Skift Take

Eric Danziger, the departing CEO at Trump Hotels and one of the few non-family members to hold the top job at the company, is the latest drag on the hotel brand that has shed properties over the last several years.

Series: Daily Lodging Report

Daily Lodging Report

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. It covers North America and Asia Pacific with two separate regional editions.

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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, Feb. 27

The Grand Hyatt Hotel next to San Antonio’s Henry B. Gonzalez Convention Center is going up for sale. Hyatt had been making the necessary payments, but after falling short during the pandemic, the city began taking over payments. Now, the Grand Hyatt may be sold to an out-of-state nonprofit to settle the debt. The remaining 2005 revenue bonds total about $168.3 million. Under the plan, Hyatt would sell the hotel to Community Finance Corp. The city would issue another bond of up to $450 million to pay off the existing city-backed bond debt. It will also set up some operating reserves and some debt reserves for the hotel going forward. If the plan is approved, CFC would own the hotel and make payments on the bond over the next 40 years. Hyatt would still operate and manage the hotel for at least 30 years. The bond would be paid back using hotel revenue and the city would not be responsible for making up any lack of payment. After the bond is repaid, CFC would then transfer ownership of the hotel to the City of San Antonio. That could occur around the year 2060 or earlier if repaid sooner. The decision is subject to city council approval, which will consider this item on March 3.

Skift Note: Not exactly the kind of sale Hyatt wants to brag about in its ongoing push to shed real estate and become more of an asset-light company like competitors Marriott and Hilton.

Monday, Feb. 28

Choice Hotels International, Inc.’s Ascend Hotel Collection and Cambria Hotels achieved domestic system-wide RevPAR index share gains versus its local competitors in 2021 compared to the same period of 2019. At the same time, both brands combined to expand the number of domestic upscale hotels by 13% year-over-year, excluding the impact of AMResorts properties’ exit following its acquisition. Ascend Hotel Collection now features 325 hotels open worldwide, adding several mountain, lake and bay retreats, from Chesapeake Bay in Maryland to the Blue Ridge Mountain in North Carolina, to the collection last year. In addition to outperforming local competitors throughout 2021, in Q4, Ascend exceeded 2019 RevPAR levels, achieving a 14% increase in ADR, and outperformed the upscale segment by nearly 16 percentage points in RevPAR growth, compare to the same period of 2019. Cambria hotels achieved its strongest RevPAR index share gains versus local competition in the brands history driven by both occupancy and ADR index gains in 2021. For the year, Cambria achieved RevPAR index share gains versus local competition of over 12 percentage points compared to 2019. The brand also continued to drive positive unit growth for Choice, expanding to 57 hotels, debuting 8 hotels in 2021 with 17 projects under active construction at year-end, including 6 ground breakings with 4 taking place in the fourth quarter. In 2022, the brand expects to open over 20 new hotels across the country. 

Skift Note: It’s no wonder Choice Hotels wants to push even further into upscale hotels with its two high-end brands accelerating their recovery last year.

Tuesday, March 1

It is like a time warp in that a good portion of the world is rapidly reopening as Omicron/Covid cases plunge while Hong Kong is facing the worst outbreak in the more than 2 years that Covid -19 has been a thing. Hong Kong’s new daily infections surged past 20,000 this weekend prompting officials to admit their system of hospitalizing every patient is not working, and they are running out of room. Officials agreed to allow vaccinated patients to isolate at home and resume normal life once they test negative twice. It looks like the speed of infection spread will cause this to be over with soon, but the problem is nobody is ready to call a peak in infections just yet.

Skift Note: Hong Kong continues to struggle under the grip of the pandemic, but the government isn’t showing any sign of relenting on its tough approach to new cases. That’s a long-term legacy for hotel companies to consider with their operations in the city.

Potential buyers have reserved more than half of the 179 luxury residences in the Four Seasons project due to break ground next year in Austin, TX. The development is a venture between Austin Capital Partners, Four Seasons Hotel and Resorts; and Hines. Four Seasons Private Residences Lake Austin will be located throughout 18 buildings and will include a private marina, a clubhouse, infinity-edge pool, owners’ boating club, and a funicular running from the hilltop to Lake Austin. Plans also call for a fine-dining restaurant, a café, athletic center with private training rooms, golf simulators, squash courts, basketball, tennis and pickleball courts, and a children’s gym and play area. 

Skift Note: Four Seasons continues its significant expansion streak under the ownership of Bill Gates, and its residential push signals luxury hotel brands see homes as a durable revenue stream going forward.

Wednesday, March 2

In South Korea, consulting firm C3 Gaming asked if the Foreigners-Only Casino resorts there will survive the pandemic. For years we have been discussing how poor these resorts performed, constantly having some issue that resulted in low revenue, made worse by new billion-dollar resorts opening or in the works. The bigger question should be why would anyone want to spend billions more like Mohegan Gaming is doing, on a mega-Foreigners-only IR? The reality is if C3 is correct and most of the Foreigners-Only IRs close up, it will benefit Mohegan Gaming’s planned Inspire. If it is just the Cebu IRs that close their doors, like the study suggests could occur, that won’t help Inspire or their biggest competitor, the fledgling Paradise City IR in Incheon that is already open and bleeding red ink, even before the pandemic. The borders could open but not the Chinese. Even if China would lift the Zero-Covid policy and allow the borders to open and their nationals to travel, China has declared war on cross-border gambling. There are 17 foreigners-only casinos in South Korea and none are doing any better than surviving. Over half the country’s gambling revenue is generated by the one casino that allows locals to gamble, Kangwon Land Casino located in Jeongseongun. Jeju has 8 foreigner-only casinos that was barely hanging on before the pandemic hit. Only three of the eight casinos are open right now. Besides Paradise City, Mohegan Gaming’s Inspire IR and the Miden City Resort Complex are planned in Incheon. The latter is the one Caesars Entertainment abandoned and we doubt it has much of a chance to ever be developed.

Skift Note: Another Western gaming company is looking beyond Macau to pump resources into the Asia Pacific region. 

Thursday, March 3 

After 6 years of having the job most people would not have wanted, Eric Danziger is leaving as CEO of Trump Hotels to become CEO of Braintree Group. Braintree is an investment group with companies that focus on education, multifamily housing, storage and hospitality. Braintree Hospitality is a hotel development and full-service management company that owns and operates 14 hotels in the western US. Being CEO of Trump Hotels during the Trump presidency was not an easy task.

Skift Note: The number of Trump-branded hotels is on the decline, so it comes as no shock the chief executive for the brand would look for a new job.

The CBRE Hotels Research State of the Union presents a review of current hotel trends, leading and coincident indicators of hotel demand, and an update on cost pressures and margin flow-through. Key takeaways of their recent research are: the worst of 2022 is likely behind us. January was a low point, but things started to improve in February. Recent travel trend data and leading indicators indicate that trends should continue to improve over the near term. The reopening of the US border in November led to strong gains in inbound international travel with many gateways reaching or exceeding their 2019 levels in December; there is still material runway for growth in 2022 and expect markets like New York, San Francisco, Miami and Los Angeles to continue to benefit. Both OTA and brand websites have recovered to pre-pandemic levels but group and corporate travel remain the laggards. December 2021 GOP levels exceeded 2019, but full-year 2021 GOP came in 35% below 2019. Stronger GOP levels resulted in a nearly 50% reduction in CMBS delinquency from Dec. 2020 to Dec. 2021. Short-term rental market share has normalized as hotels have reopened. Large units in southern and drive-to destinations are driving revenue growth. 2022 GDP estimates have been negatively revised and rate increases could be a headwind. Hotel construction expenditures continue to pull back and input cost increases will remain headwinds to incremental supply growth, boosting investor appetite for existing assets.

Skift Note: Strong performance in the final month of 2021, even with an Omicron surge, coupled with the variant now on the wane are major wind in the sails for U.S. hotels looking to accelerate their recovery this year.

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