Latest HITs: Record TRevPAR in US; Stoneweg buys in Spain; big Labor Day in China

TRevPAR record. U.S. hotel total revenue per available room (TRevPAR) was the highest for any month on record, according to STR‘s March 2023 P&L data release. March 2023 per-available-room metrics (% change from March 2022): GOPPAR: US$95.12 (+14.5%); TRevPAR: US$238.22 (+17.5%); EBITDA PAR: US$71.07 (+14.4%); LPAR (Labor Costs): US$74.43 (+23.4%). “The increase in TRevPAR prevented labor costs from placing further pressure on GOPPAR. Profit margins continue to be strong even with those increased labor costs as total revenues are growing and other expenses are being managed through reduced services, lower employment levels and adjusting operations,” said Raquel Ortiz, STR’s director of financial performance. “The strongest performing markets when compared to 2019 are now realizing less improvement year over year. Group-dependent markets are now at the top, with New York City showing the highest GOPPAR gain on March 2022. Overall, there are no longer any top markets with negative TrevPAR or GOPPAR comparables.”

Stoneweg grows in Spain. Stoneweg Hospitality, Geneva, Switzerland, has acquired two hotels in Spain from Spain’s Globalia Business Corp. for €83 million. The properties are La Niña, a 226-room hotel in Costa Adeje, Tenerife, and Palace de Muro, a 184-room hotel in Muro, Mallorca. Stoneweg Hospitality, which was established in 2021, currently owns a portfolio of seven prime hotels across Spain and with this deal reaches 1,691 keys.

On the move in China. Breaking a single-day record, some 19.7 million railway trips were made across China last Saturday during the Labor Day holiday. China Railway Group expects traffic to rise to a record 120 million passengers for the extended holiday period, up 20% from the same period in 2019. Reports suggest many young tourists are now opting for low-cost, value-for-money experiences, with some unexpected destinations becoming the new travel hotspots.

Resch Group grows in Indiana. In Spring 2025, The Elsby Hotel will debut as a full-service, 82-room boutique hotel in New Albany, Indiana. The hotel is an adaptive reuse of the Elsby Building, a 100-plus year-old building that previously housed office space. It was purchased in June 2021 by co-owners Steve Resch, of Resch Property Group and Resch Construction, and Chad Sprigler, of The Sprigler Company, both based in New Albany. With a total development budget of $29 million, renovation and new construction will begin in late Spring 2023. The Elsby Hotel is managed by First Hospitality, Chicago, and will be soft branded as a Tapestry Collection by Hilton.

Park 1Q23 results. Park Hotels & Resorts beat the Street in 1Q23 reported adjusted EBITDA of $146 million, above the consensus estimate of $134 million. AFFO/share of $0.42 compares the with consensus estimate of $0.33. Comparable RevPAR of $158.84 (+36.5% y/y) compares to at-consensus of $160. Full year adjusted EBITDA of $624 million to $704 million is up $14 million at the midpoint and in-line with the $14 million 1Q beat. Park said full year RevPAR is projected at $167-$179 (+7-14%). Park Chairman and CEO Thomas Baltimore, Jr. said results were driven by on-going improvements at their urban hotels (+81% RevPAR YOY) and sustained strength in resort markets (+13% RevPAR YOY), while an acceleration in group trends helped to drive healthy margin gains during the quarter. Group revenues exceeding forecast by 15%, while 2023 group revenue pace now stands at 82% of 2019. Hawaii continues to outperform despite the absence of notable Japanese demand with RevPAR up 26% during the 1Q. In February 2023, Park sold the 508-room Hilton Miami Airport hotel for gross proceeds of $118.25 million, or $233,000 per key, 14x the hotel’s 2019 adjusted EBITDA and at a cap rate of 6.2% on the hotel’s 2019 net operating income.

Dallas' big pipeline. The largest construction pipelines at the close of 1Q23 are led by Dallas with, record-high project and room counts of 184 projects/21,810 rooms, according to Lodging Econometrics. Following are Atlanta with 144 projects/18,242 rooms, Los Angeles with 118 projects/19,066 rooms, Phoenix with 117 projects/16,100 rooms, and Nashville with 115 projects/15,354 rooms. Markets with the greatest number of projects already under construction at the Q1 close are New York with 54 projects/8,682 rooms, Atlanta with 26 projects/4,278 rooms, and the Inland Empire with 26 projects/2,584 rooms. Dallas has 25 projects/3,739 rooms while Phoenix has 24 projects/5,155 rooms projects presently under construction. LE recorded record-high renovation and brand conversion totals of 1,953 active projects/253,533 rooms. The markets with the largest count of combined renovation and conversion projects are Atlanta with 41 projects/4,427 rooms, Houston with 38 projects/3,969 rooms, Chicago with 34 projects/4,572 rooms, Dallas with 31 projects/3,807 rooms, then San Diego with 28 projects/4,238 rooms. In addition, construction starts in the total U.S. pipeline rose 20% by projects and 30% by rooms YOY. In the first quarter, Nashville has the highest number of new projects announced into the pipeline with 14 projects/1,847 rooms. Dallas follows with 11 projects/1,576 rooms, then Atlanta with 10 projects/1,146 rooms, Austin with 9 projects/1,201 rooms, and Phoenix with 9 projects/885 rooms.

US pipeline by company. Marriott International has the greatest number of projects in the U.S. construction pipeline, at Q1 2023, with 1,499 projects/181,377 rooms, followed closely by Hilton Worldwide (Hilton), with a record-high count of 1,436 projects/161,359 rooms, and then InterContinental Hotels Group (IHG) with 809 projects/80,679 rooms, according to Lodging Econometrics. Combined, these three franchise companies comprise 68% of the projects in the total U.S. pipeline. Marriott also has the most projects and room counts in each stage of the pipeline at Q1, with 279 projects/38,156 rooms currently under construction, 763 projects/90,038 rooms scheduled to start construction in the next 12 months, and 457 projects/53,183 rooms in early planning. The leading brands by project count for the three companies with the largest pipelines in the U.S. at Q1 are Home2 Suites by Hilton with all-time highs by projects and rooms of 546 projects/56,001 rooms, Marriott’s TownePlace Suites, also reaching all-time highs by projects and rooms at Q1, with 333 projects/31,068 rooms, and IHG’s Holiday Inn Express brand with 301 projects/28,371 rooms. LE recorded record-high conversion pipeline totals of 1,079 projects/110,084 rooms for the U.S. in the first quarter of 2023.

IHG supports KSA tourism. IHG Hotels & Resorts has signed a Memorandum of Understanding (MOU) with the Saudi Tourism Authority (STA) at the Arabian Travel Market 2023 to provide a framework for both entities to explore methods to increase inbound visitation to Saudi Arabia from key markets across Middle East and Africa region. This includes developing customized promotions, joint marketing campaigns, and promotion through loyalty programs which will showcase Saudi Arabia as an exciting destination. IHG, which is positioned to add over 10,000 additional rooms in KSA over the next two to three years, also plans to invest in developing Saudi talent with an ambition to hire 6,000 nationals across its portfolio by 2030.