Hotel companies, developers, and investors all signaled this week with their various deals that they are all taking the long view on the hospitality industry. Omicron and the rest of the pandemic is a blip in the timeline of construction and brand expansion.
Daily Lodging Report
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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, Dec. 12
The shuttered Trump International Hotel & Tower Vancouver is reopening sometime in 2022. Daily Hive Urbanized confirmed the upscale hotel property’s second life will carry the brand of Paradox Hotel, a new international hotel chain, which is also planning to open locations in Phuket, Thailand and Singapore in 2022. Paradox Hotel is now also the operator of Summit Lodge Boutique Hotel. Both Summit Lodge and the former Trump-branded tower are owned by Holborn Group. It is not clear if Paradox Hotel is a new hotel division of TA Global Berhad, which is closely affiliated with Holborn Group under the same ownership and leadership. Holborn Group opened the Trump-branded Vancouver property in February 2017, with TA Hotel Management, the Canadian subsidiary of TA Global Berhad, operating the hotel. The hotel permanently closed in August 2020 due to the impacts of the pandemic, with TA Hotel Management declaring bankruptcy. The 63-storey tower contains 147 guest rooms, amenities, and ballrooms within the first 15 floors and 217 luxury condominium homes in the upper levels.
Skift Note: Another Trump hotel finds new life (and branding). At what point does the portfolio bleeding stop?
Monday, Dec. 13
Hilton and Jin Jiang International announced the extension of the Hampton by Hilton management license agreement, extending the contract until 2034 to create a network of more than 600 Hampton by Hilton hotels in China. The exclusive license agreement is between Hilton and Jin Jiang’s Plateno and was first signed in 2014. The extension marks a strengthened cooperation between Hilton and Jin Jiang as they launch a new phase of joint development in an ambitious plan to operate over 600 Hampton by Hilton hotels in China. The 155th Hampton in China opened in Beijing on December 7th. There are over 355 Hampton by Hilton hotels in the China development pipeline.
Skift Note: Asia, especially China, already had a grip on Hilton’s future development pipeline. Expect more deals like this for other Hilton brands.
MGM Resorts and Hard Rock International announced a deal for Hard Rock to buy the operations of The Mirage Hotel and Casino on the LV Strip for $1.075 billion in cash. Hard Rock will in essence take over the long-term lease with VICI Properties for initial annual base rent of $90 million a year. Hard Rock will license The Mirage brand for three years while they begin repositioning the property into a Guitar Shaped Hard Rock property on the LV Strip. VICI may fund up to $1.5 billion of a redevelopment plan of the Mirage through VICI’s Partner Property Growth Fund. Analysts called the price higher than expected, once again showing the appetite for LV Strip assets. Add to that last night’s news that Las Vegas will be hosting the 2024 Super Bowl and LVS without having to rely on conventions and group business is being reflected in this value. MGM just keeps adding to what is an overflowing cash hoard.
Skift Note: Las Vegas casino resort ownership is beginning to look a lot different than the past. Established players like MGM Resorts park resources once reserved for real estate ownership into online gaming and newer gambling destinations.
Wednesday, Dec. 15
Average daily rate gains and a 35.1% year-over-year increase in hotel occupancy in Q3 showed demand for U.S. hotel stays endured in the face of the Delta variant. Continued improvement in domestic travel and the rollback of many international travel restrictions have led CBRE to revise its forecast significantly upward in the near- and medium-term. RevPAR is now forecast to reach 2019 nominal levels by the second half of 2023, rather than in 2024, as previously forecasted. Still, the Omicron variant and ongoing concerns about the pandemic continue to dampen business, convention and large-group travel. CBRE expects these categories of travel to accelerate in the latter half of 2022. Moving forward, existing hotels will benefit from below-average new construction deliveries, as the cost and availability of construction inputs, including labor, will restrict supply growth to 1.2% to 1.3% through 2025. This is well below the long-run average of more than 2%.
AAA predicts crowded roads and skies, with air travel nearly tripling over 2020. More than 109 million people, an almost 34% increase from 2020, will travel 50 miles or more as they hit the road, board airplanes, or take other transportation out of town between Dec. 23 and Jan. 2. The dramatic bounce-back, 27.7 million more people traveling, will bring this year’s numbers to 92% of 2019 levels. Airlines will see a 184% increase from last year. Road trips remain the top mode of travel during the holidays, with over 100 million planning to head to their destinations in cars. More than 6 million are expected to travel by air, while 3 million people are booking buses, trains, and cruises. AAA booking data through October shows that domestically, theme parks, beaches and Las Vegas are popular destinations. According to AAA, travel prices are higher this holiday season. A recent analysis of AAA’s flight booking data revealed that ticket prices for Christmas week are up 5% from last year. Mid-range hotel rates have increased 36% for AAA Approved hotels for Christmas travel; and the average rate for car rentals has increased 20% for Christmas travel.
Skift Note: Omicron will dampen the expected winter recovery of business travel, but a pushback on border closures may soften the blow of this expected speed bump. Roaring leisure travel demand and U.S. avoidance to any domestic travel restrictions will continue to make the country a global leader in the hotel recovery.
Thursday, Dec. 16
Trip.com Chairman James Liang believes Chinese international travelers will likely fall back into old travel habits and preferences once borders reopen. He is predicting China will begin reopening of its borders to the world around mid-2022. While he may just be pulling things out of thin air, Liang said by the end of Q3 or Q4, it will return to normal and once the border is completely open, we will see pent up demand to travel outside of China for sure. Liang must have a crystal ball to say things like that when the first Omicrom cases were reported in China and everyone there braces for a lockdown to try to stamp out Covid ahead of the Winter Olympic games in February. Liang is confident that the popular destinations preferred pre-pandemic will see a very strong rebound – including Japan, Thailand, South Korea and Macau. The pandemic introduced Chinese to just how much they can do domestically and saw the popularization of small groups or private groups of tourists, as opposed to big tour groups of 30-40 people. He pointed out there is one dark cloud, referencing China’s rumored tourist blacklist. The Chinese government supposedly has a list of countries that have been identified as targeting Chinese nationals for gambling. While Beijing acknowledged this list, nobody really knows what countries are on it.
Skift Note: China detected its first Omicron case this week, so take any recovery forecast lightly. But if a mid-2022 border reopening of China’s international borders pans out, it’s going to get a lot harder to find a hotel room in some of the world’s largest cities.