5 things to know: 20 May 2014
20 MAY 2014 8:27 AM
From the desks of the Hotel News Now editorial staff:
• Sahara might sell hotels to secure chairman’s release from jail
• Grupo Hesperia seeks to sell stake in NH Hoteles
• A strong April for US hotels
• PwC: Group demand drives RevPAR growth
• HAMA members urge a focus on revenues
Mumbai-based Sahara Group might sell its two hotels in New York and one in London to secure release of its chairman, Subrata Roy, from an Indian jail, where he has been held since 4 March after failing to appear at a contempt hearing, according to Reuters.
Roy has been involved in a legal battle with Indian capital markets regulators over bonds issued to investors regulators say were not legal. The Indian court ordered Sahara to pay 100 billion rupees ($1.7 billion) to secure his release. The court rejected the company’s offer to pay the money in instalments.
Sahara owns the Plaza Hotel and Dream Hotel in New York and the Grosvenor House in London.
Spanish hotelier Grupo Hesperia said on Monday it has given JP Capital Markets a mandate to sell up to 8% of its 20% stake in hotel chain NH Hoteles, according to Reuters.
In a regulatory filing, Grupo Hesperia said it expects to keep a stable holding in the Spanish urban hotel group following the potential sale. Shares in NH Hoteles closed at €4.32 ($5.93) each on Monday, valuing an 8% stake at about €145 million ($199 million).
The U.S. hotel industry reported gains in the three key performance metrics during April, according to data from STR, the parent company of Hotel News Now. Compared to the same month last year, occupancy increased 3.2% to 65.7%; average daily rate rose 4% to $114.67; and revenue per available room increased 7.4% to $75.30.
The economy chain scale posted an 8.5% increase in RevPAR from a 4% rise in occupancy and a 4.3% increase in ADR. The independent chain scale followed with an 8.3% increase in RevPAR.
Nashville, Tennessee, posted a 23.5% increase in RevPAR in April, the highest among the 25 largest hotel markets. Tampa/St. Petersburg, Florida, followed with a 22.1% rise in RevPAR.
In a new forecast released Monday, PwC US said a rebound in group demand and a strengthening U.S. economy will lead to a 6.5% increase in RevPAR in 2014. The company forecasts hotel demand to increase 3.1%, which combined with supply growth of 1%, will boost occupancy to 63.5%, the highest since 1997.
In 2015, as supply growth accelerates, occupancy growth should moderate to 1.3%, the company said. But hotel pricing power is expected to accelerate, leading to a 5.1% increase in ADR and a 6.4% rise in RevPAR.
“Recent strength in operating performance, despite economic challenges in (the first quarter), has reaffirmed the underlying strength of the U.S. lodging sector,” said Scott Berman, principal and U.S. industry leader, hospitality and leisure, for PwC. “With the recovery in group demand accelerating, hotel operators at the higher price points are poised to benefit.”
At this point in the hotel cycle, hotel operators need to be laser-focused on building revenue, members of the Hospitality Asset Management Association said during the group’s recent spring meeting, writes HNN’s Shawn A. Turner.
“I am now spending more of my time on revenue management on a daily and weekly basis and working with my managers on how to benchmark best practices to improve operational efficiencies,” said Ruby Huang, VP of asset management at Starwood Capital Group.
Other HAMA members interviewed during the meeting agreed with Huang’s assessment.
“As you expand, you want to expand the right way, and that’s a challenge,” said Dave Hogin, senior VP of asset management at Strategic Hotels & Resorts. “I think it’s all about revenue. It’s all about what are the most lucrative distribution streams.”
Compiled by Ed Watkins.