From the desks of the Hotel News Now editorial staff:
- MGM to sell two Vegas assets totaling $5 billion
- Oyo defends struggling SoftBank
- LIIC members discuss current cycle, cutting costs, M&A
- Smaller, historic US cities feeling tourism pressures
- SBE expands global executive team
MGM to sell two Vegas assets totaling $5 billion: MGM Resorts International announced Tuesday it has agreed to sell two of its Las Vegas properties, the Bellagio to Blackstone Real Estate Investment Trust and the Circus Circus Las Vegas to an affiliate of Treasure Island owner Phil Ruffin. Collectively, the two deals are valued at approximately $5 billion.
The Blackstone deal is a $4.25-billion sale of the Bellagio, and is a 95%/5% joint-venture sale-and-leaseback deal for an initial annual rent of $245 million. The deal with Ruffin is an $825-million sale of the Circus Circus Las Vegas. That property reported earnings before interest, taxes, depreciation and amortization of $62 million for the 12-month period ending on 30 June 2019.
Oyo defends struggling SoftBank: CNBC reports Japanese tech company SoftBank is struggling with its investments in WeWork and Uber, but its stake in India budget hotel chain Oyo Hotels & Homes “continues to pan out.”
WeWork recently canceled its IPO, which has put SoftBank in the spotlight and raised concerns about its investing style, the article states. Ritesh Agarwal, founder and CEO of Oyo, said SoftBank founder Masayoshi Son “is one of the most visionary leaders of our generation. He invested in Alibaba, Yahoo Japan. We remain inspired by him. I attribute a lot of our growth to him.”
Agarwal also differentiated Oyo from other private companies that are rapidly growing but have yet to turn profitable, saying “three years in a row we have cut our losses in half every year … and our revenue continues to increase.”
LIIC members discuss current cycle, cutting costs, M&A: Members of the Lodging Industry Investment Council shared their thoughts on where their companies are in the current economic cycle, as well as on ways to cut costs, and mergers and acquisitions, during The Lodging Conference, reports HNN’s Dana Miller.
Carlos Rodriguez, CEO of Driftwood Acquisitions & Development, said he believes the industry is at an inflection point. His company remains an active buyer and continues to look for deals, but it is a market-by-market situation.
“Obviously payroll is going up and margins are getting squeezed, and (average daily rate) and occupancy (are) not going up as it used to in the last few years,” he said. “We believe we are close to the peak, but we’re still active, we’re still looking to place money, we’re still looking to normally acquire hotels (and) develop under the right circumstances in the right markets.”
Smaller, historic U.S. cities feeling tourism pressures: Cities in the U.S. such as Charleston, South Carolina, and Portland, Maine, are beginning to feel pressure “after a decade-long boom in tourism,” and locals are worried about the “raft of hotels springing up,” reports Bloomberg Businessweek.
“While European destinations such as Venice and Barcelona are famously overrun, some of America’s small historic cities are starting to buckle from a prolonged boom in tourism—and rightly or wrongly, locals are directing some of their anger at hoteliers,” the article states.
Some developers are also noticing pushback and “feel unjustly singled out,” Bloomberg Businessweek reports.
SBE expands global executive team: Lifestyle hospitality company SBE Entertainment Group announced it has appointed five industry veterans to its global executive team, according to a news release. Since SBE finalized its partnership with Accor in October 2018, it has signed 26 new hotel projects, and 45 new global restaurants and bars to its existing global pipeline. The company plans to open 12 new hotel and residence projects by the end of 2020.
Brad Hayden has joined sbe as VP of hotel finance. Javier Hortal joined as SVP of design and development for Middle East and Europe. Mark Eacott is now VP of lifestyle design for Asia Pacific. Wayne Brown is the culinary director for Asia Pacific, and Hector Kremer was appointed feasibility manager for Middle East and Europe.
Compiled by Dana Miller.