Extended-stay hotels reported a 7.2% increase in average rate in the first quarter of 2012 compared to the same period in 2011, according to The Highland Group. The increase was significantly larger than the gain the overall hotel industry posted. Mid-price extended-stay hotels led the charge with 10% average daily rate growth during the past year. However, the segment reported a slight decline in demand and falling occupancy over the same period. For the overall extended-stay segment, demand continues to increase at about twice the rate of supply.
While development in general is still in a slowdown that does not mean a few high profile hotel projects aren’t set to make a big splash when they open during the next few years. HotelNewsNow.com’s Jason Q. Freed today highlights 10 of the hottest hotel openings in the United States, including the 210-room Park Hyatt Hotel in New York (valued at $375 million) and the massive 1,012-room JW Marriott Austin (valued at $350 million).
A number of projects that made it out of the ground during the past few years are attached to a casino, a fact which Jan Freitag, senior VP of global development at HotelNewsNow.com’s parent company STR, said is typical during a “time of fiscal constraint.”
“Without as much income from traditional sales tax or property taxes, municipalities have to find new ways to fund the budget,” he said. “Gaming is a perceived easy opportunity. And then with those casinos normally comes the idea of a hotel.”
Speaking of development, Starwood Hotels & Resorts Worldwide will add 40 new hotels in the Middle East/North Africa region by 2017, adding to its existing portfolio of 70 properties. The target represents 60% growth and more than 13,000 rooms.
“MENA is key to Starwood's global expansion strategy, representing our second largest growth market after China,” Frits van Paasschen, the company’s president and CEO, said in a news release. “When you consider that the region has 35 metropolitan areas with a population of over one million, and many with a wealthy middle class, there's huge long-term potential for internationally-branded luxury and upper-upscale hotels.”
Starwood has added six hotels throughout MENA during the past 18 months.
The hotel industry is entering a key phase that will see divergent paths for winners and losers based on their ability to push rate, according to panelists at the inaugural Hotel Equity and Lender Perspectives conference, reports HotelNewsNow.com’s Shawn A. Turner.
“It’s all about rate at this part of the cycle,” said Jim Luchars, chief investment officer at Stonebridge Companies LLC. “The winners and losers of this cycle will be the ones where you are seeing a real rate push.”
This new phase of the cycle also will see a continued dearth of new development, the panelists agreed, although financing is beginning to trickle once again. Yields can be between 9.5% and 12%, depending on what is being financed and if the project is still in the ramp-up phase, said HEI Hotels and Resorts’ Russ Urban.
For those of you still not convinced the Asia/Pacific travel market will be a key feeder of demand to the global hotel industry, here’s a few statistics from the folks at EyeForTravel: China and India's online travel markets boasted the greatest overall travel market growth and hotel bookings during 2011. Spend by Chinese travelers on travel accommodation domestically and abroad is expected to increase by 20% between 2010 and 2015 to reach $67 billion. China is producing 25 million new people classified as “middle class” each year, and Indonesia will soon reach 60 million of its population deemed to be middle class.
“Tailoring offerings to local markets will be essential,” EyeForTravel concluded in an article highlighting the top five travel trends for 2012. “This will mean understanding how consumers plan trips, engage with social media (and not just global brands like Facebook either) book in different markets and so on.”
Compiled by Patrick Mayock.