH in São Paulo. “The rise in ADR has outpaced the country’s GDP growth, highlighting the significant recovery in the sector.”
Investors are undoubtedly taking note, according to the study. “Following Host Hotels & Resorts’ acquisition of the JW Marriott Rio de Janeiro in the fourth quarter of last year, there has been an unprecedented uptick in the amount of international investors evaluating development opportunities in Brazil this year,” said Clay Dickinson, executive VP for JLLH. “The firm is advising private equity and institutional investors from the United States, Europe and Latin America on market expansion strategies. Investment funds from the Middle East and Asia have Brazil on their radar as well.”
San Francisco is booming
In the tale of two recoveries, San Francisco clearly has found itself on the right side of the tracks.
The city’s hotel industry is booming, leading the top 25 U.S. hotel markets in year-to-date growth for both average daily rate (14% to US$147.56) and revenue per available room (21% to US$114.56), according to HotelNewsNow.com’s parent company STR.
Overall for the U.S., industry averages clock in at a significantly slower pace, up only 3.5% in ADR and 8.2% in RevPAR.
Working in the hotel industry’s favor is the lack of new supply entering the market.
Whereas other strong markets like New York have faced an influx of new hotel rooms that have kept pace with increases in demand, there’s virtually no new supply in San Francisco’s pipeline.
STR counts only six properties in the planning phase of its total active pipeline. There are no projects under construction.
The reason, said Kimpton Hotel and Restaurant’s Joe Long, is simple: the cost to build. San Francisco is an incredibly expensive market in which to develop hotels.
Many investors have opted instead to buy their way into one of the city’s 397 existing properties.
“Over the last 12 months the city of San Francisco has seen the sale of nine major hotels for total dollar volume of over US$780 million,” said Alan Reay, president of Atlas Hospitality Group.
• Read “San Francisco hotels sail with steady demand.”
Hersha Hospitality Trust entered into an agreement to sell 18 hotels to Starwood Capital for US$155 million—the most hotels the real-estate investment trust has ever sold at one time.
The deal is right in line with most transaction experts’ expectations that portfolio sales will lead the transactions market recovery. Panelists at the third annual Hotel Data Conference in Nashville, Tennessee, earlier this month predicted more portfolio sales with buyers, especially REITs, broadening their interest to secondary and tertiary markets.
The 18 hotels transacted with Starwood Capital are all in secondary and tertiary cities in the eastern U.S. states. Hersha CFO Ashish R. Parikh told HotelNewsNow.com the REIT’s future plans are to concentrate its portfolio to only urban, high-barrier-to entry markets.
“These hotels are very good assets in very good locations, but the company over the past five years has gone from being secondary and tertiary owners to owning assets in the highest barrier-to-entry markets,” he said. “Most of these assets are considered non-core because they’re not in urban markets.”
• Read “Hersha: portfolio sale largest in REIT’s history.”
Kept Hotels plans expansion
Kept’s future plans surround sourcing, structuring and closing of hotel management and acquisitions, according to a news release. Jason Hsiang, formerly director of acquisitions and development for Morgans Hotel Group, has been named principal of acquisitions and development.
Marriott signs first Autograph Collection in Caribbean
The Scrub Island Resort, Spa & Marina in the British Virgin Islands will join Marriott’s Autograph Collection in early 2012, under a franchise agreement with Scrub Island Development Group. The luxury resort features 67 guestrooms, suites and villas and secluded beaches.
The resort will be the first Autograph Collection hotel in the Caribbean and Marriott International’s first property in the British Virgin Islands, according to a news release. The Autograph Collection portfolio now includes more than 20 properties in the United States and Europe. Marriott’s plans are to double the portfolio size by the end of 2011.
New AmericInn prototype under way
Construction has begun on a new AmericInn prototype featuring a contemporary new design located in Fairfield, Iowa.
The hotel is being developed by Apollo Development and is expected to open in March 2012, according to a news release. It will be managed by Three Rivers Hospitality. Apollo has previously developed five AmericInn properties located in Illinois, Nebraska and Iowa.
AmericInn’s new prototype will feature a new open lobby concept that encompasses a beverage bar and breakfast dining area that is designed to foster social interaction throughout the day. The first hotel will feature 64 guestrooms and suites.
Dave Harchako, general partner of Apollo, said the AmericInn Fairfield is also being constructed with special energy conservation features, including motion-monitoring energy management systems in all guestrooms, high efficiency windows, energy efficient construction and interior placement of the swimming pool to retain heat.
Ron Burgett, executive VP of development for AmericInn, said that additional AmericInn properties are under development nationwide, including another new construction by Apollo that is expected to break ground later this year.
Reynolds will lead new investment arm for Marcus
Bill Reynolds, formerly with Thayer Lodging Group, has joined The Marcus Corporation as senior managing director of MHR Capital, a newly formed hotel investment business with goals to act as an investment fund sponsor, joint venture partner or sole investor for hotel and resort properties, according to a news release.
Key openings, deals
• The Holiday Inn Bogota-Airport in Bogota, Colombia, opened as IHG’s sixth property in the country. The new-build, eight-story hotel features 191 rooms and is owned by Alianza Fiduciaria S.A. and will be operated by METRO hotels.
• HEI Hotels and Resorts purchased the 360-room San Diego Marriott La Jolla hotel, located in La Jolla, California.
• The first Best Western Premier in British Columbia opened in Sooke, British Columbia. The Best Western Premier Prestige Oceanfront Resort features 122 rooms and suites. There are now 13 Best Western Premier hotels throughout Canada and the U.S.
• IHG has signed on a Holiday Inn Express in the city of Rio Branco, Brazil, a new-build property slated to open in November 2013. The hotel will be owned by Inter-Oceanica Hotelaria e Turismo Ltda., and will feature 110 guestrooms.
• The 136-room Crowne Plaza Tuxpan, Mexico, has opened in the La Calzada neighborhood at the edge of the Tuxpan River. The Real Estate Group RICSHER, S.A. de C.V. owns the property.
Compiled by Jason Q. Freed.
Starwood Capital buys 18 hotels from Hersha