Latest HITs: Earning for Playa, RLJ; Spanish resort trades; Canada pipeline

JLL recaps 1Q. JLL’s latest U.S. Hotel Investment Trends report for 1Q23 showed that during the quarter, RevPAR grew 13% compared to 2019, fueled by higher ADR and growth in business and group demand as well as strong leisure travel. Performance surged in top-25 markets, surpassing pre-pandemic levels by 7% largely due to a boost in corporate and group demand. While debt market turbulence resulted in a decline in U.S. hotel investment volume relative to last year, total liquidity finished in-line with pre-COVID numbers driven by increased single-asset sales, particularly for select-service and luxury assets. JLL added that the industry can expect investment activity to accelerate in the short-to-medium-term catalyzed by impending loan maturities, interest rate cap renewals, and fund-life expirations.

MICE rebound helps Playa. Playa Hotels & Resorts reported 1Q23 earnings results with occupancy levels hitting post-pandemic highs in Mexico and Jamaica and Ajusted EBITDA reaching a quarterly record. CEO Bruce Wardinski said the relaxation of COVID-related restrictions have led to robust demand in the MICE segment. At the same time, Wardinski added that the sudden appreciation of the Mexican Peso and the decline in profits from two newly acquired Dominican Republic properties were significant headwinds. He added that Playa continues to expect double digit year-over-year ADR growth in the second quarter, as demand for the remainder of the year has remained steady despite macroeconomic concerns. “Our MICE business for 2024 is pacing well ahead compared to the same time last year, providing a strong base of business for the coming high season,” Wardinski added. Net income was $42.7 million compared to $42.7 million in 2022; adjusted net income was $49 million compared to $31.8 million in 2022; net package RevPAR increased 24.7% over 2022 to $355.27, driven by a 27.4% increase in net package ADR; owned resort EBITDA increased 25% versus 2022 to $109.4 million; adjusted EBITDA increased 28% versus 2022 to $98.5 million.

Urban bump drives RLJ results. RLJ Lodging Trust’s 1Q earnings beat expectations driven by improving fundamentals in urban markets, as well as business transient, group and leisure demand. President and CEO Leslie Hale said, “These positive trends allowed our portfolio to achieve strong year-over-year RevPAR growth with continuing pricing power.” 1Q RevPAR increased 27% from 2022 and achieved 95% of the comparable period in 2019, A number of RLJ’s key urban markets, including San Diego, New York and Washington DC, exceeded 2019 ADR by 10% or more during the quarter.

Sotherly loan. Sotherly Hotels, Williamsburg, Virginia, has executed a $10 million secured loan with Citi Real Estate Funding, collateralized by a first mortgage on the DoubleTree by Hilton Laurel in Laurel, Maryland. The interest only loan, which has a principal balance of $10 million, matures in May 2028 and carries a fixed interest rate of 7.35%. Proceeds from the loan were used to repay the existing first mortgage and for general corporate purposes. “We view the favorable loan terms, which include payments nearly identical to the previous loan, as well as the considerable cash proceeds of approximately $2.7 million, as a positive outcome for the company, particularly in the current lending environment,” said Sotherly CEO Dave Folsom.

Paris Las Vegas tower. Caesars Entertainment will spend more than $100 million to renovate the Jubilee Tower at Horseshoe Las Vegas and integrate it into Paris Las Vegas with a new name, Versailles Tower. The renovation will introduce 756 redesigned luxury guestrooms and a pedestrian bridge connecting the Versailles Tower to the existing Paris resort. The enhanced rooms are slated for completion in late 2023 with the pedestrian bridge to follow in early 2024.

Maldives development. FAM Holding Group, Dubai, will develop for $217.8 million the Al Mahra Maldives resort – its first project outside the UAE. The resort is expected to have 150 villas, including 10 VIP, 40 beach and 100 over-water villas with private pools. Building is expected to commence in three months and project handover is expected in 2Q25.

Spanish resort trades. Madrid-based real estate asset management specialist Mazabi has acquired the 157-room Aragon Hills & Spa hotel in Spain’s Fromigal-Panticosa ski resort. The search is on for a new operator and is part of the long-term regeneration and unification plan of the four ski resorts in the Tena and Aragon valleys, Canfranc, Candanchú, Astún and Formigal-Panticosa. Mazabi now has 19 hotel assets with several hotels planning to be sold this year.

Canada pipeline. Canada’s hotel construction pipeline currently stands at 283 projects/37,683 rooms, an increase of 10% by projects and 5% by rooms year-over-year (YOY), according to Lodging Econometrics. Canada saw significant growth in the first quarter with new project announcements surpassing totals for each of the previous five quarters to stand at 27 projects/3,806 rooms. Projects in the early planning stage hit a peak for the country with 145 projects/20,583 rooms, up 38% and 36% YOY, respectively. Other pipeline metrics at the Q1 close include projects that are under construction, which stand at 47 projects/5,802 rooms. Ontario continues to lead Canada’s construction pipeline with record-high project and room counts of 162 projects/21,945 rooms and accounts for 57% of the projects and 58% of the rooms in Canada’s pipeline. British Columbia follows, also reaching record-high totals at Q1, with 55 projects/8,670 rooms, followed by Quebec with 21 projects/2,555 rooms. Marriott International has 78 projects and 10,305 rooms, followed by Hilton with 64 projects/7,850 rooms, and InterContinental Hotels Group with 43 projects/4,347 rooms.