Latest HITs: US ADR growth beats inflation; $340M for Ritz condos; new CEO at Mandarin

Inflation buster. Average U.S. ADR growth has surpassed inflationary growth by 55 bps from 1988 to 2022, according to new data from JLL. In fact, during the elevated inflationary period of 2022 and the first quarter of 2023, the U.S. hotel industry has been able to significantly outpace inflation growth. In Q1 2023, ADR growth exceeded inflation growth by 4.3 percentage points. This outperformance is attributed to robust leisure demand and the resurgence of group and corporate travel.

Financing for Ritz-Carlton condos. Catalfumo Companies has received $340 million in financing from Madison Realty Capital to build The Ritz-Carlton-branded condo development in Palm Beach Gardens, Florida. The deal is South Florida’s largest construction loan since the Federal Reserve began raising interest rates in March 2022. The project is set to include 106 units across three buildings, as well as a 29-boat slip marina. Since launching sales in February, the project has already garnered $75 million in sales, according to Daniel Catalfumo, founder of Palm Beach Gardens-based Catalfumo Companies. Asking prices for condo units range between $4 million and $8 million. Construction is set to begin in late summer 2023 with completion expected in 2025.

New CEO for Mandarin. Mandarin Oriental International appointed Laurent Kleitman as chief executive officer, effective September 1, succeeding James Riley. Laurent was most recently the president and chief executive of Parfums Christian Dior, the largest luxury fashion beauty business of LVMH. Prior to joining LVMH in 2019, Laurent was president of the Consumer Beauty division of Coty. Prior to that, he spent 25 years at Unilever and held global and regional leadership roles covering the UK, Europe, and Asia, across its personal care, home care, and food businesses.

Rosewood to Seoul. Rosewood Hotels & Resorts has been appointed by Korean real estate developer Eleven D&C Co. to manage the 250-room Rosewood Seoul, a new build ultra-luxury hotel set to open in 2027. Situated beside Yongsan Park in the heart of the city, the hotel will exist within The Parkside Seoul, a revolutionary development occupying the former site of the United Nations Command. The architecture will be led by Kohn Pedersen Fox Associates.

IHG adds in Riyadh. IHG Hotels & Resorts has signed a management agreement with The King Abdullah Financial District Management and Development Co. (KAFD DMC), a subsidiary of Saudi Arabia’s Public Investment Fund (PIF), to bring the first Kimpton hotel in the region to Riyadh, Saudi Arabia. The 212-key Kimpton Riyadh is set to open in June 2024. IHG currently operates 37 hotels across five brands in Saudi with 31 hotels in the development pipeline set to open within the next three to five years.

Cycas grows in Germany. Cycas Hospitality has been appointed to manage its the luxury Grandhotel Bad Pyrmont spa hotel near Hanover, Germany. Comprising two adjoining properties, the 5-star hotel includes 151 guest rooms (including nine suites), within the Steigenberger Hotel and Spa and the 44-room Fürstenhof Hotel, which has recently undergone renovation. The hotel is set to commence an extensive E20 million refurbishment program later this year.

Asia GOPPAR beats 2019. Most of Asia Pacific’s key hotel markets surpassed their 2019 levels in gross operating profit per available room (GOPPAR), according to STR’s March 2023 P&L data release. Bali’s March GOPPAR reached US$52.92, which was 227.6% of the pre-pandemic comparable. In February, the market reported GOPPAR at US$41.90, which was 121% of the 2019 level. New Delhi followed with a GOPPAR of US$82.40, which was 164.4% of the 2019 comparable. The GOPPAR level was slightly lower than February (US$101.71). While improved over February, Hong Kong’s GOPPAR was just 76.1% of the 2019 comparable.

Prizeotel expands. Radisson Hotel Group has signed it first prizeotel in the UK and Ireland region. Scheduled to open in Q1 2025 in Dublin, the hotel will feature 145 rooms. The brand is currently present in Germany, Austria, Switzerland, and Belgium, and includes 17 properties, representing more than 3,400 rooms. Additional openings and signings in European destinations will be announced soon with a particular focus on the UK and Ireland.

Host's big 1Q beat. Again, improvement in group business continues to drive strong 1Q23 earnings with Host Hotels & Resorts delivering strong results, benefitting from operational improvements across its portfolio. Notably, comparable RevPAR increased 31% over 1Q22, exceeding the top end its guidance by four percentage points. Host repurchased $50 million of stock in the first quarter. Host also raised its full year RevPAR growth guidance range to 7.5% to 10.5%. Comparable hotel Total RevPAR was $365.93 and comparable hotel RevPAR was $217.77 in the first quarter, representing an increase of 34% and 31.1% respectively, over the first quarter of 2022, benefiting from easier comparisons due to the impact of the COVID-19 Omicron variant on first quarter 2022 operations. Comparable hotel Total RevPAR and comparable hotel RevPAR increased 10.3% and 7.4% respectively, in comparison to the first quarter of 2019. Performance was driven by continued strong leisure demand, while also benefiting from growth in city center markets. Host generated GAAP net income of $291 million in the first quarter and GAAP operating profit margin of 18.0%, an improvement of 660 basis points compared to the first quarter of 2022, as food and beverage margins improved 490 basis points to 37.6%, due to strong contributions from group business. Host achieved comparable hotel EBITDA of $439 million and Adjusted EBITDAre of $444 million, both of which exceeded 2022 first quarter results. Strong improvement in occupancy of 14 points coupled with rate growth of 4.2% over first quarter of 2022, led to comparable hotel EBITDA margin of 32.5% for the first quarter of 2023, exceeding the first quarter 2022 margin by 220 basis points. The company also announced plans to develop and sell 40 fee-simple condominiums on a five-acre development parcel at Golden Oak in Orlando, adjacent to Four Seasons Resort Orlando at Walt Disney World Resort. It also sold The Camby, Autograph Collection for $110 million and recorded a gain on sale of $69 million. In connection with the sale.

Onyx launches Shama Luxe. Thailand-based Onyx Hospitality Group has signed a business alliance agreement with Walton Asset Management Co. to manage Shama Luxe Sukhumvit Bangkok, a 52-unit luxury serviced apartment in the heart of Bangkok. The signing expands its Shama brand and launches the Shama Luxe brand into the luxury serviced apartment market. The launch of Shama Luxe Sukhumvit will bring the number of Shama's in Bangkok to six, equaling the number of properties in Hong Kong. By the end of the year, three more locations will be added to the portfolio in Hong Kong and Malaysia, with Shama Johor Bahru, Shama Medini Iskandar and Shama Hub Metro South Hong Kong. This will bring the brands total inventory to 19 properties in 2023.

CMBS delinquencies hold steady. The latest Trepp CMBS Delinquency Report reveals rates held steady at 3.09%. Declines in the retail, lodging, and multifamily rates offset a small increase in industrial loans and a bigger increase for offices. Office remains the most heavily watched part of the market as firms look to aggressively reduce space. Sublease space is at or near record highs in many markets as demand from big tech firms has eroded sharply. In addition, many companies are letting leases expire or are renewing for smaller footprints. The all-time high on this basis was 10.34% registered in July 2012. The COVID-19 high was 10.32% in June 2020.

Introducing The Pomp. The Cordish Companies and Caesars Entertainment announced their Pompano Beach development, The Pomp, will be anchored by a dynamic Live! dining and entertainment district. Located 35 miles north of Miami and less than 10 miles north of Fort Lauderdale, the 223-acre project is one of the largest developments in South Florida. Once complete, The Pomp will bring together entertainment, dining, hotel, retail, residential, office and lifestyle amenities, alongside the Harrah’s Pompano Beach casino. The Pomp will feature 1.3 million square feet of retail and entertainment space, 4,000 luxury residential units, two hotels and 1.35 million square feet of Class A office space upon completion.