From the desks of the Hotel News Now editorial staff:
- Global economic, real estate market expected to slow in ’19
- Hotel booking sites could become more transparent
- Still time to capture hotel value, executives say
- Stake in Park Lane Hotel sold as part of 1MDB fund recovery
- No. 1 hotel in the US could cost $3,000 per night
Global economic, real estate market expected to slow in ’19: A healthy global economy in 2018 fueled liquidity for hotel investments in 2018, according to the recent Hotel Investment Outlook from JLL. In total, global transaction volumes reached nearly $68 billion.
However, in 2019 the global economic and real estate market’s growth is anticipated to slow due to a number of factors, including trade tensions between the U.S. and China, more volatile equity markets and uncertainty with the political landscape in the United Kingdom, France and Italy, the report states.
Taking a deeper look at regions, investment volumes across Europe, the Middle East and Africa are believed to soften “by between 5%-10%,” and single-asset deals will be a main driver for the market. One region to keep an eye on as a standout region, according to JLL, is Asia/Pacific.
“APAC is expected to be the standout region from a growth standpoint, with hotel investment volumes forecast to grow 15% year-on-year in 2019,” the outlook report states.
Hotel booking sites could become more transparent: Some of the major players in the travel website ecosystem, such as Trivago, Expedia, Agoda and Booking.com, have “agreed to change the way they do business” following a U.K. investigation that revealed some of those sites were misleading users about hotel room rates and search results, CNN Business reports.
The U.K. Competition and Markets Authority said pressure selling, misleading discount claims and hidden charges were some of the issues they encountered in the probe.
“The regulator said that some buyers were warned that other users were looking at the same hotel, giving them a ‘false impression’ of room’s popularity. In other cases, the full cost of the room was not displayed,” CNN Business writes.
Companies have pledged they would display all charges and be clear about discounts while also refraining from pressure selling by a deadline of 1 September.
Still time to capture hotel value, executives say: With nine years of mostly positive growth, hotel owners and operators are still finding ways to capture value and margins for their properties, according to members of the Lodging Industry Investment Council at the recent Americas Lodging Investment Summit, writes HNN’s Stephanie Ricca.
Although strong demand trends are keeping the current cycle going, a majority of the LIIC roundtable participants noted that average daily rate squeezes, market variability and non-fixed costs present challenges.
“Our industry does have very strong macro demand trends—people are traveling, aging Boomers have more disposable income and are moving around more,” said Robert Leven, chief investment officer of Procaccianti Companies and TPG Hotels & Resorts. “Those dynamics on the demand side will continue to be really good. What concerns me is … the squeeze on ADR growth because we are facing a lot of cost issues.
“When you see the anemic ADR growth we had in the peak of the cycle, and now we’re further along and supply is starting to catch up, what is ADR growth going to look like under that scenario over the next couple of years?” he asked.
Stake in Park Lane Hotel sold as part of 1MDB fund recovery: Mubadala Investment, a sovereign wealth fund in Abu Dhabi, United Arab Emirates, has reportedly purchased a stake worth about $140 million in the Park Lane Hotel in New York City “as part of the U.S. Justice Department’s efforts to recover billions of dollars that flowed through Malaysia’s scandal-plagued 1Malaysia Development Berhad (1MDB) investment fund,” according to The Straits Times.
The U.S. Justice Department was able to seize the money from Malaysian financier Low Taek Jho, also known as Jho Low, since he “agreed to drop his claims to the property in a U.S. forfeiture lawsuit,” the news outlet reports. It was believed Low’s stake in the property was bought with money stolen from Malaysia’s state-owned 1MDB fund.
Potential new lenders to the hotel were recently made aware of the property’s ownership change.
No. 1 hotel in the U.S. could cost $3,000 per night: According to U.S. News & World Report’s 2019 list of the best hotels across the globe, the No. 1 hotel in the U.S. is the Four Seasons Resort Hualalai in Hawaii, reports Market Watch. The hotels are ranked based on factors such as industry awards and guest reviews.
What makes this hotel the best of the best, according to the list, is that not only will guests be surrounded by “dramatic white-sand beaches and black-lava escapes,” the property offers world-class golf and guests can learn to snorkel from a marine biologist in the 1.8-million gallon, lava-rock aquarium filled with more than 4,000 fish.
Room rates range from $1,000 per night to upward of $3,000 per night.
Compiled by Dana Miller.