HotelNewsNow.com each week features a news roundup from a different region of the world. Today’s review covers the Americas.
Americas region continues rebound
The Americas region recorded positive results in the three key performance metrics when reported in U.S. dollars for April 2011, according to data compiled by STR and STR Global, respectively the parent and sister companies of HotelNewsNow.com.
The Americas region ended April with a 4.7% increase in occupancy to 61.2%, average daily rate was up 3.3% to US$103.53, and revenue per available room rose 8.1% for the month to US$63.35.
Among the key markets in the region, Rio de Janeiro, Brazil, achieved the largest occupancy increase, rising 13.1% to 77.4%, followed by Miami-Hialeah, Florida, with a 9.5% increase to 79.8%. Two markets posted occupancy decreases of more than 5%: Toronto, Canada (-8% to 63.4%), and Washington, D.C. (-6.0% to 73.7%).
Sao Paulo, Brazil, jumped 28.4% in ADR to US$147.95, reporting the largest increase in that metric. Rio de Janeiro (+15.4% to US$207.33) and Miami-Hialeah (+13.1% to US$170.73), followed Sao Paulo with the only other double-digit ADR increases. Washington, D.C. (-2.9% to US$151.28), and Toronto (-0.4% to US$138.37) reported the only ADR decreases for the month.
Three markets experienced RevPAR increases of more than 20%: Sao Paulo (+34.4% to US$103.46); Rio de Janeiro (+30.6% to US$160.48); and Miami-Hialeah (+23.8% to US$136.25). Two markets posted RevPAR decreases: Washington, D.C (-8.8% to US$111.55), and Toronto (-8.4% to US$87.78).
U.S. leads upward trend
The U.S. hotel industry posted increases in all three key performance measurements during April 2011, according to data from STR.
In year-over-year measurements, the industry’s occupancy was up 4.9% to 61.2%, its ADR ended the month with a 2.8% increase to US$100.55, and its RevPAR rose 7.9% to US$61.51.
“The U.S. hotel industry continues to show signs of recovery as the April performance indicates,” said Amanda Hite, STR’s president. “Though Easter, a traditionally slow travel period, did have some affect on performance, the industry ended the month with positive movement. Of particular note is the 2.8% increase in ADR. As rates continue to rise, the gap between current levels and the peak levels of 2008 lessens, which in turn makes hoteliers more comfortable about the operating environment. With the summer travel season right around the corner, we expect to see even stronger performance gains across the board.”
Among the top 25 markets, Houston experienced the largest occupancy increase, rising 14.8% to 64.1%. Four other markets posted occupancy increases of 10% or more: Nashville, Tennessee (+11.2% to 65.4%); Norfolk-Virginia Beach, Virginia (+10.8% to 59.2%); Orlando, Florida (+10.8% to 76.4%); and Minneapolis-St. Paul, Minnesota-Wisconsin (+10% to 64.1%). Washington, D.C., fell 6.0% in occupancy to 73.7%, reporting the largest decrease in that metric.
Supply boost mutes New York’s performance
Following a high-octane 2010, New York’s hotel performance has pulled back this year.
Year-to-date through March, New York’s occupancy slipped 2.6% to 70.2%, its ADR is up 4.6% to US$197.29, and its RevPAR ticked up by 1.9% to US$138.45, according to data from STR.
All of those metrics are down when compared to the market’s 2010 performance. Year-end occupancy was 81%, ADR was US$232.60, and RevPAR was US$188.38.
That stellar performance lured a number of developers into the market, and the resulting uptick in supply has made for a muted 2011 thus far, said STR VP Jan Freitag.
There are 173 projects comprising 20,650 rooms in the city’s active pipeline as of April 2011, according to STR/ McGraw-Hill Construction Dodge. There are 53 hotels in construction in New York, comprising 6,712 rooms.
“We’re seeing the fallout of that now,” Freitag said of the development rush.
Schrager names new concept
One of Ian Schrager’s newest ventures—two new hotel brands under his new private hotel company, Schrager Hotels—has gone “public” with its name.
With the transformation of the iconic Ambassador East Hotel in Chicago into PUBLIC Chicago, Schrager hopes to revitalize “the hotel concept itself” and provide “another worldwide wakeup call for the entire industry.”
Schrager told HotelNewsNow.com in December there are hundreds—potentially an oversupply—of spinoffs of the 4-star boutique hotel he created during the mid-1980s, but he sees potential just below and just above that space in the market.
In a more recent news release, Schrager said he leads the pack and sets trends; he never follows them. “Now in his fourth decade of creating magic with groundbreaking experiences in nightlife, hospitality and residential living, Schrager has nothing left to prove; but he still has something to say,” the release says.
Chinese spur growth in Caribbean
The Chinese government is investing heavily into myriad markets throughout the Caribbean region, and a representative from the country said during the Caribbean Hotel & Tourism Investment Conference he expects investment from the private sector to follow.
As Caribbean hoteliers and tourism officials partner with Chinese investors, they must at the same time be preparing for an influx of demand from outbound Chinese travelers, said Adam Wu, COO of the China Business Network.
The most prominent Chinese investment project is the Baha Mar resort, which is under construction on Cable Beach in the Bahamas, just south of eastern Florida. Baha Mar is the first tourism project outside China for the state-owned Export-Import Bank of China and general contractor China State Construction and Engineering Corporation. The project, which is being financed by a 20-year, US$2.4-billion loan from the Export-Import Bank as well as a US$150-million investment from China State Construction and Engineering, broke ground in late February.
“The Chinese government has a policy, Go Global, which encourages both state-owned enterprises and private companies to invest in international markets,” Wu said. “There is no myth; it’s a fact. What does China want in return? A good friendship.”
Wu suggested tourism officials in the Caribbean region should feel confident that, if the right partnerships are made, private investors in China will follow suit and invest in the same regions the Chinese government has.
Low-fee brand hits market
Hotel veteran Steve Belmonte has seen the good, the bad and the ugly in hotel franchising as head of Hospitality Solutions LLC. And after helping hundreds of clients work through “unreasonable terms, mandates and fees,” he saw a need for a low-cost, common-sense franchise fee structure.
The result was Centerstone Hotels, a new, three-tiered brand that boasts the lowest fees in the industry, Belmonte said.
The brand will launch during the next 60 to 90 days with up to 20 former hotels from Key West Inns as its backbone. Key West Inns founders, Neal and Cory Jackson, will share an ownership stake with Belmonte in Centerstone.
Key West Inns, which has 23 hotels in its portfolio pre-Centerstone conversion, will remain in business as a separate company and brand from Centerstone, said Neal Jackson, who will serve as the new entity’s president and COO.
“We’ve had initial conversations with all of the (Key West Inns) owners. At least 20 of them have indicated their desire to convert to Centerstone,” Belmonte said. “While this may be a new brand, we’re going to launch it with 20 hotels already open and operating.
“We have an infrastructure in place that we have expanded and built on,” he added.
CMBS defaults expected to hit 12%
Increasingly successful loan modifications and rising new issuance will not be enough to put a stop to rising commercial mortgage-backed securities loan defaults, which are likely to exceed 12% by the end of this year, according to Fitch Ratings in its latest annual fixed rate conduit loan default study.
Loan defaults increased 20% last year, with 1,477 loans totaling US$22.09 billion defaulting for the first time in 2010. Cumulative loan defaults increased to 10.6% (US$57.58 billion) through the end of last year, compared to 6.59% (US$35.49 billion) through the end of 2009.
The pace of loan defaults declined to US$3.5 billion during the fourth quarter of 2010 following a highwater mark of US$8.41 billion during the first quarter of 2010. “Although CMBS loan defaults declined over the course of 2010, it is still too early to predict a meaningful decline,” Fitch managing director Mary MacNeill in a news release. “Commercial real estate fundamentals are still lagging the overall economy.”
Omni Dallas to open ahead of schedule
Omni Hotels & Resorts announced it will open the Omni Dallas Hotel at Park West almost two months ahead of schedule, on 11 November. The convention center hotel and luxury property will host a large veteran’s event in honor of the Veteran’s Day celebration immediately after the property’s ribbon-cutting ceremony.
Following the 11 November event, the first group sales client, Dallas-based Freeman, will hold its national sales convention at the Omni Dallas Hotel 13 through 15 November. The Freeman group has booked approximately 800 roomnights.
Owned by the City of Dallas, the hotel was endorsed by voters in May 2009 and backed by the sale of nearly US$500 million in revenue bonds in August that same year. The property is located on eight acres in Dallas.
Westin marks milestones in Americas
The first Westin hotel in South America—The Westin Lima Hotel & Convention Center in Peru—has opened. The hotel features 301 rooms and the largest meeting and convention facilities in Peru.
Westin is also poised to make its debut in Panama with the upcoming openings of The Playa Bonita followed by The Westin Panama, and increase its presence in Mexico with the upcoming opening of The Westin Guadalajara this September.
In related news, Starwood Hotels & Resorts Worldwide has opened its first all-inclusive resort—The Westin Resort & Spa, Playa Conchal in Costa Rica. Renovation on the property formerly known as the Paradisus Playa Conchal Resort will include work on the hotel’s 406 suites and all public areas, which will be conducted in phases through December. The Westin Resort & Spa, Playa Conchal marks the return of Starwood to Costa Rica after 20 years.
Hyatt adds three Summerfield Suites in California
A Hyatt Hotels Corporation affiliate purchased three Woodfin Suites hotels in California for US$76.5 million from the beneficial owner O-B Holdings, a joint venture managed by Three Wall Capital LLC through its affiliates. Today, Hyatt affiliates began managing the three properties, which are being rebranded as Hyatt Summerfield Suites hotels. The acquisition increases by approximately 9% the Hyatt Summerfield Suites portfolio to a total of 38 locations in the United States. Future property renovations totaling US$15 million are planned.
"These properties are great additions to the Hyatt Summerfield Suites portfolio in markets where the brand is not currently represented," said Steve Haggerty, global head of real estate and development for Hyatt. "This acquisition marks a meaningful expansion of the Hyatt Summerfield Suites brand in three of California's largest metropolitan areas, supporting Hyatt's goal of becoming the preferred brand in all the segments we serve through the addition of hotels in locations where we know our customers are currently traveling."
The acquired properties are located in Cypress, Emeryville, and Sorrento Mesa, California.
Hyatt Summerfield Suites Cypress/Anaheim has 142 suites on three floors. Hyatt Summerfield Suites Emeryville/San Francisco Bay Area features 234 suites. Hyatt Summerfield Suites San Diego/Sorrento Mesa has 194 suites.
Noteworthy deals
• Pebblebrook Hotel Trust acquired the Viceroy Miami hotel for US$36.5 million. The 148-room, luxury, full-service hotel is located in downtown Miami in the ICON Brickell complex. The property will continue to be managed by Viceroy Hotel Group.
• Marriott International opened its third hotel in Panama, the 120-room Courtyard Panama MetroMall. This is the second Courtyard by Marriott hotel in Panama and is being developed and operated by Real Hotels & Resorts of El Salvador.
• Sonesta Collection opened its fourth hotel in Colombia, the 118-room Sonesta Hotel Cartagena. The hotel, and its sister properties in Bogota, Barranquilla, and Valledupar, Colombia; Peru; and Chile, are all branded Sonesta Hotels and managed by Colombia-based GHL Hoteles.
• Grand Solmar Land's End Resort & Spa Cabo San Lucas had its grand opening on 21 May. The hotel is the only new resort opening in Los Cabos this year. Grand Solmar Land's End Resort & Spa Cabo San Lucas marks the fifth property owned and operated in Cabo San Lucas by Grand Solomar.
• Z New York Hotel—a 100-room boutique designed by Andre Kikoski just over the 59th Street bridge—announced it will open in July.
• Sheraton Hotels will return to Omaha, Nebraska, after nearly 10 years with the opening of Sheraton Omaha Hotel in October. Owned by an investment fund managed by Latitude Management Real Estate Investors, the former Crowne Plaza will complete a US$4-million renovation to all guestrooms and public areas.
Compiled by Jason Q. Freed.