Group items tagged

U.S. EXTENDED-STAY HOTELS continued their good performance in all measures of performance in April compared to 2019 and higher than in March, according to hotel investment advisors The Highland Group. Due to seasonal increases in leisure travel, the upscale extended-stay hotels benefited the most from the greatest lift in recovery indices except ADR. Meanwhile, mid-price extended-stay hotels achieved the strongest monthly gains in ADR and room revenues compared to April 2021, the U.S. Extended-Stay Hotels Bulletin: April 2022 report said. Economy extended-stay hotels continued the lead the recovery compared to 2019, but, demand declined 1.4 percent in April this year compared to April 2021, mainly due to strong increases in ADR over several months. "The 1.8 percent increase in extended-stay room supply in April is the first month supply growth reported below 2 percent since 2013 and the seventh consecutive month of 4 percent or lower supply growth. It is likely that the supply increases should be well below pre-pandemic levels during the near term," the report said.

STEERED BY SEVERAL factors, including the strong performance by several hotel brands, the Baird/STR Hotel Stock Index increased 1.4 percent in April to a level of 5,430, STR said in a statement. Growth is slowing, STR said, but will continue for the next quarter or more. "Hotel stocks increased in April, and the gains were driven by outperformance from the global hotel brands," said Michael Bellisario, senior hotel research analyst and director at Baird. "RevPAR trends have remained solid in the face of growing macroeconomic uncertainties and continued banking turmoil, and first-quarter earnings generally have surprised to the upside with positive full-year estimate revisions occurring. The Hotel REITs declined more than 2 percent in April and underperformed the RMZ, while the global hotel brands gained just over 2.5 percent and outperformed the S&P 500's return by 100 bps." According to STR, the Baird/STR Hotel Stock Index fell slightly behind the S&P 500, which was up 1.5 percent in April but came in above the MSCI US REIT Index, up 0.7 percent. The hotel brand sub-index jumped 2.5 percent from March to 10,178, while the hotel REIT sub-index dropped 2.6 percent to 1,045, it added. "The industry continues to revert to normal patterns and calendar shifts with growth slowing as forecasted," said Amanda Hite, STR president. "Monthly demand fell year over year for the first time since the recovery began in April 2021, but that decrease can be attributed to an extra Sunday on the calendar this year versus last. Without the extra Sunday, which is historically a low-performance night, demand would have been slightly up from last year. ADR, on the other hand, grew 3.4 percent, while RevPAR was up 1.8 percent - the lowest increase of the recovery thus far. Despite slowing growth, we expect the industry to see further gains throughout the summer and fall."

ALL RECOVERY INDICES of U.S. extended-stay hotels were lower compared to 2019 in May than in April, according to hotel investment advisors The Highland Group. The demand for economy extended-stay hotels declined 1.3 percent for the second consecutive month in May compared to same period last year mainly due to sharp increase in ADR in last few months, the report said. The U.S. Extended-Stay Hotels Bulletin: May 2022 by The Highland Group said that the extended-stay room supply growth was just 1.9 percent during the month. It is the second successive month that the growth was below 2 percent since 2013, and the eighth consecutive month of 4 percent or lower supply growth. The report added that the supply increase will be well below pre-pandemic levels during the near term. According to STR, all hotel room revenue was up 43 percent in May 2022 compared to last year. "In May, mid-price and upscale extended-stay segments reported their lowest monthly change in demand in 2022. Except for February 2021, due to the leap year in 2020, economy extended-stay hotels reported only the second monthly fall in demand in 23 consecutive months," the report said. "Overall hotel occupancy gained more than extended-stay hotels in May compared to one year ago, decreasing extended-stay hotel's occupancy premium to 12 percentage points, and remains within its long-term average range."

IN 2020 AND 2021, U.S. hotel operators did a praiseworthy job controlling expenses to offset the significant declines in revenue. Based on data from CBRE's Trends in the Hotel Industry survey of annual operating statements from thousands of properties across the U.S., not only have we seen a reduction in the variable expenses associated with the drop in business volume (i.e., occupied rooms, restaurant covers), but also in cuts among what were previously thought to be fixed expenses. During this time period, insurance costs were out of operators' control. Per the 11th edition of the Uniform System of Accounts for the Lodging Industry (USALI), insurance expenditures are classified as a non-operating expense and reported on the summary operating statement below gross operating profits. The insurance expense line item includes property insurance for building, contents, and business income from all perils, as well as general liability and excess liability insurance. The insurance expense category does not include workers compensation insurance, which is allocated to the operated and undistributed departments. To analyze recent changes in hotel insurance costs, and the factors that influence those changes, we examined the operating statements of 3,156 U.S. hotels that reported insurance expenses for the Trends survey each year from 2015 through 2021 (estimated). The following paragraphs summarize the findings from our analysis.

THE BAIRD/STR HOTEL Stock Index jumped in July, ending a downward trend for two consecutive months. The index decreased 10.4 percent year-to-date for the first seven months of 2022. Baird/STR Index recorded a sharp increase of 14.3 percent in July, according to STR. The index fell 19.3 percent in June and dropped 5.8 percent in May. It went up 0.7 percent during April. It increased 2.2 percent in March after rising 4.1 percent in February. The Baird/STR Index surpassed both the S&P 500, up 9.1 percent from June, and the MSCI US REIT Index, increased 8.7 percent, respectively during July. The hotel brand sub-index rose 14.2 percent from June, while the Hotel REIT sub-index increased 14.6 percent during the month. "Hotel stocks rebounded sharply and outperformed their respective benchmarks in July; relative outperformance has continued in August," said Michael Bellisario, senior hotel research analyst and director at Baird. "Despite the big gains in July, hotel stocks did not fully recapture June's losses. Positively, second quarter earnings exceeded analysts' and investors' expectations, and broader recession fears have begun to subside, which has boosted sentiment and stock prices. All eyes are on the post-Labor Day outlook that should reflect a more normalized travel environment."

THE BAIRD/STR HOTEL Stock Index dropped in June for the second consecutive month. The index dropped for the first time, after rising continuously for five months, in May. Baird/STR recorded a sharp fall of 19.3 percent in June, according to STR. The index dropped 5.8 percent in May. It went up 0.7 percent during April. It increased 2.2 percent in March after rising 4.1 percent in February. The index decreased 21.6 percent during the first six months of 2022. The Baird/STR Index fell behind both the S&P 500, dropped 8.4 percent from May and the MSCI US REIT Index, down 7.9 percent respectively during June. The hotel brand sub-index fell 19.3 percent from May, while the Hotel REIT sub-index dipped 19.5 percent during the month. "Hotel stocks continued on their downward trajectory in June and were significant relative under-performers as investors began to factor in an increasing likelihood of an impending recession," said Michael Bellisario, senior hotel research analyst and director at Baird. "While the upcoming summer travel months are expected to be strong, investors are looking beyond the near-term fundamental strength to a period when demand and ADR growth are likely to moderate, which is supported by the many macroeconomic indicators that are flashing signs of broader slowing."

U.S. HOTEL PERFORMANCE exhibited mixed results in the third week of April compared to the previous week, according to CoStar. Key metrics such as occupancy and ADR saw slight increases, while RevPAR declined from the preceding week. Occupancy rose to 66.8 percent for the week ending April 20, up from the previous week's 65.8 percent, but marked a 0.3 percent year-over-year decrease. ADR dropped to $158.60 from $160.20, a 1.5 percent increase compared to last year. RevPAR climbed to $105.94 from $105.48 the prior week, showing a 1.2 percent rise compared to the same period in 2023. Among the top 25 markets, Philadelphia saw the most significant year-over-year occupancy surge, soaring by 14.3 percent to reach 72.1 percent, while RevPAR also notably increased by 23.2 percent to $114.11.

REAL ESTATE INVESTMENT competition She Has a Deal (SHaD) started a 10-city tour of U.S. cities to raise equity capital under the name "SHaD Prosperity Fund I." The funds will support women-led hotel projects, a statement said. The tour kicks off in Miami on Feb. 11 and will be open to small groups of qualified individual investors, family offices, small entities and trusts. Cities on the tour include Cleveland, Phoenix, Dallas, New York, Atlanta, Chicago, as well as Oakland, California; Louisville, Kentucky; and Washington, D.C. It will finish in the first week of April. According to SHaD, each event will include a preview of the women-led hotel deals being pitched by participants in the 2022 She Has a Deal pitch competition. "Launching SHaD Prosperity Fund I is the next logical step in the SHaD mission. Now that we have created a powerful platform to expose more women to hotel ownership and educate them about the process, I want to ensure that capital is available for the women to close their hotel deals," said SHaD founder Tracy Prigmore. "This investment vehicle marries two of my passions: creating investment vehicles that open the doors of hotel investing to more people and increasing the number of women owning and developing hotels. The ability to create passive income for investors while leading social change is inspiring."

THE BAIRD/STR HOTEL Stock Index rose again in April, continuing a trend the index has followed for the past four months. Investors' optimism is driven by the travel industry's ongoing recovery due to pent-up demand that is overriding negative influences, such as the Russia/Ukraine war and rising interest rates. Baird/STR went up 0.7 percent during the month, according to STR. The index rose 3.1 percent over the first four months of 2022. In March it increased 2.2 percent in March after rising 4.1 percent in February. The index also surpassed both the S&P 500, which dropped 8.8 percent in April, and the MSCI US REIT Index, which went down 4.6 percent. The hotel brand sub-index rose 0.5 percent from March, while the hotel REIT sub-index jumped up 1.5 percent.

U.S. HOTEL PERFORMANCE declined in the fourth week of April compared to the previous week and the corresponding period last year, as expected during Passover, according to CoStar. All key metrics, including occupancy, RevPAR and ADR, experienced a decrease compared to the previous week. Occupancy came in at 65.7 percent for the week ending April 27, down from the previous week's 66.8 percent, while marking a 1.2 percent year-over-year decrease. ADR decreased to $154.44 from $158.60, reflecting a 1.3 percent decline compared to last year. RevPAR stood at $101.42, down from $105.94 the prior week, indicating a 2.5 percent dip compared to the same period in 2023. Among the top 25 markets, Seattle reported the sole double-digit increase in occupancy, rising by 15.6 percent to 74.6 percent. Detroit, host of the NFL Draft, saw the most significant surge in both ADR, rising by 21.8 percent to $147.83, and RevPAR, increasing by 25.6 percent to $94.74.

BUSINESS CONTINUED TO improve in the second week of April for U.S. hotels, according to STR. Occupancy, ADR and RevPAR all rose on a weekly basis, and the last two were up compared to the same time in 2019. Occupancy was 66.4 percent for the week ending April 9, up from 64.1 percent the week before but down 4.7 percent from 2019. ADR was $150.45 for the week, up from $145.74 the previous week and up 10.6 percent from 2019. RevPAR reached $99.93, a rise from $93.48 weekly and up 5.4 percent from three years ago. Among STR's top 25 markets, Tampa saw the highest occupancy increase over 2019, up 6.2 percent to 84 percent. Minneapolis had the largest occupancy decrease from three years ago, down 29.5 percent to 51.4 percent.

THE BAIRD/STR HOTEL Stock Index dropped in May, after rising continuously for five months. Investors grew concerned about macroeconomic slowing and inflationary pressures which led to the broader stock market volatility. Baird/STR dropped 5.8 percent during the month, according to STR. Baird/STR went up 0.7 percent during April. The index decreased 2.8 percent over the first five months of 2022. It increased 2.2 percent in March after rising 4.1 percent in February. Baird/STR index fell behind the S&P 500, which was flat from April, but surpassed the MSCI US REIT Index, which was down 6.3 percent. The hotel brand sub-index fell 6 percent from April, while the Hotel REIT sub-index dipped 4.9 percent during the month.

U.S. HOTELS ADDED 1,200 jobs in April, recent government statistics showed, yet employment levels in the industry still lag significantly behind pre-pandemic levels, according to American Hotel & Lodging Association. The Bureau of Labor Statistics also noted that there are currently about 1.92 million people employed in hotels, representing a decrease of 193,600 compared to February 2020. The association is advocating for policy changes to address hospitality industry's labor shortages. AHLA urged the Department of Homeland Security to issue around 65,000 additional H-2B temporary nonagricultural worker visas, as authorized by Congress in the Further Consolidated Appropriations Act. "Hotels are doing all they can to attract and retain workers, but the nationwide workforce shortage is preventing our industry from reaching its full potential," said Kevin Carey, AHLA's Interim president and CEO. "AHLA members need help filling open jobs so they can maintain and expand operations. The DHS can provide vital assistance by making available nearly 65,000 additional H-2B visas. Meanwhile, we are urging Congress to pass three important bills to help grow our nation's workforce: the Asylum Seeker Work Authorization Act, the H-2 Improvements to Relieve Employers Act and the Closing the Workforce Gap Act."

INFLUENCED BY EASTER and Passover calendar shift, U.S. hotel performance registered lower year-over-year comparisons from the previous week, according to STR's latest data through 8 April. Occupancy was 61.3 percent for the week ending April 8, down from 66.2 percent the week before, and dipped 7.4 percent than the comparable week in 2022. ADR stood at $153.30, down from $158.40 the week before, and rose 0.8 percent compared to 2022. RevPAR was $94, down from $104.78 in the last week and slipped 6.7 percent over the same month in 2022. Among the Top 25 Markets, New York City saw the highest year-over-year increases in occupancy, up 6.3 percent to 82.2 percent and RevPAR rose 19.4 percent to $232.80 over 2022.

AS NORMAL SPRING break patterns continue, U.S. hotel performance increased in the first week of April compared to the previous week, according to STR. Metrics improved over the previous week as well as year-over-year in most cases. Occupancy stood at 66.2 percent for the week ending April 1, up from 64.9 percent the week before, and rose 3.4 percent than the comparable week in 2022 and decreased 3.5 percent over the comparable week in 2019. ADR was $158.40, down from $158.61 the week before, increased 7.3 percent and 19.9 percent against 2022 and 2019, respectively. RevPAR was $104.78 from $102.98 in the last week and rose 10.9 percent and 15.7 percent over the same month in 2022 and 2019. Among the top 25 markets, Washington, D.C., registered the highest year-over-year increase in occupancy, up 18.2 percent to 78.7 percent, while Dallas saw the highest occupancy lift over 2019, up 6.2 percent to 73 percent. Houston showed the most substantial ADR, up 25.8 percent to $133.5, while Phoenix reported the highest ADR increase over 2019, up 49.4 percent to $232.54.

A SLIGHT DROP was witnessed in U.S. hotel performance in the first week of April from the week before due to a continuing slump in Spring Break travel, according to STR. Little movement was seen in the top 25 markets as well. Occupancy was 64.1 percent for the week ending April 2, down from 65.5 percent the week before and down 6.4 percent for the same period in 2019. ADR was $145.74 for the week, dropped from $149.38 the week before and increased 11.7 percent from two years ago. RevPAR was $93.48 for the week, dipped from $97.92 the week before and up 4.5 percent from the same period in 2019.

THE PROFITABILITY OF U.S. hotels was above 2019 level for the third consecutive month in May, but was lower compared to April, according to STR. The GOPPAR and EBITDA PAR levels were down in May compared to the month before. GOPPAR was $88.63 for the month, down from $90.96 reported in April. In March, GOPPAR stood at $83.81. EBITDA PAR was $67.80 for May, TRevPAR was $219.58 and labor costs per room were $66.27. "After the top-line metrics showed mixed results in May, it wasn't a surprise that the bottom-line metrics came in a bit lower," said Raquel Ortiz, director of financial performance, STR. "Regardless, each of the four key P&L metrics showed improvement when indexed to 2019, with GOPPAR and EBITDA PAR coming in higher than May 2019 levels. We continue to keep a close eye on F&B as group demand levels rise. F&B revenues are gradually moving closer to 2019 levels, but catering and banquet revenues continue to lag."

REFLECTING THE POSITIVE side of the Easter calendar shift, U.S. hotel performance during the second week of April increased from the previous week, according to STR. Year-over-year comparisons also were up. Occupancy was 64.2 percent for the week ending April 15, up from 61.3 percent the week before, and increased 3.7 percent than the comparable week in 2022. ADR stood at $155.33, up from $153.3 the week before, jumped 4.7 percent against 2022. RevPAR came in at $99.67, increased from $94 in the last week, and rose 8.6 percent over the same month in 2022. Among the top 25 markets, Minneapolis saw the highest year-over-year increase in occupancy, up 17.4 percent to 54.5 percent during the Easter week. Washington, D.C., reported the most substantial ADR, up 22.5 percent to $200.99, and RevPAR, increased 38.1 percent to $146.73 year-over-year.

THE RevPAR OF U.S. hotels in the third week of May was the highest it has been since mid-July 2019, according to STR. Also, all metrics in April as a month improved compared to March, and hotels reported all-time high room rates during the period. Occupancy was 68.6 percent for the week ending May 21, up from 66.5 percent the week before and down 3.5 percent from 2019. ADR was $151.75 for the week, increased from $148.31 the week before and up 13.4 percent from three years ago. RevPAR reached $104.06 percent during the week, up from $98.59 the week before and rose 9.5 percent from 2019. STR's top 25 markets saw their highest weekly occupancy, ADR and RevPAR levels of the pandemic-era during the week.

GOPPAR FOR U.S. hotels dropped in July but once again exceeded 2019 levels for the fourth consecutive month, according to STR. The summer peak still brought an increase in demand, but the cost of ramping up to meet that demand cut into profit margins. GOPPAR was $78.30 for the month, down from $91.23 reported in June. It was $88.63 in May and stood at $90.96 in April. EBITDA PAR was $55.29 for July, TRevPAR was $209.66 and labor costs per room were $67.27. "While each of the key bottom-line metrics decreased slightly from June on a per-available-room basis, total profits increased with peak summer room demand and revenues," said Raquel Ortiz, STR's director of financial performance. "Profit margins were stronger than July 2019 for both full- and limited-service hotels, but GOP margins were at lower levels than the previous four months. The dip in margins can be attributed to higher expenses associated with more ramped-up operations as well as the general rise in costs around the country. Rising wages are being somewhat balanced by hotels using more contract labor and reducing benefits costs."