From the desks of the HotelNewsNow.com editorial staff:
• WSJ: Iconic Essex House in NYC on the market
• Potentially costly ADA changes go into effect Thursday
• Investors more confident in hotel recovery
• Groupon Travel lacks value, says IHG VP
• Job creation in US travel segment outpaces economy
Dubai Investment Group is putting up for sale the Jumeirah Essex House, an 81-year-old Midtown Manhattan hotel and the crown jewel of the Middle East investor's U.S. real-estate portfolio, according to The Wall Street Journal.
For the Dubai government fund, the planned sale marks the next step in its efforts to reduce property holdings in the U.S. While it is possible that Dubai could accept offers to refinance or recapitalize the hotel, a sale is considered the most likely outcome, say people familiar with the matter.
Hotel experts say the 509-room hotel, with its signature red neon sign, could fetch between $375 million and $500 million. Located on Central Park South, it has a prime location. Dubai Investment Group is open to bids that would keep Jumeirah Group on as operator of the hotel, as well bids that would bring in a new manager.
New provisions under the Americans with Disabilities Act go into effect Thursday, which means a lot of potential changes for hoteliers. This week, HotelNewsNow.com will examine some of the most pressing issues for the hotel industry in a five-part special report.
Today’s installment covers several key topics, such as “safe harbor,” which provides protection to hoteliers who are in compliance with the old 1991 Standards for Accessible Design.
“It's similar to a grandfather clause,” said Doug Anderson, a partner with LCM Architects, during a webinar titled “Understanding the Obligations of Lodging Facilities to Meet the Needs of Customers with Disabilities.”
If a hotelier previously moved the light switch in a single-user, lobby bathroom down to 52 inches above the finished floor in order to comply with the original ADA regulations for Title III, for example, that hotelier would not have to then move the switch down to the revised 48-inch requirement as under the more stringent 2010 standards, he said.
Investors and lenders are showing growing signs of optimism, according to the most recent Hotel Investors Gauge, a quarterly survey from HotelNewsNow.com and its sister company STR Analytics.
Key findings from the Hotel Investors Gauge include:
• Investors’ return expectations for acquisitions declined to 18.5% from 20% in the prior survey, illustrating that investors are getting more confident in the hotel sector’s recovery.
• Developers’ return expectations also declined slightly to 20.6%.
• The median cap rate on trailing 12-month net income for stable assets was 7.9%. Although the cap rate is relatively stable compared to the previous Hotel Investors Gauge, the increasing cash flows and lower return expectation will likely increase asset pricing.
• Most of the lender terms remain relatively unchanged from the prior survey. Loan-to-value ratios generally ranged between 62.5% and 70%. The average Libor spread was 350 basis points. Most loan terms were five years.
At least one major hotel chain is turning a cold shoulder to Groupon Travel. Speaking during a general session at last week’s International Hotel Investment Forum in Berlin, Andrew Rubinacci of InterContinental Hotels Group said the discounting platform is completely devoid of value.
Quick to offer a defense, Groupon’s Ait Voncke said the service allows hoteliers to target previously untapped, niche consumer segments.
But Rubinacci said his research has shown Groupon drives deep discounts at high margins. Even worse, studies have shown the platform does not attract repeat business.
Job creation in the U.S. travel industry outpaced that of the broader economy by 34%, according to recent analysis from the U.S. Travel Association. The number of workers employed directly in the travel industry increased by 8,000 during February to 7.6 million. Since February 2011, travel employment has increased by 129,000. The travel industry has now recovered more than half of the 496,000 jobs lost during the recession, while the rest of the economy has made up just 39%.
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