Skift Take

Here’s a taste of the hotel deal and development news that Skift's Daily Lodging Report newsletter summarized in the past week, as of March 31.

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 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, March 26

Malaysia reopened its borders nearly a year ago and finally its hotel industry is getting back to pre-pandemic occupancy levels. The Malaysian Association of Hotels said the country recovered well in 2022 with the occupancy rate going from 36% to 54%. In 2019, the rate was around 60%, according to Tourism Malaysia data. The average room rate jumped 38% last year to reach US$74.

The resort island of Phuket in Thailand has seen a surge of Russian travelers in the high season. That adds to a jump in regional visitation from India, Malaysia and Singapore. C9 Hotelworks’ Phuket Hotel Market Update 2023 said market wide occupancy last year rose to 48%. It was a low of 8% in 2021. 1Q23 has seen the influx of Russian travelers and the expectations are that the third and fourth quarter of 2023 will benefit from the return of Chinese travelers.

Skift Note: The phased return of Chinese outbound travelers is the hotel’s best hope for 2023.

Monday, March 27

Deutsche Bank issued a report, commenting on what they think the trading action in gaming and lodging stocks are telling them. DB said current lodging C-Corp multiples have held up considerably better than the multiples of gaming-related gaming-related entities so they believe in a recessionary environment, lodging  stocks likely have more downside risk.
Jefferies gave their views on the read-across to Lodging from the banking crisis
They believe the primary issue affecting stock prices in the group the past week is the banking crisis, notably the pressure on regional banks and its prospective
prospective impact on financing of new properties. In terms of C-Corps like Hilton, an important aspect of unit growth is from franchise deals, a majority of which are financed by regional banks.  There is no immediate evidence of impact to deal deal flow or property opens as of yet given the length of the development cycle. cycle.

Skift Note: Pipeline growth is a critical measure to watch this year.

Tuesday, March 28

HVS gave their findings from the Hunter Conference. HVS said early 2023 comparisons continue to look favorable with easy comparisons in 1Q due to last year’s Omicron outbreak. Year-over-year comps will begin to normalize into April and May but ADRs are expected to remain notably above last year’s levels due to inflation and the strength of travel overall. HVS said short-term rental environments are tightening with many cities and municipalities enacting new zoning codes that restrict their proliferation. With the hybrid workweek taking firm hold, HVS sees the lodging industry experiencing a return of midweek travel. Leisure trips remain strong. Hotel value discussions were front and center at the conference, with financing constraints the big concern. HVS said if someone is under pressure to sell within a quick timeframe right now, it is more like liquidation value and not market value. They expect more sellers to meet the market this year in order to get deals done but not at that extra-urgent liquidation point.  The expectation that interest rates may decline later this year is fading, with the dream shifting to mid-to-late 2024. More private equity groups are entering the lending space this year as an alternative method to earn yield. HVS said these groups offer creative financing options such as bridge loans, mezzanine debt, construction loans and property improvement plan loans.

A Crisil Market Intelligence report predicted the revenue of premium hotels in India will rise 80% this current fiscal year. The rise will be on the back of 19%-21% after a 13% jump in 2022. Occupancy levels for premium hotels are expected to rise from 50% in the last fiscal year to 67-72 percent in Fiscal Year 2023. Crisil expects revenue for premium hotels to rise a further 15%-20% in fiscal 2024.

Skift Note: HVS’ summary was their clients desire to get deals done and urge to develop more hotels are as strong as ever, particularly in the extended-stay segment, albeit in a new financing market and high construction-cost reality.

Wednesday, March 29

MCR’s Tyler Morse gave an update on their strategy during the pandemic. He was speaking at the Skift, the parent company of this publication, Future of Lodging Forum. He said MCR bought 70 hotels during the pandemic and is closing on four more next week with another 12 in the pipeline. This strategy has made MCR the third largest hotel owner in the United States, with 150 hotels, including the TWA Hotel, High Line Hotel and Pasadena Hotel and Pool, in 37 states. As for what Morse is focused on now, in case you want to follow his lead? Fake grass and fake plants are being put everywhere in MCR hotels. Morse said the technology in fake grass is spectacular, and it is better for the environment.

Hilton announced plans to more than double its portfolio in Puerto Rico. The company’s development pipeline in Puerto Rico will bring the company’s supply to 16 hotels and resorts encompassing nearly 4,400 rooms across eight brands in Puerto Rico. The Puerto Rico pipeline highlights include the brand debut of Tapestry Collection by Hilton later this year with the 186-room Condado Palm Inn San Juan, Tapestry Collection by Hilton. 

Finn Partners released the results of their latest report, Outbound Rebound: The Return of Chinese Travelers. The survey was conducted in mid to late-January, started days after the Chinese government lifted international travel restrictions after 3 years. Over 2,000 affluent Chinese in first, second and third tier cities were interviewed. The findings included that one in two affluent Chinese travelers are making plans for at least five trips in 2023, planning to make an average of 5.9 trips this year, up from 5.6 trips in 2019. Younger affluent 21-25 year olds continue to be the most frequent travelers. 

Skift Note: Get more details on Morse’s thoughts at Skift’s write-up of the event: “Pandemic First Mover MCR Still Going Strong on Hotel and Tech Investments.” Video to follow soon.

Thursday, March 30

STR gave China hotel data for the week ending March 25. Hotel RevPAR (revenue per available room) in China was up 159.2% year over year, up against an easy decline of -51% comparison. When compared with the same week in 2019, hotel RevPAR was down -6.2%.

STR released their global bubble chart update through March 18th. It showed growing momentum in the Asia Pacific region and more than half of the markets globally, with better than 20% growth in RevPAR versus 2019.

Singapore was also one of the leaders in occupancy, along with Thailand and New Zealand from Asia Pacific. Vietnam was on the bottom, with RevPAR -25% below the pre-pandemic comparable.

Skift Note: China is back, baby. Get the China hotel details at CoStar’s STR, the gold standard for hotel benchmarking.


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