Latest HITs: LuxUrban-Wyndham deal; DiamondRock buy; Braemer rebrands Mr. C

LuxUrban affiliates with Wyndham. Wyndham Hotels & Resorts and LuxUrban Hotels have signed a deal to bring 16 LuxUrban hotels, representing approximately 1,400 rooms, into the Trademark Collection by Wyndham brand later this year. Located across New York, Los Angeles, Miami, Washington, and New Orleans, the hotels will maintain their LuxUrban branding while also gaining affiliation and recognition via the Trademark brand name. The agreement also paves the way for additional LuxUrban hotels—including any locations not yet acquired—to join Trademark. LuxUrban, with an asset-light acquisition-driven growth strategy, acquires the operating rights to hotels under long-term master lease agreements. Today, Trademark Collection includes more than 185 hotels in nearly 25 countries.

US performance update. U.S. hotel performance declined slightly from the previous week but showed improved comparisons year over year, according to CoStar’s latest data through 29 July. Occupancy was 72.2% (+0.6% YOY); ADR was US$161.83 (+2.3 YOY); and RevPAR was US$116.91 (+2.9% YOY). Among the Top 25 markets, St. Louis saw the largest year-over-year increases in occupancy (+17.4% to 73.6%) and RevPAR (+43.6% to US$105.50). Nashville reported the largest gain in ADR (+22.4% to US$210.31). The steepest RevPAR declines were seen in Miami (-14.6% to US$121.58) and San Francisco (-10.5% to US$149.88).

Grigg moves to CBRE. CBRE has announced today that Andrea Grigg has joined CBRE Hotels as a senior managing director and global head of Hotels Asset Management to develop and lead the firm’s global hotel asset management and operator selection practice. Based in Atlanta, Grigg will focus on bringing cross-border hospitality solutions and ownership representation to global hotel investors. She will also oversee operator and brand selection, as well as management contract negotiation services, helping better serve hotel owners by sharing global best practices. Grigg joins CBRE from JLL, where she spent the last 16 years as a leader in the firm’s hotel asset management practice.

Masterworks takes Club Quarters debt. New York-based Masterworks Development is taking a new position in the Club Quarters operating brand with a discounted purchase of the note to a $61 million mezzanine loan tied to four struggling Blackstone-owned hotels in major cities. Masterworks used to own the hotels and now bought the note for the company’s locations in San Francisco, Chicago, Boston and Philadelphia. The mezzanine debt,  with a $274 million senior CMBS loan against the properties, was borrowed by the Blackstone fund Blackstone Real Estate Partners VII in 2017, with the 1,228-room portfolio serving as collateral.

DiamondRock acquisition. DiamondRock Hospitality Co. has acquired for $33 million the fee-simple interest in the 117-room Chico Hot Springs Resort in Paradise Valley, Montana and near Yellowstone National Park, as well as a 595-acre adjacent ranch parcel for future expansion of the Resort or residential lot sales. Chico was acquired from an individual owner-operator and is an independent resort, completely unencumbered by brand and management agreements. The $27 million purchase price for the resort represents an 8.1% capitalization rate on 2022 net operating income. DiamondRock expects Chico to generate a 10.5% NOI yield on the total $33 million purchase price upon stabilization. The acquisition was funded from corporate cash on hand. The company has installed a management company to execute its operating plan as well as to pursue many high return-on-investment opportunities, including additional rooms and glamping, affordable workforce housing, and renewable power.

Georgetown refi. BWE, a national commercial and multifamily mortgage banking company, has closed a $33.4 million loan to refinance Sonder Georgetown and LuxUrban Georgetown, two apartment buildings that have been converted into short-term stay hotels. The loan came from a private credit fund on behalf of Varsity Investment Group. Located in the heart of Georgetown next to the Four Seasons, Varsity Investment Group purchased Georgetown Suites, which were originally built as a hotel, in 2021 to convert it into a luxury apartment complex. Varsity then worked with Sonder and LuxUrban, two major hospitality companies, to master-lease the two buildings so they could be operated as short-term rentals under the names Sonder Georgetown and LuxUrban Georgetown. The two buildings contain more than 200 units.

Braemar rebrands in Beverly Hills. Braemar Hotels & Resorts is rebranding and converting its Mr. C Beverly Hills in Los Angeles, California, to the Cameo Beverly Hills. Following a $25 million renovation, which is expected to be completed by the end of 2025, the hotel will join Hilton’s LXR Hotels & Resorts. The hotel will be bookable through Hilton’s system beginning August 4. Remington will continue to manage the property after the conversion under a management agreement.

Top US pipeline markets. The five largest U.S. hotel construction pipelines as of 2Q23 are Dallas with a record-high 184 projects/21,501 rooms, Atlanta with 141 projects/17,993 rooms, Phoenix with 119 projects/16,107 rooms, Nashville with 116 projects/15,346 rooms, and Los Angeles with 112 projects/17,797 rooms, according to Lodging Econometrics. The markets with the most projects currently under construction at the Q2 close are New York with 47 projects/8,201 rooms, and Phoenix with 29 projects/6,064 rooms. Dallas has the most projects scheduled to start in the next 12 months with 69 projects/8,045 rooms, followed by Atlanta with 66 projects/7,932 rooms, and the Inland Empire market with 48 projects/4,946 rooms. Markets with the most projects in early planning are also led by Dallas with 90 projects/10,104 rooms, Los Angeles with 52 projects/8,663 rooms, and Nashville with 51 projects/6,009 rooms. LE recorded a combined renovation and conversion pipeline total of 1,939 projects with 253,473 rooms for the U.S. at the Q2 close. The markets with the largest combined number of renovations and conversions are Atlanta with 39 projects/4,232 rooms, Chicago with 36 projects/4,921 rooms, and Dallas with 33 projects/5,687 rooms.

Peachtree adds management. Peachtree Hospitality Management (PHM) has assumed management of the 105-suite SpringHill Suites Dallas Rockwall in Texas. The assignment is part of PHM’s agreement with TEKMAK Development Co. to provide third-party management services for a portion of its hotel portfolio. PHM also has agreed to operate two under-construction hotels: a dual-branded TownePlace Suites by Marriott and Fairfield by Marriott in Paris, Texas, and a TownePlace Suites by Marriott in Forney, Texas. PHM currently manages 91 hotels across 28 brands with 11,154 rooms in 22 states.

Miami Beach refi. Cronheim Hotel Capital has secured $85 million for the refinance of the Grand Beach Hotel, a 424-suite luxury hotel located on the beach in Miami Beach, Florida. David Poncia, Dev Morris, Allison Villamagna, and Andrew Stewart sourced the financing from one of Cronheim’s correspondent life insurance companies, which provided a five-year fixed-rate loan on an interest-only basis. The hotel is in the midst of a substantial renovation which includes upgrades to the lobby, lobby bar, coffee shop, boutique restaurant, spa, and guestrooms. “This property was undergoing significant renovations during the financing process. The challenge was in using projections for stabilized cash flow in order to complete a permanent financing from a portfolio lender,” said Stewart. “The developers have done a great job repositioning the asset to ensure its competitiveness going forward.”

Anaheim hotel trades. Private investor Sunstone Development has acquired the 60-year-old Budget Inn, a 24-key limited-service hotel located in Anaheim, California. Sunstone intends to explore long-term alternative strategies for the site, including full-service hotel uses. The off-market transaction completes Sunstone’s 1.1-acre land assemblage at the gateway to the Disneyland Park that included the purchase of the adjacent 44-key Days Inn by Wyndham last year. The Mogharebi Group Advises Sunstone Development on the acquisition.

Extended-stay occupancy contracts. Excluding the post-pandemic recovery, extended-stay hotel’s 3.2% RevPAR gain in the second quarter of 2023 was the smallest quarterly increase in more than three years but it was better than the 2.7% increase STR reported for the overall hotel industry, according to the Highland Group. Compared to Q2 2019, extended-stay hotels RevPAR recovery index in Q2 2023 was 113%, which was two points ahead of STRs index for the total hotel industry. Extended-stay hotels are increasing rates faster than the overall hotel industry, but occupancy is contracting further. Economy and mid-price extended-stay segments are outperforming corresponding classes of all hotels.

Hyatt soft brand growth. The Fordson Hotel, formally known as 21c Museum Hotel Oklahoma City, Oklahoma, has joined the Hyatt Hotels Corp. portfolio as an affiliated hotel under the Unbound Collection by Hyatt brand. The property is owned by Hall Capital and operated Avion Hospitality is now bookable across Hyatt reservation channels and is expected to join the brand in late 2023.

IHG adds in India. IHG Hotels & Resorts has signed a management agreement with Ginger Tree Goveia to bring a voco-branded hotel to Goa, India. voco Goa Arpora is set to open its doors in January 2025. IHG currently has 45 hotels operating across five brands in SWA and has a strong pipeline of 39 hotels due to open in the next two to three years.

Canberra hotel trades. Boutique funds management company Serene Capital has acquired from Shakespeare Property Group for A$41.5 million the 152-room Canberra’s Abode Hotel and Apartments in Australia. The hotel was sold with a long-term lease to Iconic Hotels under its Abode brand, which is a division of Geocon, Canberra’s larger residential builder-developer.