From the desks of the Hotel News Now Editorial staff:
- Hong Kong protests hurting hotels
- Blackstone buys 65% controlling interest in Great Wolf
- US cap rates remain stable in H1 2019
- Johnson announces revised Brexit proposal
- Battery Wharf Hotel strike enters fourth week
Hong Kong protests hurting hotels: The ongoing political protests against extradition in Hong Kong have led to declines in visitor numbers and hotel performance, writes HNN’s Terence Baker.
Information from the Hong Kong Tourism Board shows visitor arrivals decreased 4.8% year over year in July to 5.2 million, “mostly due to a 5.5% decline in visitors from China, while total overnight arrivals for the same period fell 5.3% to 2.38 million,” Baker writes.
A first-half 2019 earnings report for firm Hong Kong and Shanghai Hotels shows the Peninsula Hong Kong’s average daily rate decreased 1% year over year and revenue per available room dropped 11%.
“We are fortunate to also have a portfolio of non-tourism related assets and businesses in Hong Kong, (but) these, too, will be affected if the protests are prolonged and the general economy deteriorates,” said Clement Kwok, CEO and managing director of Hong Kong and Shanghai Hotels.
Blackstone buys 65% controlling interest in Great Wolf: An affiliate of Blackstone announced Wednesday that it has acquired a 65% controlling interest in Great Wolf Resorts, and will enter into a $2.9 billion joint venture with an affiliate of Centerbridge Partners, which currently owns Great Wolf, to own the company, according to a news release.
“We have been very impressed by the evolution and growth of the company under Centerbridge’s ownership,” Tyler Henritze, head of U.S. acquisitions for Blackstone Real Estate, said in the release. “With the leadership of its talented management team, Great Wolf has enriched the guest experience and opened seven new lodges since 2015. We look forward to investing in these properties to further deliver for guests and grow the company.”
U.S. cap rates remain stable in H1 2019: A study from CBRE shows average U.S. hotel cap rate remained stable at 8.28% in the first half of the year.
The largest gains were seen in the full-service and economy segments. Cap rates for full-service hotels in central business districts rose 6 basis points to 7.75% while cap rates in the segment in suburban areas increased 8 basis points to 8.26%.
Economy hotels in CBD markets increased 4 basis points to 9.20%, and in suburban markets where there are economy hotels, cap rates rose 5 basis points to 9.74%.
Every hotel segment in Tier III cities saw decreases in hotel cap rates.
Johnson announces revised Brexit proposal: British Prime Minister Boris Johnson announced a revised Brexit proposal on Wednesday and warned the “European Union that he remains prepared to take the U.K. out of the bloc at the end of October without a deal,” The Wall Street Journal reports.
Johnson “urged EU officials to help find an agreement over the terms of Britain’s split with the bloc, more than three years after Britain voted to leave the EU,” the news outlet reports.
The prime minister’s approach to negotiate a deal before the end of October could create more division between the two sides, according to The WSJ.
Battery Wharf Hotel strike enters fourth week: Workers are in the fourth week of a strike against the Battery Wharf Hotel in Boston with tensions growing and negotiations going nowhere, The Boston Globe reports.
“The union is looking into a pair of Canadian consultants it thinks are behind a ‘Draconian’ contract proposal intended to drive down labor costs, which it said could put the hotel in a better position to be sold and potentially benefit those same consultants,” the news outlet reports.
The property changed ownership in 2014, and issues started in 2018 when the new ownership group met with union officials for the first time. The owner gave the union a proposal that “would have done away with protections for immigrants and women, eliminated diversity clauses intended to help African-American workers, gutted health insurance, scrapped the pension, increased workloads and frozen wages,” according to the news outlet, and would have done away with the union if the hotel was sold.
Compiled by Danielle Hess.