The Daily Lodging Report for 12/21/14
Presented by: AETHOS Consulting Group and Gaming USA Corporation.
Alan R. Woinski, Editor
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The DJIA rose another 27 points on Friday while Nasdaq was up 17, the S&P 500 rose 9 points and the 10 year treasury yield was down .03 to 2.18%. Lodging stocks were higher. New highs were set by RHHP, HPT, CHH and INN while Supertel Hospitality rebounded 9%.
MLV & Co. initiated coverage on Ashford Inc with a Buy rating and $110 price target. MLV said their positive view is driven by confidence in management�s ability to grow assets under management which in turn will growth AINC�s earnings per share at a disproportionate rate. Their confidence is also helped by a positive view of lodging stocks.
Ashford Hospitality Trust and Prudential Real Estate Investors announced the signing of a definitive agreement in which AHT will pay $250.1 million for the remaining 28.26% ownership in the 28 hotel Highland Hospitality portfolio. AHT has a 71.74% ownership interest in the JV and will fund the buyout with cash, completing it next quarter. They anticipate refinancing the debt on the portfolio. The portfolio includes 19 full service hotels and 9 select service properties with a concentration in major brands. Analysts were quite positive on this news.
Sotherly Hotels was initiated with an Outperform rating by JMP Securities.
The Guardian reported on comments from analyst Berenberg, saying InterContinental Hotels Group could be a takeover target for rivals. The report may have made more sense months ago but they argued that even with their proposed takeover of Kimpton Hotels, they said IHG could merge or takeover Hyatt Hotels but is more likely to be acquired by Starwood or Hilton Hotels.
RW Baird reported on a proposal by NY City Councilman Corey Johnson that could end hotel to residential conversions in NYC. The proposal would prohibit hotels with 150+ rooms from converting more than 20% of their space to residential condo units. RWB called this a net negative for hotel owners and real estate values in Manhattan if it passes. The cause of this push is that 3,600 hotel rooms at 14 properties in NYC have been converted to condos since 2003 and that caused the loss of 1,800 jobs. The proposal is being supported by the Hotel Trades Council. RWB expects hotel owners in NYC to fight the proposal.
Lodging Econometrics reported the Canadian Hotel Construction Pipeline is at 194 properties/23,924 rooms, up 13% and 22% respectively year over year. The Pipeline continues to grow and is at a cyclical high mark, up 4,304 rooms from last year and 8,064 rooms from the cyclical low set in 2011. LE said the top Canadian markets are Calgary with 23 projects/461 rooms, Edmonton with 18 projects/2,560 rooms and Toronto 17 projects/2,922 rooms with the three accounting for 30% of all Canadian Pipeline projects.
HNN reported Destination Hotels & Resorts will relaunch as a consumer facing brand in 2015. They are said to be the largest operator of independent hotels in North America with 44 hotels/11,900 rooms. The consumer facing initiatives include a relaunch of their website to make it easier for travelers to understand they are booking at a Destination property; a revamping of Destination Delivers, their 5 year old recognition program; and a variety of other consumer directed changes including new logos, Diverse by Design updated motto, along with a generally different approach to communicating with guests.
DiamondRock Hospitality announced it completed the sale of the 1,004 room Los Angeles Airport Marriott, selling the hotel to Sichuan Xinglida Group Enterprises Co�s US unit XLD Group who also purchased the Torrance Marriott from DRH in late 2013. The hotel was sold for $160 million, making it the largest hotel sale of the year in Los Angeles County. DRH said they redeployed the proceeds from the sale into their recent acquisition of the Westin Beach Resort & Spa, Fort Lauderdale. About $35 million worth of improvements are expected to be coming to the hotel.
LaSalle Hotel Properties confirmed they had acquired the 150 room Heathman Hotel in Portland, Oregon for $64.3 million. The hotel was purchased fee simple and will be managed by JRK Hotel Group which also manages The Roger in Manhattan and Villa Florence in San Francisco on behalf of the company.
Loews Regency Hotel in Midtown Manhattan has added six designer inspired Signature Suites, marking the culmination of the hotel�s $100 million transformation earlier this year, including 321 apartment styled guestrooms, Julien Farel�s new salon and spa, and the Regency Bar & Grill.
Driftwood Hospitality Management closed on the acquisition of the 288 room Crowne Plaza Springfield and 140 room adjoining Holiday Inn Express in Springfield, Illinois. The hotels had been owned by a group of banks that purchased the property at a foreclosure sale early last year for $36.5 million. Driftwood said they will spend $12 million on upgrades to the hotels. This brings to five the number of hotels for Driftwood in Illinois.
Aria Development Group, together with AQARAT, announced its latest development in the heart of Downtown Miami�s urban core. The mixed-use project, set to open in 2017, will feature luxury apartments and Miami�s first YOTEL hotel. Aria of NY closed on a joint venture agreement with Kuwait�s AQARAT, to develop the tower. Empire Square Group arranged the joint venture. The YOTEL hotel will feature 250 cabins and guest facilities including a hip restaurant and bar, pool deck and gym. Aria is also planning luxury residential units on the upper floors of the tower.
Red Lion Hotels Corp. announced they will open their first location in Ohio following the signing of a franchise agreement for a Red Lion Hotel in Cincinnati. Durga, LLC is the owner of the future Red Lion Hotel - Cincinnati Sharonville which will have 185 rooms.
The Port of Vancouver in Washington State said they hope to develop a new Red Lion hotel as part of a largest effort to redevelop its Terminal 1 property, currently home to the Red Lion Hotel Vancouver at the Quay. The goal would be to keep the existing hotel operating while the new one is being built. The port said no decisions have been made and they are in negotiations with RLH.
Two Greensboro, NC based groups want to build a five story, 104 room, Towne Place Suites hotel in Asheville. CN Hotel Inc. is listed as the owner of the land with Asheville Property Inc. listed as the project�s developer.
Paramount Lodging Advisors announced the sale of the 140 room Quality Inn & Suites located in Greenville, SC. PLA exclusively represented the seller, a special servicer in the transaction. PLA said they led the marketing efforts in conjunction with Auction.com and the buyer was Liberty Group
The University of Dayton announced they will partner with Concord Hospitality on the purchase of the 399 room Dayton Marriott hotel near the campus. Concord will jointly own the property and operate it as well as oversee an upcoming renovation. The hotel was purchased for $18.5 million and will remain a Marriott branded property.
Red Roof Inn announced the opening of a 101 room hotel in Council Bluffs, Iowa.
Plans for a $71 million, 257 room convention hotel in downtown Evansville, IN have fallen through as Old National Bank has pulled out of the financing. Evansville had committed a maximum of $20 million but Old National Bank could not cover the entire $14 million they had originally allocated, leaving a funding gap of $6.5 million.
Developer Don Wilson is teaming up with Viceroy Hotel Group to run a 180 room hotel Wilson wants to build on the Gold Coast in Downtown Chicago. Wilson�s Convexity Properties submitted plans to the Chicago Council last week. The Chicago market is really heating up. This follows Wanda Group announced plans for an 88 story tower that would include a 250 room, five star Wanda Hotel and upcoming Virgin and Loews hotels.
The 60 Thompson has been reflagged as the 97 room Sixty Soho by its owner Jason Pomeranc.
Radisson announced the signing of four hotels in North America - Radisson Hotel Farmington Hills, Radisson Hotel High Point, Radisson Hotel Red Deer and Radisson Hotel Charlotte Airport South located in Michigan, North Caroline and Alberta, Canada.
Hampshire Hotels� Sant Singh Chatwal will not serve jail time for pleading guilty to making illegal campaign contributions. The Daily News said he was fined $500,000 and has to complete 1,000 hours of community service.
Supertel Hospitality said Kelly Walters will stay on as CEO until January 31, 2015. He was supposed to leave on December 31, 2014 but they have not found a replacement.
Miraval Group announced it invested in ESPA, a provider of luxury spa and wellness products and services. ESPA has more than 450 luxury spas in 50 countries worldwide. Miraval Group also announced the appointment of Elizabeth Blair as CEO and Andrea Persily as CFO. Blair was most recently CEO of 24 Hour Fitness. Persily was most recently COO and CFO of SpaFinder.
Wyndham Hotel Group announced the signing of a franchise agreement with local partner Costa del Sol to open 1,000 rooms across seven Wyndham Hotels and Resorts branded properties that will open within the next year in destinations across Peru. The agreement includes the conversion of six properties and the construction of a new 144 room property in Lima.
An affiliate of the Qatar Armed Forces Investment Portfolio has acquired the Pullman La Defense Paris from Invesco Real Estate, acting on behalf of one of its dedicated hotel funds. Accor will continue to operate the hotel under a long term lease agreement. The hotel has 382 rooms and is the largest five star hotel in La Defense, the financial center of Paris. HVS Hodges Ward Elliott represented Invesco on the transaction.
Hard Rock International announced plans for the beachfront Hard Rock Hotel Tenerife, set to open in mid-2016. This is Hard Rock�s second project in collaboration with Palladium Hotel Group who recently opened the Hard Rock Hotel Ibiza, the brand�s first European hotel. The Hard Rock Hotel Tenerife will have 637 rooms, including 236 suites, spread across two towers offering both a family friendly and adults only experience.