5 things to know: 10 September 2019
5 things to know: 10 September 2019
10 SEPTEMBER 2019 9:20 AM

From the desks of the Hotel News Now editorial staff:

  • Chesapeake shareholders approve Park acquisition
  • Rising supply, slowing business travel hurting US hotels
  • Global debt levels hurting ability to raise interest rates
  • Assessing short-term rentals’ effect on US hotels
  • Tokyo seeing luxury hotel boom ahead of Olympics

Chesapeake shareholders approve Park acquisition: Shareholders of Chesapeake Lodging Trust voted in favor of the acquisition by Park Hotels & Resorts, according to a news release. Of the 88% of outstanding shares voting, approximately 99% were in favor of the deal.

The two real estate investment trusts announced the pending $2.7-billion acquisition in May. Based on numbers available in early June, the deal would cement Park’s place the second-largest REIT by market cap at $7.4 billion and give it the fourth-largest room count at 31,567. The deal is scheduled to close on or around 18 September 2019.

Rising supply, slowing business travel hurting U.S. hotels: Higher labor costs, steadily growing supply and weak business travel have been an ongoing challenge for U.S. hoteliers, and investors are noticing, The Wall Street Journal reports. In a comparison of real estate investment trust sectors, hotel REITs have been the second-worst performer, beating only mall REITs.

Some REITs are using share buybacks to hold off drops in share prices, such as Host Hotels & Resorts and Sunstone Hotel Investors, which have purchased $230 million and $50 million, respectively, of their own shares recently, according to the article. Ashford Hospitality Trust halved its second-quarter dividend to 6 cents, breaking from its 12 cents dividend that it provided quarterly since 2013.

Hotel investors are setting their prices expecting a U.S. recession is more likely now than a year ago, Lukas Hartwich, an analyst at Green Street Advisors, told the newspaper.

“Things could get uglier in the short run,” he said.

Global debt levels hurting ability to raise interest rates: Governments around the world used their borrowing abilities to help pull themselves out of the great recession 10 years ago, but the high amount of debt left over makes it harder for them to raise rates now, The Wall Street Journal reports. Consumers and businesses, each managing their own debt levels, are less likely to spend money in the face of weakening economic conditions.

“Globally, you are at worryingly high levels,” Sonja Gibbs, managing director for global policy initiatives at the Institute of International Finances, told the newspaper, adding that policy makers need to consider debt levels as they adjust interest rates. “There’s going to be an impact on the broader economy.”

Assessing short-term rentals’ effect on U.S. hotels: Alternative-accommodations platforms have matured over the years, creating a larger space for themselves in the hospitality field, write HNN’s Bryan Wroten, Stephanie Ricca and Dana Miller from the 2019 Hotel Data Conference. As their popularity grows among travelers, there are lessons hoteliers can learn to improve their own service to guests.

J.D. Power Senior Manager of Consumer Insights Jennifer Corwin said during her session that the better hoteliers communicate the services and amenities their properties offer, the more guests will use (and pay for) them.

“When alternative-lodging users stay in hotels, they spend less time in the guestroom; they’re more likely to experience things, like using the internet, the pool, the fitness center, laundry services and the spa,” she said. “When people do the things your hotel has to offer, they’re more satisfied. They see the value in it. The more you can get people out of their guestroom, the more satisfied they are.”

Tokyo seeing luxury hotel boom ahead of Olympics: Tokyo, a city with few luxury hotels, is welcoming a number of new luxury hotels expected to open in time for the 2020 Olympics, The Wall Street Journal reports. The city is expecting to receive a record 40 million visitors in 2020 when the Summer Games arrive, and those visitors are expected to spend more than $12 billion on accommodations.

The high demand for office space in the city is one of the reasons why Tokyo has far fewer luxury hotels compared to other major cities around the world, the newspaper reports. However, many recent luxury hotels have used that to their advantage, taking up the top floors of office towers.

Among those expected to open in time for the Olympic Games are a Four Seasons hotel, a Marriott International Edition hotel and the reopened historic Okura Tokyo hotel.

Compiled by Bryan Wroten.

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