The Best of Daily Lodging Report for the Week Ending October 29

Skift’s Daily Lodging Report is a subscription-required, email-only newsletter read by anyone and everyone in the hotel investor, owner, and operator space, including CEOs of some of the industry’s top brands. With two separate regional versions, it covers everything from North America to Asia Pacific. The report itself, curated by founder Alan Woinski, boils industry news down to a quick, easy-to-read daily digest known for keeping readers up to date in an efficient, effective way.

Here’s a sampling of what the Daily Lodging Report provided to its readers this past week. If you’re not a subscriber, you should be. Don’t wait. Sign up now here.

Sunday, Oct. 24

In the latest poll from The Global Business Travel Association, half of industry respondents reported more optimism in October compared to September. Highlights from the October GBTA poll include: Support is strong for the U.S. policy to open borders with new requirements for international visitors to enter the U.S., including proof of vaccination status and proof of a negative COVID-19 test result within three days of travel departure. Supplier and travel management company staff are more optimistic about the industry’s path to recovery compared to a month ago. The October poll saw an increase in respondents reporting their companies usually or sometimes allow non-essential domestic business travel. Non-essential international business travel followed a similar trend. Among those who stated they have traveled less or much less for business than they did pre-pandemic, seven in ten say they miss traveling for business and are eager to travel for business more in the future. One in five do not miss traveling for business and wouldn’t mind traveling less in the future and the rest are unsure. GBTA members and stakeholders strongly agree reduced infection rates and increased vaccinations will accelerate the volume of business travel at their company. Top drivers include increased vaccination rates worldwide; increased vaccination rates across the region or county; and increased employee vaccination rates.

Skift Note: The death of business travel has been greatly overstated. While there is still plenty of uncertainty on the timing of a recovery, the growing optimism in the survey was one of the first pieces of news this week showing a comeback for the sector.

Monday, Oct. 25

Colliers International said hotel sales in New Zealand are likely to set new records this year with the pandemic not impacting prices. Sales to date of hotels with more than 50 rooms is already well above the $120 million for the whole of last year. With a number of large hotel deals due to go through in the last quarter, there is a good chance total sales for the year will surpass $300 million which will be the highest volume of hotel transactions on record. Colliers said demand was so strong that properties were selling privately without being publicly listed, mostly to domestic buyers who were a mix of established operators seeking to expand, and new investors. Colliers said most of the activity was in the lower band of properties going for under $20 million, reflecting the fact that international buyers, typically higher spenders, were shut out by the border closure. In the past they made up half of all hotel purchasers, but were reluctant to commit, without being able to get into New Zealand to inspect properties in person. Colliers said there is a significant amount of non-traditional investors showing an interest in motels and hotels because government contracts for MIQ and emergency housing provided guaranteed income. The bargain hunters are the ones being disappointed as there is no evidence of distressed sales. The Christchurch market has been particularly busy with CPG Group buying the Rendezvous Hotel with plans to rebrand as a five-star Fable Hotel; the Patterson family buying the Hotel Montreal; the country’s first modular hotel, Cosa, changing hands last month with plans to operate as the Carnmore, to name a few.

Skift Note: The report throws cold water on any investor mindset there is some untapped pool of hotel bargains waiting to be had in the South Pacific.

Analysts at Lodging Econometrics reported that in the third quarter of 2021 the total U.S. construction pipeline stands at 4,837 projects/592,259 room, down 8 percent by projects and 10 percent by rooms YOY. Many developers have a long-term positive outlook on hotel development as projects in the early planning stage are up considerably, with 1,978 projects/239,831 rooms, a 27 percent increase by projects and 25 percent by rooms YOY. Projects scheduled to start construction in the next 12 months are down 14 percent by projects and 15 percent by rooms YOY, with 1,824 projects/210,189 rooms at the end of the third quarter. Projects under construction were also down in Q3, ending the quarter at 1,035 projects/142,239 rooms. Renovation and conversion pipeline activity remains steady at the end of Q3 ‘21, with conversion projects at 752 projects/79,024 rooms. Through the third quarter of 2021, the U.S. opened 665 new hotels with 85,306 rooms with another 221 projects/23,026 rooms anticipated to open by the end of the year, totaling 886 projects/108,332 rooms for 2021. Lodging Econometrics’ analysts expect an increase in new hotel openings in 2022, with 970 projects/110,123 rooms forecast to open in 2022 and another 961 projects/111,249 rooms anticipated to open in 2023.

Skift Note: Despite a cooling off in hotel construction during the pandemic, don’t rule out new-build projects in the U.S.

Tuesday, Oct. 26

Hong Kong will tighten Covid restrictions even though there is a lack of local outbreaks. They want to better align with China’s policies to increase the chances of quarantine-free travel between the territory and mainland. Hong Kong has not had a major local outbreak since the beginning of the year with virtually no local transmission in recent months, but it is largely closed to international travel and travelers from countries deemed high risk such as the US must serve a 21-day quarantine. Resuming quarantine-free travel with the mainland is the top priority, compared to reopening travel internationally and tightening restrictions to be more in line with mainland practices is necessary to give Chinese authorities confidence to resume quarantine-free, cross-boundary travel.

Skift Note: China and Hong Kong’s zero-tolerance approach to new cases will leave the largest cities, more dependent on international travelers, struggling for a full rebound in hotel performance.

Wednesday, Oct. 27

Thailand hopes to quickly rebound after more than a year and a half of a shutdown, sending visitor numbers down to just 73,000 in the first eight months of 2021, and that was with the Sandbox scheme. On November 1, the country reopens to vaccinated travelers from certain areas with hopes for the return of at least a million visitors by March, and $30 billion in revenue through 2022. The big problem is that while China is on the list of more than 40 ‘low risk’ countries, Beijing is imposing a two week quarantine on returnees. India and Russia are also not on the list. Those are three of the top countries for visitation, pre-pandemic. The second stage of reopening is planned for December 1 and will end a seven month prohibition on alcohol served in bars and restaurants. While the hotels need business, they are taking no chances of competing with other reopening markets, slashing room rates, something we always say is a zero sum game. Many hoteliers are hoping for 20% to 25% occupancy. Instead of being viewed as a celebration of tourism surviving, the media is painting this as too little, too late.

Skift Note: Thailand’s move toward reopening its international borders has hoteliers cutting rates to win business. Rate cuts are a major drag on performance recovery, hotel executives like Hilton CEO Christopher Nassetta said just this week.

Thursday, Oct. 28

The New York Post indicated a happy ending is in sight to the Big Apple’s hotel industry catastrophe, you just have to wait until 2026! Vijay Dandapani, president of the Hotel Association of New York is optimistic for five years from now. The beleaguered industry’s plight is epic in scope. Of the city’s total 700 hotels pre-pandemic, about 250 either closed or were converted to homeless shelters. Average occupancy fell from over 80 percent in 2019 to 33 percent early this year but it has since upticked to 45 percent. By comparison, occupancy never fell below 60 percent during the earlier crises of 9/11 and the 2008 Wall Street crash. Room rates have fallen 60 percent since 2019. A further looming shadow over the business is a flood of new rooms, possibly more than 18,000, in projects that were started prior to 2020 and are on track to open this year or soon after, including branded properties such as the Virgin Hotel, Ritz-Carlton, Nomad, the Arlow Midtown and Hard Rock near Times Square. International business travelers and tourists peaked at 13.5 million in 2019, plunged to a mere 2.4 million in 2020 and might rally to 4.6 million this year. Dandapani doesn’t see business coming back to 2019 levels until 2025. According to CBRE, over the past six to eight months, the value of hotel assets in the city have returned to near-2019 values. The discount to pre-pandemic levels was significant, prior to last spring, in excess of 25 percent. That discount now has all but gone away. Starting in May, the number of groups willing to do deals expanded rapidly. Even though full recovery might wait until 2024 or 2025, deals could be underwritten more clearly now, according to CBRE.

Skift Note: Given how swift recovery has come, even fleetingly, to other parts of the world, it’s hard to believe New York City’s leading hotel group’s forecast that a full rebound is still five years away.

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