There was a lot of talk of a slow recovery settling over the hotel industry during 2010 and 2011 at the Americas Lodging Investment Summit this year. But the overflow crowd attending an ALIS breakout panel devoted to providing information on what to do during a bankruptcy served as a stark reminder that, while the future might hold better times for the industry, the present remains challenging.
HEI Hotels & Resorts is sitting on a pile of cash and is waiting to strategically place it as an economic recovery looms. Steve Mendell, the Norwalk, Connecticut-based company’s newly appointed president of acquisitions and development, said during an interview at last week’s Americas Lodging Investment Summit that he expects a turnaround to come slowly.
Starwood Hotels & Resorts Worldwide Inc. (HOT) swung to a loss in the fourth quarter on charges related to its vacation-ownership business. But, the hotelier's improved outlook for 2010 is poised to be a positive harbinger for lodging companies reporting in its wake and provide a lift for hotel stocks this session. Amid strengthening demand, Starwood projected 2010 earnings of 63 cents a share, versus the 56-cent average prediction from a poll of analysts by Thomson Reuters. The company also revised its 2010 outlook for revenue per available room or revpar, a key measurement of profit, from flat to up 5%, from a range of flat to down 5% it established last year.
-“I am shocked to report that during an industry study, hotels ranked No. 1 in brand disloyalty, while airlines came in second out of 26 industries …” So said moderator Adam Weissenberg, vice chairman and national managing partner of Deloitte & Touche LLP, during his opening remarks in the Hotel Leaders Outlook panel at the Americas Lodging Investment Summit held at the Hilton San Diego Bayfront. Although that report is a bit disconcerting, the industry experts that spoke on the panel managed to focus on the positives: the good things they learned in 2009; and strategies for 2010.
Ailing hotel owner and operator Lodgian Inc. (LGN) agreed to a $54 million takeover by real-estate private-equity firm Lone Star Funds. Lodgian Chief Executive Daniel E. Ellis said Friday that the deal will provide shareholders with "meaningful value" and will bring some financial strength to the firm's assets. The real-estate investment trust has had trouble paying debt on loans backed by its properties.
Shares of hotels climbed Thursday, with several setting 52-week highs, on hopes revenue per available room, or revpar, could turn positive sooner than previously expected. "Industry-wide revpar has been improving at a rate that would suggest that we turn positive sometime before consensus, which is currently mid-2010," Collins Stewart analyst Bryan Maher said. He added he believes revpar, a key industry measure of profitability, will turn positive in April, but it could happen as soon as the first quarter if trends hold.
Most people are elated that 2009 is over, ready to write last year off and bid it good riddance. We witnessed the collapse of financial institutions, the closing of major automotive manufacturers, a record number of housing foreclosures and a ballooning unemployment rate.
Big-name investors have swooped in on two high-profile commercial real-estate assets in a sign that activity is returning to the investment-property market. Private-equity firm CIM Group has teamed up with New York developer Harry Macklowe to help him regain control of what is regarded as one of the most valuable vacant lots in the world, according to people familiar with the matter. The site of the old Drake Hotel, in Midtown Manhattan at Park Avenue and 56th Street, has been under the cloud of foreclosure for about five months after the collapse of Mr. Macklowe's empire.
Blackstone Group LP is aiming to control the restructuring of hotel owner Highland Hospitality Corp. after purchasing a key slice of Highland's debt from Wachovia Corp., according to people familiar with the matter.
Interstate Hotels & Resorts Inc. (IHR) will be bought for $307 million by a joint venture of hotel investors Thayer Lodging Group and Jin Jiang International Holdings Co. The deal comes amid a slump in hotel performance and investors looking to purchase properties at heavily discounted prices. Interstate Hotels holders will get $2.25 a share, a 77% premium over Thursday's closing price. Interstate's lenders have approved the transaction, subject to certain paydowns at closing, and is slated to close in the first quarter.
Are we there yet? Remember the days when this question referred only to the seasonal trip to the in-laws or the start of the mandatory summer vacation road trip? Today it is primarily in reference to the end of the recession. Are we there yet? By all accounts, nobody really knows and given the long-term time horizons of hotel development and ownership, it really shouldn’t matter. What matters is the direction our industry is headed, recession or not. Unfortunately, the consensus seems to think we are heading into a year that by all measures will be worse than 2009. Is that possible?
A real estate investor hopes to raise $350 million in an initial public offering this week, eyeing acquisitions in the nation's downtrodden hotel market. Pebblebrook Hotel Trust plans to use cash from its IPO to purchase upscale hotels it believes will be available at deep discounts because of ongoing turmoil in real estate markets and in the hospitality industry. The deal is referred to as a "blank-check" IPOs, which means it doesn't have an operating business and intend to use proceeds from the IPO to make acquisitions.
In a sign that Dubai World may struggle to keep its prized assets, the sovereign wealth fund’s investment unit Istithmar lost control of its W Hotel in Manhattan in a foreclosure auction on Tuesday for $2 million, after buying the property for $282 million in 2006.
Merv Griffin, the celebrity CEO and “Jeopardy” game show creator, couldn’t find the answer. Sol Kerzner, of Sun International Hotels fame, got burned. Tom Barrack, once dubbed “The World’s Greatest Real Estate Investor” by Fortune magazine, faced possible foreclosure. Despite promises to the contrary, all of them failed to turn Resorts Atlantic City into a top casino during their ownership over the years. Now it’s Mr. Lender’s turn to try.
Want to buy a hotel? 2010 may be just the time. Hopes for an economic turnaround are prompting some hotel investors to get back in the long-dormant acquisition game, laying the groundwork for what could prove to be an active acquisition market next year.
Hyatt Hotels (H), a global upscale hotel operator and developer owned by the Pritzker family, is expected to go public this week. Family squabbles and corporate governance issues cloud an eagerly anticipated IPO.
A year ago, the average Shore Club room took in nearly $200 a night during the slow summer travel season. This summer, the hotel barely generated $100 per room. Add in revenue from the bar and restaurants -- favorite stops for celebrities on the South Beach party circuit -- and the numbers get worse: Profits plunged 113 percent at the Shore Club this summer, a rough stretch that saw the 309-room hotel fall behind on its mortgage.
This week's IPO of Hyatt Hotels Corp. will be a big test for the offerings market. After investors warmed to new issues this past summer, they lately have gotten much more picky, pushing issuing prices down, as well as the prices of companies that debuted in recent months. Hyatt, the world's 10th-biggest hotel chain by number of rooms, hopes to raise as much as $988 million and will take the single-letter H ticker symbol when it debuts on the New York Stock Exchange. But the initial public offering will expose the chain's own struggles at a time when rising volatility in the stock market has made IPOs less attractive.
Expedia Inc.'s third-quarter earnings rose 23% amid higher bookings and increases in hotel and car rental revenue. A prolonged travel slump has hurt online travel-booking companies like Expedia. The industry has been dropping booking fees to capture more business from airlines' Web sites, though the move eliminates a valuable revenue source. Major online travel agencies also have provided some price guarantees and have been offering more flight-and-hotel packages, boosting their market share, though it is unclear whether they can maintain their momentum once the economy improves.
Wyndham Worldwide Corp.'s (WYN) third-quarter profit decreased 27% as the company's hotel and timeshare businesses continued to suffer amid broad industry weakness. The company also expects fourth-quarter earnings of 35 cents to 38 cents a share. Analysts polled by Thomson Reuters expected 32 cents. It also reaffirmed its 2009 earnings forecast. Shares were up 1.9% to $17 in premarket trading as the third-quarter results edged forecasts. The stock has more than doubled this year.