Briefs: Hersha sells 7 assets; Life House starts incentive program

Hersha sells 7 assets: A day after reporting 1Q22 earnings, Hersha Hospitality Trust, Philadelphia, Pennsylvania, announced that it has entered into a definitive agreement to sell seven of its non-core urban select-service hotels outside of New York for gross proceeds of US$505 million, or approximately US$360,000 per key. Hersha intends to use the proceeds to provide immediate liquidity for a significant net debt reduction of approximately US$460-US$480 million. On Wednesday, Hersha’s 1Q22 results showed over US$12 million of property-level EBITDA in March, making it the most profitable month since the onset of the pandemic. In addition, comparable portfolio ADR growth was 10.5% versus 1Q19; GOP margin of 40.8% exceeded 1Q19 by 365 bps; EBITDA margin of 28.3% exceeded 1Q19 by 373 Bps; and resort portfolio RevPAR growth was 28.6% above 1Q19. First quarter 2022 net loss came in at US$0.58 per share and adjusted funds from operations was US$0.06 per share.

Life House starts incentive program: Life House, a vertically integrated hotel software and operations platform, has launched its Growth Affiliate Program that will provide referral fees that lead to management contracts. Life House will provide a one-time reward equal to actual 2021 revenue multiplied by 50 basis points, subject to a cap of US$50,000 on a per deal basis. The program is aimed at players who engage with hotels throughout the ownership cycle, including but not limited to brokers, consultants, appraisers, architects, and designers. With nearly 60 hotels open or under development, Life House leadership suggests it will double its presence to more than 100 hotels during 2022. This news comes a few months after Life House raised US$60 million in Series C financing led by Kayak and Inovia Capital.

They 80-Key Faraway, Nantucket in Massachusetts, owned and created by Blue Flag Partners, is operated by Life House’s platform.

US performance increases: Hotel performance in the U.S. improved from the previous week, according to STR’s latest data through April 23.
• Occupancy: 65.8% (-4.2%)
• ADR: US$148.35 (+15.4%)
• RevPAR: US$97.66 (+10.5%)
Among the Top 25 Markets, Tampa witnessed the highest occupancy (+3.4% to 78.1%) and ADR (+38.5% to US$203.40) increases over 2019. Minneapolis saw the largest occupancy decrease from 2019 (-21.1% to 53.8%). The steepest RevPAR deficits were in San Francisco/San Mateo (-24.8% to US$131.69) and Minneapolis (-22.7% to US$62).

RFR Holdings acquires in Miami: New York-based RFR Holdings, led by Aby Rosen, has acquired the 17-story Yve Hotel Miami for US$25.8 million from Host Hotels & Resorts. Originally built in the 1920, the 241-key hotel is located right next to 100 Biscayne, a 30-story office that RFR acquired last year for US$81 million. MSD Partners provided RFR with US$39.7 million, adding to a former loan of US$67 million for 100 Biscayne, to finance the hotel’s acquisition. Host purchased the hotel for US$57.5 million from Carlyle Group and InSite Group in 2015, marking a loss of around US$32 million. After the purchase, Host had carried out extensive renovations and rebranded the hotel.

Bicycle Hotel & Casino sells: An entity related to Parkwest Casinos has acquired the Bicycle Hotel & Casino in Bell Gardens, California, for US$102 million. Another entity, also related to Parkwest Casino, has acquired the gambling business for an undisclosed price. The property has been rebranded as Parkwest Bicyle Casino and features a 99-key hotel, spa, restaurants and around 100,000-square-foot poker room with 185 tables. The deal was one of the 20 biggest real estate sales in greater Los Angeles this year and the single largest contributor to Bell Gardens’ general revenue.

Work-from-home impact: Work-from-home has been pulling down hotel revenues, with a definite correlation between its rise and falls in Australia’s CBD hotels’ revenue, reported STR’s Pacific Region. It said there was a correlation between STR’s data on occupancy and the Property Council of Australia’s data on office occupancy for Brisbane and Sydney. Data has showed that as office space use fell between July and October 2021, occupancy rates also fell compared to pre-pandemic levels. Business travel sentiment also stayed low, down by 53% for February along with a 31% dip in people’s expectations of business travel. As per data, there has been a rise in weekend occupancy compared to mid-week, reflecting that the hotel sector’s core night were mostly Mondays to Wednesdays, the days which were mostly booked for corporate or business travel.

Canada pipeline unchanged: Hotel construction pipeline across Canada remained unchanged YOY, while rooms went up by 1%, according to Lodging Econometrics. The pipeline stands at 258 projects/35,768 rooms. Projects under construction stand at 62 projects/8,114 rooms, while projects expected to begin construction in the next 12 months stand at 91 projects/12,473 rooms, a 23% increase by projects and 50% by rooms YOY, and projects in the early planning stage stand at 105 projects/15,181 rooms. The province of Ontario led Canada’s pipeline with 151 projects/20,533 rooms, at a record-high and accounted for 59% of the projects in the country’s pipeline. With 36 projects/5,668 rooms, British Columbia followed distantly. Toronto led as the city with the most projects in the pipeline with 64 projects/9,312 rooms. The city alone has 25% of all the projects currently in the country’s pipeline. Following Toronto is Montreal (14 projects/2,066), Vancouver (14 projects/2,016 rooms), Niagara Falls (11 projects/3,341 rooms), and Ottawa (10 projects/1,694 rooms). The leading franchise companies were Marriott International, with 70 projects and record-high 9,527 rooms, followed by Hilton (66 projects/7,930 rooms), and InterContinental Hotels Group (43 projects/4,371 rooms).

Scandic adds third hotel in Tromso: Scandic Hotels has signed a long-term lease agreement with Totaleiendom AS, Tromso, Norway, for a new 305-room hotel in Tromso. The hotel, slated to open in 2025, is being built on the downtown waterfront. With an expected total area of 16,500 square meters, the hotel is likely to be the largest property in Northern Norway. Scandic operates two hotels in the city totaling 390 rooms.

Huazhu announces preliminary results: While RevPAR recovery was on track in the first two months of 2022 for Shanghai-based Huazhu Group, it was interrupted by the resurgence of the Omicron variant, which resulted in lockdowns leading to a sharp dip in business and leisure travel, the company said while announcing its preliminary results for operations in Q1 2022. To minimize risks, the company is implementing costs and cash flow management measures. Huazhu’s Steigenberger Hotels has been witnessing continuous RevPAR recovery since Germany unfolded its reopening plan in mid-February. RevPAR in March 2022 recovered to 65% of the 2019 level, as compared to only 47% of the 2019 level in January 2022. However, since RevPAR recovery is still at an early stage, a comprehensive cash flow improvement program continues to be a focus.

Dalata’s growth strategy: Dalata Hotel Group, Dublin, Ireland, said trade in 2022 has surpassed their expectations. In March, the company said it expected to be 109% of 2019 levels for the March/April period. RevPAR in April is expected to surpass 2019 levels in each of their Dublin, regional Ireland and the U.K. regions. The company is looking to increase the number of rooms in operation by at least 20% compared to the end of 2021. To date, Dalata has opened four new hotels and secured their first hotel in continental Europe with Hotel Nikko, Dusseldorf.

PPHE Group’s trading update: PPHE Hotel Group has delivered a positive trading performance, especially in the group’s portfolio in the U.K., the company said in its Q1 trading update. In the U.K. during Q1, room rates settled at higher levels compared to pre-COVID levels, with the average room rates across the group 7.5% ahead of its March 2019 comparable. Occupancy saw a dramatic improvement from 7.1% in 2021 to 34.2% in 2022. The total revenue ended March 2022 increased to £32 million (US$40.19 million) from £5.3 million (US$6.65 million) in 2021, while total room revenue was £22.5 million (US$28.26 million), up from £2.6 million (US$3.26 million) in 2021. Average room rate improved to £124.1 (US$155.88) from £72.9 (US$91.56) in 2021 and RevPAR was £42.5 (US$53.38), an improvement from £5.2 (US$6.53) in 2021.

Ramadan travel outlook: The tradition of traveling towards the end of the Ramadan month seems to be making a revival this year, with outbound flight bookings from the Middle East during the last 10 days of the festival (April 22 to May 2) reaching 64% of the pre-COVID levels, revealed latest data from ForwardKeys. This was a 220% jump from the same period last year. The outbound market is projected to recover mostly in Bahrain, where booked departures were up to 90% of the 2019 levels, followed by Jordan (86%), the U.A.E. (84%), Qatar (75%) and Kuwait (68%). A standout destination for the Middle Eastern travelers is the Maldives, ahead by 178% from 2019 figures. There was a significant difference in interest from various source markets in the U.K. Fight bookings from the U.A.E. were only 2% behind 2019, while bookings from Saudi Arabia and Bahrain were behind 17% and 10%, respectively. Bookings from Kuwait and Egypt were 32% and 59% ahead, respectively.

Maldives market outlook: International arrivals to the Maldives saw a sharp rebound in 2021, jumping 138% YOY, found the ‘Maldives Hotel Market Outlook & Prospects 2022’ study by CBRE. Visitor arrivals in 2021 were led by tourists from India, Russia, Germany and the U.K. markets which have traditionally underpinned the islands’ tourism industry. The growth in international arrivals pushed hotel occupancy to 52% in 2021 from 26% in 2020. The robust recovery has continued into 2022, with over 394,000 arrivals registered during Q1 2022. This is likely to continue as connectivity with other international markets improve. The islands were a top performing hotel market across the Asia Pacific region in 2021, with performance projected to strengthen through the year. Hotels and resorts worth over US$406 million were traded in 2021 in the Maldives, marking the highest annual total ever recorded, reflecting the positive investor sentiment and recovery in the Maldives’ hotel market.

Six Senses to manage Svart: Svart Eiendom AS, the owner and developer of Svart, one of the first energy-positive hotels in the world, has selected Six Senses to manage the 94-key hotel. The hotel will harvest solar energy to power the hotel, adjacent operations, boat shuttle and also the energy required to construct the building, which will render it independent from the grid. Designed by the Norwegian architecture company Snohetta, with interiors designed by Space Copenhagen, the hotel will be located in the Arctic Norway at the base of the Svartisen glacier. The hotel was originally slated to open this year but the pandemic has pushed the opening date till 2024. The hotel will feature an indoor-outdoor spa, which was designed by consultant Felicity Leahy and will be fine-tuned by Six Senses’ approach, four restaurants, a center for engagement and innovation and a design lab which will act as an incubator for innovation and education for new technologies. Guests will be able to access fitness equipment and wearable tech integration.

IHG, Goodr partnership to manage food waste: Crowne Plaza Atlanta Perimeter at Ravinia, Atlanta, part of the IHG Hotels & Resorts, has partnered with food waste management and hunger relief firm Goodr to rescue its surplus food. Unsold edible food from the property’s 4-star restaurants and corporate dining events will be donated to Goodr’s local non-profit partners instead of landing in the trash. This is the first IHG-branded hotel to use such a service. The partnership is an extension of Goodr’s hunger relief work with IHG, which began in fall 2021 during the company’s annual “Giving for Good” initiative.

Return to office sentiment study: Most companies with offices in the U.S. are expecting to reshape their offices for hybrid work as employees return to work from offices after two years of remote work, found CBRE’s Spring 2022 U.S. Office Occupier Sentiment Survey. Companies planning to maintain the same office portfolios for the next three years fell to only 9% in the new survey, down from 27% in CBRE’s 2021 survey. About 39% of companies said they planned to expand their office portfolios over the next three years mostly due to business growth and hiring, up from 29% from last year’s survey. Conversely, 52% said they planned to decrease their office space in the next three years mostly to cut excess space that they see will be freed up by remote work and more efficient use, up from 44% from last year. The survey found that companies are going ahead with their real estate plans as employees begin to return to offices, but they will need to continue studying new work patterns and experiment with several ways to support employee satisfaction and productivity.

Olympia to operate The Revolution Hotel: Olympia Hotel Management has been selected to operate The Revolution Hotel in Boston, Massachusetts. The 177-key boutique hotel opened in 2018 and includes bath-in rooms and bath down-the-hall rooms, lofts and studio lofts and quad rooms featuring integrated bunk beds. It also includes a walk-up coffee shop, a Mexican restaurant and co-working space.

Interest in virtual reality deepening: Consumer interest in virtual reality is growing and will result in consumer-facing companies to increase investment in new experiences and capabilities to merge the physical and virtual worlds, found a study by Accenture. Around 64% of the study’s respondents said they had already bought a virtual good or participated in a virtual experience or service in the last year. This is slated to rise as 83% showed interest in making purchases through the metaverse. Around 42% said they had visited a retailer in the virtual world to seek advice, make a payment or browse a product range while shopping for a physical item, while 56% said they planned to do so in the next year. This figure rose among millennials, to 51% and 61% respectively. About 50% of the respondents said they were buying or would be interested in buying a travel experience, which rose to 55% of millennials compared to 29% of baby boomers.