Skift Take

Choice Hotels issued a positive business update in a seemingly random way. That fueled speculation it plans to do something newsy. Plus, other worldwide headlines in hotel deals and development.

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Here are the top stories from Daily Lodging Report in 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.

Choice’s Good But Mysterious Update

Choice Hotels issued a business update on July 11, reaffirming full-year guidance and giving a 2024 earnings before interest, taxes, depreciation, and amortization (EBITDA) target above Wall Street estimates. In short, Choice forecasted higher-than-expected earnings.

Analysts were a bit puzzled on the reasoning for doing this but perhaps we will find out shortly. Two things that stood out in the update. One was that quarter-to-quarter share repurchases dropped to $60 million in 2Q from $160 million in 1Q. The second was the higher-than-expected 2024 EBITDA projection although the 107 hotel openings year to date was not a number that anyone should gloss over. Choice Hotels said it opened an average of more than four hotels a week in the first half of 2023 — a 39% jump year-over-year.

As for why Choice Hotels released this update, it could be to anticipate an upcoming debt offering or exchange — or a similar financial move. Or it could just be that it is 2023 and weird stuff continues to happen

But some investors bet on something else. Wyndham’s shares have soared above market averages — and above Choice’s stock performance, since Tuesday’s announcement through publication time Thursday.

For context, see Choice Hotels’ Brands, Explained, which Skift published this week.

Ashford REIT to Return 19 Hotels To Lenders

We expect a lot more jingle mail than just from Park Hotels. Ashford Hospitality Trust (AHT) provided an update on their mortgage extensions. In that update, they disclosed they expect to return 19 hotels to lenders in various cities including Las Vegas and Atlanta. This is part of a $982 million mortgage pool they missed a repayment deadline on last month.

AHT said they would have had to pay down $255 million for an extension and spend $80 million in capex through 2025 but the properties already have negative equity. 15 other hotels had mortgage extensions renegotiated, with AHT paying down $129 million in debt.

Think about all the debt coming due. Think about the new rates these companies will have to pay if they can refinance and whether the paydown for extensions will be worth it. It will be a very interesting next few years for hotel owners, lenders, and brokers.

Margaritaville’s Ball Drop

SoHo Properties, owner of the Margaritaville Resort Times Square, has filed for Chapter 11 bankruptcy protection in a move aimed at preventing a planned Monday foreclosure auction on the Manhattan hotel. The 32-story, $370 million hotel development features 234 guestrooms. The auction was planned after SoHo was said to have defaulted on a $57 million loan provided by Arden Group. Margaritaville Holdings said the Chapter 11 filing won’t affect the hotel’s operations. The media had a field day with the whole “wasting away” thing. Overall, this is an outlier. Margaritaville has gone from strength to strength in the past decade.

Hotel Rates Strong in Many Markets

STR’s global “bubble chart” update, as of June 17, shows that 85% of markets experienced growth in revenue per available room (RevPAR) compared to 2019. Among all the countries with a room supply of more than 50,000 rooms, Israel, Switzerland, Greece, Italy, and France led RevPAR on an actual basis. A few countries reported a four-week average occupancy of more than 80%, such as Greece, the United Kingdom, and the Netherlands. Elsewhere, Indonesia had the highest occupancy growth, experiencing a 28% surge compared to pre-pandemic levels. Get more context from STR’s update.

Opportunity in Texas

The 167-room Hotel ZaZa, in uptown Dallas, along with ZaZa hotels in Houston and Austin, have recently been offered for sale. Developer Charles Givens created the ZaZa Concept and now hopes to sell the properties. Eastdil Secured is the broker. According to the Real Estate Alert, the package of 641 rooms may fetch more than $300 million.

Oyo to Add 500 Hotels in India This Year

OYO Hotels announced it will be adding 500 new hotels in India within the next three months. The Economic Times said the 500 new hotels will be added across several host cities of the upcoming Men’s Cricket World Cup. The tournament begins on October 5 and concludes on November 19 and will take place in the cities of Hyderabad, Delhi, Dharamsala, Chennai, Lucknow, Bengaluru, Mumbai, Kolkata, and Pune. The final will be placed in Ahmedabad. The new hotels will be strategically located near these stadiums.

This seems like an odd plan to publicize. Didn’t they just drive up the asking price for properties around these stadiums?

Australia’s Hotel Boom

Australia may not have fully recovered its tourism because of the slow return of Chinese travelers, but its hotel deal activity has heated up regardless.

The Ritz-Carlton in Melbourne and the one in Perth are being sold for about $350 million ($500 million Australian), according to various news sources. The Australian Financial Review predicted ultra-high net worth Australians and offshore investors are expected to bid for the hotels after Far East Consortium put them on the market with price expectations of about A$500 million. This follows the opening of the 257-room Ritz-Carlton Melbourne not even five months ago atop the tallest tower in Far East Consortium’s West Side Place development. The 205-room Ritz-Carlton Perth opened in 2019.

Salter Brothers exchanged contracts to buy the Sofitel Adelaide Hotel for A$154 million. CBRE Hotels, together with Savills, negotiated the sale of the 251-key hotel on behalf of South Australia’s development and construction firm Palumbo Group. The Sofitel Adelaide is the first internationally branded five-star hotel to be built in Adelaide in 30 years. It’s part of a 32-story mixed-use tower.

The final piece of the Sky Deck at Queen’s Wharf has been lifted into place, 100 meters above the Brisbane River. The A$3.6 billion Queen’s Wharf Brisbane development includes an open-air rooftop sky deck that can host up to 1,500 people. The development will include four hotels.

Melbourne has just opened The Interlude in what was once a prison. The rocks in the roof to prevent inmate escapes made the design very challenging. There’s a subterranean swimming pool, and the air conditioning is under the beds instead of the ceilings.

Capital Alliance, a property developer in Melbourne, announced the approval of a planning permit for its A$340 million dual hotel project in partnership with TFE Hotels. The permit for the mixed-use lifestyle development in Melbourne’s Docklands precinct includes plans for a 200-room bespoke Collection by TFE Hotels brand and the premium 105-room A by Adina.


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Tags: choice hotels, choice hotels international, daily lodging report, future of lodging, wyndham worldwide

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