Slow rebound of hotel rates in Philadelphia to continue
The slow economic recovery and strong competition from other major U.S. cities are prompting hotels in Philadelphia to charge rates below 2007 levels. "Hotels in the Philadelphia region have not recovered from the recession and are not projected to recover until 2013," said James Gratton, president of the 85-member Greater Philadelphia Hotel Association.
Hotel room rates: Feather soft - Philly.com: "Hotel room rates: Feather soft"
July 17, 2011By Suzette Parmley, Inquirer Staff Writer
Debra Cook of Denton, Texas, felt she scored a coup after booking her stay at the four-star Loews Philadelphia Hotel for $100 a night Sunday through Thursday last week, on Priceline.com. "You can't beat that rate," said the 11th-grade English teacher, who was here for a five-day conference at the National Constitution Center.
But Cook's room savings are costing city hoteliers. While downtown hotels are benefiting from new business brought by the recently expanded Pennsylvania Convention Center, they are charging rates far below 2007 levels because of the sputtering economy and intense competition from other major U.S. cities, primarily New York, Washington and Boston.
"Hotels in the Philadelphia region have not recovered from the recession and are not projected to recover until 2013," said James Gratton, president of the 85-member Greater Philadelphia Hotel Association and general manager of the Courtyard by Marriott Philadelphia Downtown.
While hotel rates are slowly come back, he said, they aren't projected to return to 2007 and 2008 levels for at least another two years.
New business created by the Convention Center expansion still leaves rooms to fill.
"If the average convention lasts four days, and we host 20 citywide conventions a year (those requiring 2,000 or more rooms on peak nights), there are still 285 nights a year . . . the hotels will have to fill," Gratton said. "Currently, we are projecting 16 conventions in [both] 2012 and 2013."
Last year's revenue per available room, or RevPar - the metric used by hotels to measure profitability - was $104, the same as in 2004 and well below 2007's $122.46.
As of May 30, Center City's year-to-date average daily rate (ADR) was $158.21, compared to Boston's ADR of $179.71, and Washington's $215.59.
Several city hoteliers interviewed contend that if the lower ADR persists, it could cut into profits and hinder the ability of newer hotels to finance their mortgages.
"When you think about operating costs such as commodities and labor, they've all gone up while ADR has gone down," said Nick Gregory, director of operations for Kimpton Hotels Philadelphia and general manager of the 230-room Palomar at 117 S. 17th St. "With occupancy flat, you lose the ability to make a profit."
The result, added Gregory, is "ownership groups come down hard on management to lower amenities to keep costs low. If labor is the number-one expense. . . you have to cut labor."
That, in turn, can diminish the customer's experience, said Bill Fitzgerald, general manager of the 432-room DoubleTree Hotel Philadelphia. "We are having to do more with less."
There's another issue, a serious one for Philadelphia and the expanded Convention Center: Evan Evans, general manager of Le Meridien, which sits across from City Hall, said as profits are squeezed, capital improvement projects such as expansions or renovations are put on hold.
The lower ADR threatens several hotel projects that were intended to support the Convention Center's expansion, which debuted March 4. Four years ago, there were more than 20 such projects in the pipeline. The 268-room Monaco by Kimpton in Old City and the 136-unit Homewood Suites in University City are the only two hotels set to open next year.
"Lenders use ADR and RevPar to determine the health of our industry and make credit decisions," Evans said. "The city needs to add an additional 1,600 guest rooms to support the expansion of the Convention Center, but investors are waiting for ADR to return."
Philadelphia's chief rivals - New York, Boston and Washington - are commanding higher rates even though they have more rooms to sell.
With over 66,500 rooms in Manhattan, and as the nation's top tourism draw, New York holds top ranking as a given. Much of Washington's hotel clientele is government-related, which explains its No. 2 spot in ADR.
But Boston's higher room rate than Philadelphia's is puzzling, since both cities have similar historical attractions and walkability. Boston also has far more rooms to sell, 18,189, against 11,160 here.
C. Patrick Scholes, senior gaming and lodging analyst at FBR Capital Markets, said Boston was more of a financial capital and home to several mutual funds and hedge funds. "This corporate travel segment tends to pay more for rooms," he said. "Whereas in a more leisure-tourism market like Philly, the rates that you can command for that group are less." Having a smaller footprint also works to Boston's advantage. "Downtown Boston is a little more congested and harder to build new properties," said Scholes. "It's harder to put up new supply in there and part of why it can command a higher rate." Boston also has a strong summer convention market and the venue to support it, said Larry Meehan, vice president of tourism sales for the Greater Boston Convention and Tourism Bureau.
The much bigger Boston Convention and Exhibition Center opened in 2004, and has a seven-year head start on Philadelphia's expanded center.
There is a silver lining for Philadelphia. The limited supply of new hotels will ultimately boost rates as the larger Convention Center draws customer traffic, say analysts and hoteliers.
For now, Angie and David Hein, of Cromwell, Conn., are taking advantage. The couple stayed one night in a $349-a-night suite with a complimentary upgrade at the Palomar last week after taking in the city's sights. "Price, location, amenities. We got all three," said Angie Hein, 63, as she checked out last Thursday.
Monday, July 18, 2011
Friday, June 3, 2011
Guidance indicates hotels’ optimism for 2011
Thursday, 19 May 2011
Posted by Shawn A. Turner at 12:00 AM
Judging by the guidance given for the remainder of 2011, it looks like the hotel industry’s publicly traded companies are optimistic about the direction of the sector’s recovery.
While the economic environment is still shaky, the consensus among hotels seems to be revenue per available room growth of between approximately 4% and 9.5% for the rest of the year, according to first-quarter earnings statements.
“I think the stock market right now is underwriting a pretty strong recovery,” said Enrique Torres, an analyst with Green Street Advisors.
At Wednesday’s close, the Baird/STR Hotel Stock Index was up 15.4% year over year, as indicated by the Hotel Investment Barometer’s data dashboard. For those who aren’t aware, the dashboard handily compiles in one spot a multitude of financial measures and provides a year-over-year look at these metrics. Check it out by clicking here. (Paid Hotel Investment Barometer subscription required to view.) Torres said many companies are targeting RevPAR between 6% and 8%. “Fundamentals (in 2011) should improve meaningfully,” he said.
Now, let’s go right to the sources and take a quick look at what some of the sector’s public companies have to say as far as 2011 guidance is concerned.
Accor: “Despite the uncertainty created by recent geopolitical events in Japan, Africa and the Middle East, and by the macro-economic environment, the group is confident that the hotel cycle will continue to recover in 2011, mainly driven by demand,” the company said in a first-quarter earnings release 20 April.
China Lodging Group: “We are confident that the outlook of the domestic travel market will continue to grow fast,” CEO Matthew Zhang said in a 10 May news release.
Choice Hotels International: RevPAR growth of approximately 4% is expected during 2011.
InterContinental Hotels Group: "We remain confident about the outlook for the rest of the year,” chief executive Andrew Cosslett said in a news release issued 10 May. “Demand for our brands continues to strengthen with both guests and hotel owners. This is driving our performance and reinforcing our industry leading pipeline. We are well positioned to take advantage of the gathering rate momentum we now see around the world.”
Marriott International: “For the full year 2011, the company expects a strong pricing environment,” Marriott said in its first-quarter earnings release on 20 April.
Starwood Hotels & Resorts Worldwide: RevPAR increases at same-store operated hotels worldwide of 7% to 9% in constant dollars; RevPAR increases at branded same-store owned hotels worldwide of 8% to10% in constant dollars.
Strategic Hotels & Resorts: Company raised the lower end of its guidance for North American same store RevPAR and total RevPAR and expects the RevPAR growth to be between 7.5% and 9%.
Sunstone Hotel Investors: Pro forma comparable 33-hotel portfolio RevPAR to increase 6% to 8%.
Original posting:
http://www.hotelnewsnow.com/blog.aspx/5583/108/Guidance-indicates-hotels-optimism-for-2011
Posted by Shawn A. Turner at 12:00 AM
Judging by the guidance given for the remainder of 2011, it looks like the hotel industry’s publicly traded companies are optimistic about the direction of the sector’s recovery.
While the economic environment is still shaky, the consensus among hotels seems to be revenue per available room growth of between approximately 4% and 9.5% for the rest of the year, according to first-quarter earnings statements.
“I think the stock market right now is underwriting a pretty strong recovery,” said Enrique Torres, an analyst with Green Street Advisors.
At Wednesday’s close, the Baird/STR Hotel Stock Index was up 15.4% year over year, as indicated by the Hotel Investment Barometer’s data dashboard. For those who aren’t aware, the dashboard handily compiles in one spot a multitude of financial measures and provides a year-over-year look at these metrics. Check it out by clicking here. (Paid Hotel Investment Barometer subscription required to view.) Torres said many companies are targeting RevPAR between 6% and 8%. “Fundamentals (in 2011) should improve meaningfully,” he said.
Now, let’s go right to the sources and take a quick look at what some of the sector’s public companies have to say as far as 2011 guidance is concerned.
Accor: “Despite the uncertainty created by recent geopolitical events in Japan, Africa and the Middle East, and by the macro-economic environment, the group is confident that the hotel cycle will continue to recover in 2011, mainly driven by demand,” the company said in a first-quarter earnings release 20 April.
China Lodging Group: “We are confident that the outlook of the domestic travel market will continue to grow fast,” CEO Matthew Zhang said in a 10 May news release.
Choice Hotels International: RevPAR growth of approximately 4% is expected during 2011.
InterContinental Hotels Group: "We remain confident about the outlook for the rest of the year,” chief executive Andrew Cosslett said in a news release issued 10 May. “Demand for our brands continues to strengthen with both guests and hotel owners. This is driving our performance and reinforcing our industry leading pipeline. We are well positioned to take advantage of the gathering rate momentum we now see around the world.”
Marriott International: “For the full year 2011, the company expects a strong pricing environment,” Marriott said in its first-quarter earnings release on 20 April.
Starwood Hotels & Resorts Worldwide: RevPAR increases at same-store operated hotels worldwide of 7% to 9% in constant dollars; RevPAR increases at branded same-store owned hotels worldwide of 8% to10% in constant dollars.
Strategic Hotels & Resorts: Company raised the lower end of its guidance for North American same store RevPAR and total RevPAR and expects the RevPAR growth to be between 7.5% and 9%.
Sunstone Hotel Investors: Pro forma comparable 33-hotel portfolio RevPAR to increase 6% to 8%.
Original posting:
http://www.hotelnewsnow.com/blog.aspx/5583/108/Guidance-indicates-hotels-optimism-for-2011
Tuesday, April 26, 2011
Rising Gas Prices Trouble Hoteliers
Rising Gas Prices Trouble Hoteliers
Posted 4/25/2011 - 7:49:34 AM
http://www.hotelbusiness.com/hb/links/news/news.asp?ID=40947
WASHINGTON, DC–With the average price of a gallon of gas in the U.S. hitting $3.84 last week, hotel owners and managers remain concerned about the impact on summer drive-in bookings.
According to the AAA Daily Fuel Gauge Report, the $3.84 figure is up $.30 since the start of the month and is 35% higher than the price a year ago.
Most vulnerable to the spike in prices are select-service roadside hotels that cater to leisure travel.
Posted 4/25/2011 - 7:49:34 AM
http://www.hotelbusiness.com/hb/links/news/news.asp?ID=40947
WASHINGTON, DC–With the average price of a gallon of gas in the U.S. hitting $3.84 last week, hotel owners and managers remain concerned about the impact on summer drive-in bookings.
According to the AAA Daily Fuel Gauge Report, the $3.84 figure is up $.30 since the start of the month and is 35% higher than the price a year ago.
Most vulnerable to the spike in prices are select-service roadside hotels that cater to leisure travel.
Wednesday, April 13, 2011
Grubb & Ellis out of compliance with NYSE | Houston Business Journal
Grubb & Ellis out of compliance with NYSE Houston Business Journal Grubb & Ellis out of compliance with NYSE Houston Business Journal - by Candace Carlisle, Dallas Business Journal Date: Tuesday, April 12, 2011, 2:41pm CDT Commercial real estate brokerage Grubb & Ellis was notified that its stock was out of compliance with the New York Stock Exchange’s listing standards, according to media reports. The stock exchange requires a minimum $1-per-share average closing price for 30 straight days. The Santa Ana, Calif.-based firm (NYSE: GBE) has six months to fix the issue. The company ranked 6th on Houston Business Journal's list of Largest Houston Area Commercial Real Estate Brokerage Firms with 42 full-time licensed brokers, published on Jan. 28. The news comes several weeks after Grubb & Ellis said it was exploring financial strategies that could involve the sale of the company. Last year, Grubb & Ellis reported a net loss of $66.8 million, with a revenue of $575.5 million during the same time period. Read more: Grubb & Ellis out of compliance with NYSE Houston Business Journal
Thursday, March 17, 2011
WSJ: Blackstone, Square Mile to Buy Hotel Mortgages From FDIC
http://online.wsj.com/article/SB10001424052748704396504576205052943405080.html
By ELIOT BROWN And KRIS HUDSON
A venture of private-equity firms Blackstone Group LP and Square Mile Capital LLC has agreed to buy from the Federal Deposit Insurance Corp. a $385 million bundle of mortgages tied to 45 hotels, according to people familiar with the deal.
The group has agreed to pay about 80 cents on the dollar for the portfolio, people said. That is a relatively high price compared with deals involving distressed debt backed by hotels done earlier in the downturn. It speaks to rising optimism about the hotel industry by investors as the economy begins to recover.
The loans backed by the hotels, generally recently constructed, limited-service properties spread across the country, are a remnant of the failed Silverton bank in Georgia, which held the debt until mid-2009, when it was closed by the FDIC.
In May 2010, the FDIC sold a similar portfolio of hotel-backed mortgages that also sat on Silverton's balance sheet. Square Mile bought that portfolio as well, paying about 81 cents on the dollar. But the price in the current sale is considered higher, as the FDIC provided zero-interest financing to Square Mile on the first deal, a benefit that drives up prices.
The hotel sector was particularly hard hit by the economic downturn, and last fall, a peak 19.3% of lodging loans that were placed in commercial mortgage-backed securities were delinquent, according to loan research service Trepp LLC. But in recent months, real-estate investors have been betting on a turnaround in the sector and hotel owners are moving to put new capital into distressed properties that seemed hopeless a year ago. The delinquency rate for February stood at 14.6%.
For example, hedge fund Paulson & Co. and Winthrop Realty Trust are currently in bankruptcy court seeking to maintain control of a portfolio of five luxury resorts with a $1.5 billion debt load.
Another deal involves a Goldman Sachs Group Inc. fund that purchased a portfolio of 105 hotels throughout the U.S. in 2006. The fund paid about 93 cents on the dollar to buy $94 million in junior debt on the portfolio and also is seeking to rework its total $800 million in debt, which matures next month.
The Silverton portfolio is the third large portfolio the FDIC has sold this year. The first two were won by a team of Colony Capital and the New York-based Cogsville Group. Unlike those deals, in which the Colony team bought a stake of the portfolios from the agency, the FDIC is selling its entire ownership in the Silverton deal.
By ELIOT BROWN And KRIS HUDSON
A venture of private-equity firms Blackstone Group LP and Square Mile Capital LLC has agreed to buy from the Federal Deposit Insurance Corp. a $385 million bundle of mortgages tied to 45 hotels, according to people familiar with the deal.
The group has agreed to pay about 80 cents on the dollar for the portfolio, people said. That is a relatively high price compared with deals involving distressed debt backed by hotels done earlier in the downturn. It speaks to rising optimism about the hotel industry by investors as the economy begins to recover.
The loans backed by the hotels, generally recently constructed, limited-service properties spread across the country, are a remnant of the failed Silverton bank in Georgia, which held the debt until mid-2009, when it was closed by the FDIC.
In May 2010, the FDIC sold a similar portfolio of hotel-backed mortgages that also sat on Silverton's balance sheet. Square Mile bought that portfolio as well, paying about 81 cents on the dollar. But the price in the current sale is considered higher, as the FDIC provided zero-interest financing to Square Mile on the first deal, a benefit that drives up prices.
The hotel sector was particularly hard hit by the economic downturn, and last fall, a peak 19.3% of lodging loans that were placed in commercial mortgage-backed securities were delinquent, according to loan research service Trepp LLC. But in recent months, real-estate investors have been betting on a turnaround in the sector and hotel owners are moving to put new capital into distressed properties that seemed hopeless a year ago. The delinquency rate for February stood at 14.6%.
For example, hedge fund Paulson & Co. and Winthrop Realty Trust are currently in bankruptcy court seeking to maintain control of a portfolio of five luxury resorts with a $1.5 billion debt load.
Another deal involves a Goldman Sachs Group Inc. fund that purchased a portfolio of 105 hotels throughout the U.S. in 2006. The fund paid about 93 cents on the dollar to buy $94 million in junior debt on the portfolio and also is seeking to rework its total $800 million in debt, which matures next month.
The Silverton portfolio is the third large portfolio the FDIC has sold this year. The first two were won by a team of Colony Capital and the New York-based Cogsville Group. Unlike those deals, in which the Colony team bought a stake of the portfolios from the agency, the FDIC is selling its entire ownership in the Silverton deal.
Wednesday, February 2, 2011
HotelBusiness.com: Chatham Launches IPO
HotelBusiness.com: Chatham Launches IPO
Chatham Launches IPO
Posted 02-02-2011 - 7:16:31 AM
PALM BEACH, FL—REIT Chatham Lodging Trust launched an underwritten public offering of four million common shares.
The company intends to use the net proceeds of the offering to repay debt under its secured revolving credit facility, to acquire additional hotels and for general business purposes.
The company expects to grant the underwriters a 30-day option to purchase up to 600,000 additional common shares to cover overallotments, if any.
Barclays Capital and UBS Investment Bank are acting as the joint book-running managers for the offering. FBR Capital Markets is acting as the joint lead manager and Morgan Keegan, Credit Agricole CIB, Piper Jaffray, Stifel Nicolaus Weisel and JMP Securities are acting as co-managers.
Chatham Lodging Trust owns 13 hotels representing 1,650 rooms/suites in nine states.
Chatham Launches IPO
Posted 02-02-2011 - 7:16:31 AM
PALM BEACH, FL—REIT Chatham Lodging Trust launched an underwritten public offering of four million common shares.
The company intends to use the net proceeds of the offering to repay debt under its secured revolving credit facility, to acquire additional hotels and for general business purposes.
The company expects to grant the underwriters a 30-day option to purchase up to 600,000 additional common shares to cover overallotments, if any.
Barclays Capital and UBS Investment Bank are acting as the joint book-running managers for the offering. FBR Capital Markets is acting as the joint lead manager and Morgan Keegan, Credit Agricole CIB, Piper Jaffray, Stifel Nicolaus Weisel and JMP Securities are acting as co-managers.
Chatham Lodging Trust owns 13 hotels representing 1,650 rooms/suites in nine states.
Tuesday, February 1, 2011
CNL Hotels affiliates file for bankruptcy
HOTELSMag.com - Daily News
By HOTELS Editors on 2/1/2011
ORLANDO More than 20 affiliates of CNL Hotels & Resorts Inc. have filed for bankruptcy, with more than US$1 billion in assets and liabilities outstanding.
The filing comes as five of CNL’s eight U.S. luxury hotels face a debt payment of about US$1.5 billion. The largest unsecured creditor is Hilton Worldwide, which is owed approximately US$13.4 million, Reuters reports. CNL has retained lawfirm Kirkland & Ellis and financial adviser Houlihan Lokey."
By HOTELS Editors on 2/1/2011
ORLANDO More than 20 affiliates of CNL Hotels & Resorts Inc. have filed for bankruptcy, with more than US$1 billion in assets and liabilities outstanding.
The filing comes as five of CNL’s eight U.S. luxury hotels face a debt payment of about US$1.5 billion. The largest unsecured creditor is Hilton Worldwide, which is owed approximately US$13.4 million, Reuters reports. CNL has retained lawfirm Kirkland & Ellis and financial adviser Houlihan Lokey."
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