Middle East Is Seeing the Strongest Hotel Pipeline of All Global Regions

Daily Lodging Report

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Here are some excerpts from Daily Lodging Report from the past week. If you’re not a subscriber, you should be. Get news on hotel deals, development, stocks, and career moves. Sign up here, now.

Sunday, October 23

The Middle East & Africa was the only world region to show an increase in overall hotel pipeline activity at the end of the third quarter. In the Middle East & Africa, with 243,613 rooms under contract (up 2.2 percent, year over year), according to September 2022 data from STR, the gold standard for hotel performance data. Most of the region’s pipeline activity is in Saudi Arabia (39,070) and the UAE (32,272).

IHG Hotels & Resorts reported a really good third quarter, with RevPAR up 28 percent year over year and up 2.7 percent from 3Q19. The problem is they also announced Paul Edgecliffe-Johnson is leaving his CFO position, taking the same job at online gaming/sports betting company Flutter Entertainment. While this was viewed negatively by the Street, Edgecliffe-Johnson must need a challenge or something, leaving the stability of IHG for such a volatile situation/company/industry with Flutter Entertainment.

KHP Capital Partners purchased the Pan Pacific Hotel, in the South Lake Union neighborhood of Seattle, WA, for $70 million. The sale price includes $51.3 million for the building and $18.7 million for the hotel’s furniture and operating systems. The 153-room hotel was purchased from Hersha Hospitality Trust.

Skift Note: Conventional wisdom in the hotel industry is that it has gotten harder this year to get developers to put shovels in the ground because of rising interest rates and portfolio disruptions for financial institutions. Yet hotel developers in the Middle East haven’t experienced that. Enthusiasm for the opportunity and current high yields are encouraging more development.

Monday, October 24

JLL Hotels & Hospitality Group’s Hotel Investment Highlights Asia Pacific 2H22 said Asia Pacific hotel investment would rise 14 percent year-over-year to $10.7 billion in full-year 2022. In the first nine months of 2022, hotel transactions in Asia Pacific totaled $8.4 billion. Japan reclaimed its position as the region’s most active travel market. South Korea reached a new historical peak. A total of 123 hotel deals were transacted in 2022 year to date versus 139 year-on-year in 2021. JLL said there is some pressure on the industry as institutional capital is outstripping the supply of hotels available for acquisition in Asia Pacific’s markets.

The Chinese investment firm striving to revive the historic Ambassador Chicago hotel has put the property up for sale. A venture of Gaw Capital Partners has hired hotel real estate brokerage RobertDouglas to sell the 285-room inn. “No asking price is listed for the 17-story property, but sources say Gaw may have a difficult time getting bids that exceed the $38.5 million mortgage it borrowed against the property in 2019,” the Real Deal reported. A sale close to that dollar figure would be a fraction of the $61.5 million the Gaw venture paid for the property in July 2016, when it was known as the Public Chicago, reported the Chicago Tribune.

Skift Note: While some see boom times, others see extra headwinds.

Tuesday, October 25

Asian developer Hing Construction will bring a new five-star hotel to Lusaka in Zambia. The resort will have around 150 rooms, spread over 12 floors and situated on a podium, the Lusaka Times reported. Construction is expected to begin in August 2023 and will be fully financed through issuing medium-term institutional bonds. The hotel investment advisor is Barrows. The total project value is $110 million. Other Zambian hotel projects in the works include the 200-key Radisson Blu Mosi-oa-Tunya Livingstone Resort which will be ready before the end of this year, and the Park Inn by Radisson Lusaka Longacres, bringing 135 keys to the country’s capital this year as well.

Deutsche Bank gave its first broad-based downward revision to hotel real-estate investment trust (REIT) estimates since the travel recovery began in spring 2021. DB is going to have some company as we sense more analysts are beginning to believe that we just saw the best environment for the space as the return to work is taking away the big leisure push and they are not sure it is going to be completely replaced by an increase in business travel. DB said the industry, including the REITs, over-earned relative to what could reasonably be expected by any traditional metrics in 2Q and now we may be entering the first phase of an industry correction with occupancy slippage in the leisure segment. If an individual is spending more time back at the office or traveling for work, that person is not traveling for pleasure. While the pickup from groups and business transient is masking it right now, they expect the corporate segment to be impacted by layoffs and other budget cuts starting to add up.

The growing demand for luxury branded residences is stronger than ever, especially in Fort Lauderdale. Edition Residences Fort Lauderdale is capitalizing on the waterfront opportunity by developing along the Intracoastal waterway. Edition Residences Fort Lauderdale are housed within two 11-story towers. The ultra-modern towers feature 65 residences ranging from two to four bedrooms along with nine villas and four penthouses.

Skift Note: Zambia has benefited from the boom in demand for commodities as it has major copper mines. Its travel lodging supply needs to catch up to demand.

Wednesday, October 26

STR’s U.S. “bubble” chart update for mid-October 2022 highlights the best- and worst-performing hotel markets in terms of occupancy. Data for the four weeks ending October 15 shows, among the Top 25 Markets, New York City had the highest occupancy at 84.7% followed by Boston (81.6%), Anaheim (80.7%), Nashville (79.3%) and San Diego (79.1%). On a revenue per available room basis, two of the five large market occupancy leaders exceeded their matched 2019 RevPAR after accounting for inflation. San Diego and Anaheim/Orange County. 

Marriott International’s Ritz-Carlton brand announced the Ritz-Carlton, Melbourne will open its doors in the first quarter of 2023.

The doors have officially opened at Novotel Devonport, one of northern Tasmania’s most anticipated hotel launches of this year, according to The Advocate. The hotel has a waterfront location overlooking the Mersey River, just a stone’s throw from the Spirit of Tasmania terminal. The hotel offers 187 options including standard, superior, and deluxe guestrooms with a choice of city or river views, along with a selection of luxurious executive suites. The Lyons Architecture-designed hotel was conceptualized to act as an iconic horizontal land bridge, visually connecting the Mersey River to the city of Devonport.

Skift Note: The hotel recovery hasn’t been distributed equally to all places.

Thursday, October 27

It is doubtful the revenue-per-available-room comps in China will look much better in coming weeks as Covid outbreaks following Golden Week are spurring closures and lockdowns. Universal Beijing Resort announced its theme park, Citywalk and two hotels were temporarily closed per local anti-epidemic measures. The two hotels are The Universal Studios Grand Hotel and NUO Resort Hotel. Beijing once again has been hit with a Covid-19 flare up. Beijing reported 19 new locally transmitted cases and only locally new asymptomatic case on Tuesday. For all of China, they reported 338 cases nationwide.

Skift Note: China’s zero Covid policy and what is essentially a ban on the latest vaccines are setting the country’s economy up for more problems on top of a property market implosion.