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1. Bank of England Raises Interest Rate by Half Percent
The Bank of England increased its key interest rate by 0.5%, the largest single increase in more than 25 years, the Wall Street Journal reports. Its key rate is now 1.75%, up from 1.25%.
The bank also warned the U.K. will enter its longest recession since the Great Recession later this year. The economy is expected to contract for five consecutive quarters starting in the fourth quarter of 2022.
Bank officials said raising the rate this much was necessary to return inflation to the targeted 2%, the newspaper reports.
“Returning inflation to the 2% target remains our absolute priority,” said Andrew Bailey, governor of the Bank of England. “Inflation hits the least well off hardest. If we don’t act…the consequences later will be worse.”
CoStar News' Paul Norman reports the Bank of England's successive interest rate rises have already contributed to a slow down in transactions across all commercial real estate asset classes, though some sectors may be poised to weather the storm better than others.
2. Vail Resorts Acquires Majority Stake in Swiss Resort
Vail Resorts announced it closed on its acquisition of the majority stake in Andermatt-Sedrun Sport AG, a destination ski resort in Central Switzerland, reports HNN’s Sean McCracken. This is Vail Resorts’ first investment and opportunity to operate a ski resort in Europe.
The company acquired a 55% ownership of the resort operations from Andermatt Swiss Alps AG, which will retain a 40% ownership stake with a group of existing stakeholders owning the remainder. Vail Resorts’ final purchase price of 149 million Swiss francs ($155.3 million) will be reinvested into the property.
3. Ashford Trust Will Sell Two Hotels To Deleverage Balance Sheet
Ashford Hospitality Trust plans to sell two of its hotels to help the real estate investment trust deleverage its balance sheet, reports CoStar News’ Candace Carlisle from the company’s second-quarter earnings call. The two hotels are considered non-core properties within Ashford Trust’s portfolio of 100 hotels.
"There's a reason these assets are on the market or for sale," Ashford Trust President and CEO Rob Hays said. "They either have lower [revenue per available room] on the full-service assets or they have [capital expenditure] needs, or they are select-service hotels that do not fit into our plans for long-term holds."
4. US Hotel Results for Week Ending July 30
U.S. hotel performance for the week ending July 30 dipped from the previous week, the traditional summer travel peak, according to data from STR, CoStar’s hospitality analytics firm.
When measured against the comparable week in 2019, occupancy dipped 3.8% to 71.9% while average daily rate rose 18.3% to $158.32, resulting in revenue per available room increasing 13.9% to $113.90.
Among the top 25 markets, Nashville reported the largest occupancy increase compared to 2019, growing 4.2% to 77.8%. San Diego, Boston and Oahu Island led the major markets in absolute occupancy at 87.4%, 85.5% and 85.3%, respectively.
5. US Weekly Unemployment Claims Increase to 260,000
The U.S. Department of Labor’s latest numbers show initial jobless claims increased slightly to 260,000 last week, up from 254,000 the week prior, the Wall Street Journal reports. Initial claims peaked this year at 261,000 in July.
U.S. economic growth has slowed this year as gross domestic product contracted during the first two quarters of the year, the newspaper reports. Businesses are continuing to hire workers despite risks of an oncoming recession, but companies have also been laying off workers and have had fewer job openings than earlier in the year.