PhoCusWright Hotel industry performance is often predictable yet somehow still catches us by surprise. Like any other economy, the sector relies on a balance of supply and demand-do not let the flat panel TVs and fantastic beds fool you. Hotel performance is significantly tied to the overall economy as well as the industry’s own cyclical trends. Recovery is a vague concept but one that is easy to evaluate. Here is the PhoCusWright Financial Edition’s outlook for the hotel industry.
The full impact of the recession continued to hamper transactional activity and reduce average property values across the hotel, pub, restaurant, leisure, care and retail sectors during 2009, according to Christie + Co’s Business Outlook 2010 publication.
Ashford Hospitality Trust, Inc. (NYSE:AHT) today announced the refinancing of its $19.74 million loan secured by the Hilton El Conquistador Hotel and Country Club in Tucson, Arizona on December 29, 2009. The loan was set to mature in June 2011. The new non-recourse financing with MetLife for the same amount bears interest at the greater of 5.5% or LIBOR plus 350 basis points and is interest only for a term of five years. The Company’s average current interest rate on its total indebtedness, giving credit to the interest rate swap and flooridors, is 2.98%. As of September 30, 2009, the Company had $197.9 million of unrestricted cash available.
MGM Mirage is pursuing an initial public offering in Hong Kong that could generate between US$300 million and US$500 million from the sale of a 20% to 30% stake. A launch date for the IPO has not yet been set.
Strategic Hotels & Resorts, Inc. (NYSE:BEE) , today announced that the company has signed a purchase and sale agreement for the sale of the Renaissance Paris Hotel Le Parc Trocadero to an investment group led by an affiliate of Westmont Hospitality for a gross price of euro 35.5 million ($51.5 million), or approximately euro 305,000 per room. The sale, subject to certain closing contingencies, is scheduled to close within 45 days. The 116-room property was forecasted to contribute approximately euro 2.1 million in EBITDA for the full year 2009, representing a sales multiple of 16.6 times and a capitalization rate of 4.8% on NOI. The company also remains entitled to receive approximately euro 1.4 million in the first quarter of 2010 related to the 2009 performance guarantee with Marriott International.
At a meeting last week at the Grand Hotel Bonavia in Rijeka, the Supervisory Board of GSHR Holdings Ltd (the parent company of Adriatic Luxury Hotels Group) and Management Board of ALH concluded that during the first nine months of 2009 ALH Group hotels achieved good performance, particularly considering the very difficult market conditions caused by the global financial crisis.
The U.S. hotel industry posted declines in all three key performance measurements during the week of 16-22 August 2009, according to data from STR.
Accor may streamline its operations by splitting its hotels operations and services division into two separate companies. Shares in Europe’s largest hotel group rose sharply on the news despite it announcing losses of €150m in the first half due to restructuring costs and weak demand.
The total active U.S. hotel development pipeline includes 4,554 projects with 487,831 rooms, according to the July 2009 STR/TWR/Dodge Construction Pipeline Report released this week.
Shrewd international investments in award-winning properties have helped IFA Hotels & Resorts weather the global hospitality downturn. The Kuwait-based hotel group, which holds stakes in a string of luxury resorts ranging from Zimbali and Legends in South Africa to Golden Mile Palm Jumeirah in Dubai, has posted annual profits of US$108m (KD30.8m).
InterContinental Hotels, the world’s largest hotel group, has fallen sharply into the red as hotels globally are hit by fewer people travelling in the downturn and fears over swine flu.
Hilton Hotels Corporation has signed a Management Agreement with the New Doha Hotels Company for the Hilton Doha Residence in Qatar scheduled to open in 2012.