Latest news: CBRE on potential recession; Driftwood refi; Chicago foreclosure

CBRE suggests mild recession coming. The chances of a pending recession in the U.S. continues to be debated. On Thursday, CBRE Global Chief Economist and Head of Americas Research Richard Barkham suggested in a published paper that a mild global recession remains likely. He said although the global economy has shown some improvement over the past six months, including significantly lower energy prices in Europe and easing inflation, certain challenges intensified in Q3 2023. He said China’s slow economic rebound is a major concern and that three G7 countries (Canada, Germany and Italy) recorded weaker or negative GDP growth in Q2, with the core of the eurozone in increasingly poor shape. While the U.S. economy remains surprisingly resilient, he added, the rapid rise in interest rates will eventually lead to sharply lower growth. Inflation in the U.S. is now well below its peak, but the last mile to the Fed’s 2% inflation target will be bumpy, Barkham opined, adding that many policymakers indicate that pushing the unemployment rate to 4% is necessary to reach the inflation target, with interest rates unlikely to fall until then.

Driftwood, Berkadia refinance Canopy. Driftwood Capital, with Berkadia Hotels & Hospitality, have secured $47 million in refinancing for Driftwood’s 150-room Canopy by Hilton West Palm Beach Downtown in Florida. The Berkadia South Florida office orchestrated the financing on behalf of Miami-based Driftwood Capital. Bank of America provided the three-year, full-term loan, with interest-only and two one-year extension options. Driftwood developed and built the property in 2020.

Minority board membership increasing. The percentage of hotel industry board seats held by Black members and women members, respectively, is going up, according to recent research commissioned by AHLA Foundation and conducted by Penn State’s School of Hospitality Management. The increase exceeds the 2022 average in both categories for firms in the Russell 3000 Index. The 2022 data set analyzed 230 board members at 28 companies between 2016-2022. Key findings show women occupied 31.3% of independent board seats on hotel public company boards in 2022, an increase from 22.5% in 2021. This exceeds the 2022 average for firms in the Russell 3000 Index, which was 28.4% women. Only one publicly traded hotel firm has no women on its board of trustees. In 2021, there were two firms with no women on their boards. Fully, 67% of directors who were new to a board in 2022 were women.  In 2022, 12.6% of hotel public company board members were Black, an increase from 6.5% in 2021. This exceeds the 2022 average for firms in the Russell 300 Index, which was approximately 6% Black and is approaching the overall percentage of the U.S. population that is Black (13.6%). And 22% of directors who were new to a board in 2022 were Black.

Last week’s US results. U.S. hotel performance for the week of September 17-23 increased from the previous week, according to CoStar data. Occupancy hit 68.5% (-1.6% year-over-year); ADR was $164.97 (+2.9% YOY); and RevPAR touched $112.96 (+1.2% YOY). Occupancy remained down year over year due to the Rosh Hashanah calendar shift. Helped by the United Nations General Assembly, New York City posted the highest jumps in ADR (+16.5% to $488.89) and RevPAR (+17.6% to $444.47). San Francisco saw the steepest RevPAR decline (-38.6% to $175.81) due to the Dreamforce conference calendar shift.

Selina in Chicago under foreclosure. Investor Hotel Capital reportedly defaulted on a nearly $20 million mortgage secured by the Selina hotel in Chicago. The lender is listed as LaSalle Investment Management, an investment arm controlled by JLL. Hotel Capital CEO Michael Collier said the foreclosure filing is the result of Selina failing to meet its obligations to the lender and to his firm.

India IPO. India’s luxury developer and owner Juniper Hotels, jointly owned by Saraf Group and an indirect subsidiary of Hyatt Hotels Corp., has filed to raise funds for an IPO with capital market regulator Sebi. Juniper is the largest Hyatt-affiliated owner in the country. The IPO, with a face value of Rs 10, is a fresh issue of equity shares up to Rs 1800 crore with no offer for sale component. The proceeds will be used for repayment, prepayment, or redemption, in full or in part, of certain outstanding debt and for general corporate purposes.

MGM-ORIX resort in Osaka. Las Vegas-based MGM Resorts said the Osaka IR Corp., part of joint venture it established with Osaka, Japan-based ORIX Corp., has signed an agreement with Osaka Prefecture and Osaka City to create a casino-resort in Yumeshima, Osaka. The project is touted as a first-of-its kind for Japan.

Rooms revenue breakout for extended-stay v traditional hotels. A report from Atlanta-based Highlands Group finds that room revenue from guests staying seven consecutive nights or longer in a traditional hotel was 21% higher ($8.97 billion, 74.3 million room nights) than from guests staying at extended-stay hotels ($7.39 billion, 72.2 million room nights.) Nationally, the share of ESOC (extended-stay demand) was 53% in extended-stay hotels versus 13% for traditional hotels. However, traditional hotels have 10 times as many rooms. The study was for the 12 months, ending in June 2023.

Alojica acquires Marriott Puerto Vallarta. Mexico City-based Black Creek Mexico said one of its investment platforms, Alojica, has completed the acquisition of the 433-room Marriott Puerto Vallarta Resort & Spa. Terms of the deal were not disclosed. Alojica has a capital improvement plan to convert the property into the All-Inclusive by Marriott Bonvoy brand. The property is located in the Marina Vallarta area and has over 12 acres of beachfront land.

Florida Sleep Inn & Suites sells. Florida-based Mario Hotels LLC has sold a 74-room Sleep Inn & Suites in Ocala, Florida, to Ocala 484 Hotels LLC. The terms of the deal were not disclosed. Tampa-based DSH Hotel Advisors arranged the sale through a confidential marketing approach.

Tampa cigar factory to be converted. According to a report in the Tampa Bay Times, construction is underway for a Tampa, Florida, factory to be converted into a 70-room boutique hotel. Seven years after it was announced, construction began three months ago at the Balbin Bros. Cigar Factory. The three-story, 35,000 sq. ft. hotel is being developed by Mississippi-based MY Hospitality Hotels. The owner said a deal with a hotel franchise hasn’t been finalized.