5 things to know: 25 September 2020
 
5 things to know: 25 September 2020
25 SEPTEMBER 2020 9:05 AM

From the desks of the Hotel News Now editorial staff:

  • Colony Capital to sell 197 hotels to Highgate
  • Service Properties says Marriott missed payment for 122 hotels
  • Experts walk through basics of receivership process
  • Best hotel industry stocks for 2020
  • Roadside hotels fare better than others during crisis

Colony Capital to sell 197 hotels to Highgate: Colony Capital announced that it has entered into a definitive agreement to sell six of its hospitality portfolios to Highgate for $2.8 billion, according to a release.

The six portfolios have 22,676 rooms across 197 hotels.

“As part of the transaction with Highgate, Colony will transfer five of the six portfolios held in the Hospitality segment and an approximately 55% interest in the THL Portfolio held in the Other Equity and Debt segment. The sixth portfolio in the Hospitality segment, the Inland portfolio, is under receivership and is excluded from the transaction,” the release states.

The deal will reduce Colony’s consolidated debt outstanding by $2.7 billion.

 

Service Properties says Marriott missed payments for 122 hotels: Service Properties Trust has sent a letter to Marriott International requesting that the company pay it $11 million in missed payments for guaranteed minimum returns for 122 hotels, according to a news release.

Marriott has 10 days to make the payment or Service Properties will terminate its agreement with the company and rebrand those properties under the Sonesta brand.

Service Properties terminated an agreement with InterContinental Hotels Group in August for failure to make payments for 103 hotels the REIT had under the company’s brands.


Experts walk through basics of receivership process: Extended forebearance periods are coming to an end and as borrowers go into distress, some hotels will enter receivership, HNN’s Stephanie Ricca writes from the recent Distressed Hotels Forum.

A wave of distressed assets in the industry has yet to be seen, which in part is due to extended forbearance periods.

“Based on what we’re seeing in bankruptcy court, the types of cases going into bankruptcy or receivership are of two types—hotels that were in trouble prior to COVID-19 or cases where the borrower has just given up, handed the keys to the lender and said ‘I’m through and don’t want to be part of the solution,’” said Mary Jo Heston, judge in the U.S. Bankruptcy Court, Western District of Washington. “Once we get past the forbearance phase, we’ll see an increase in receivership and bankruptcy.”

Best hotel industry stocks for 2020: Investopedia recently looked into the top hotel company and REIT stocks for 2020 based on the most sales growth, the least sales decline and the best performance.

Hyatt Hotels Corporation ranked high for the best value hotel stocks at a price of $57.02, followed by Marriott at $99.88.

Hotel stocks with the lowest sales decline included Green Tree Hospitality Group, Extended Stay America and Huazhu Group.

Roadside hotels fare better than others during crisis: Travelers have shifted from wanting destination hotel experiences to wanting cleanliness and safety at a good price, which is why roadside hotels have fared better than others during the pandemic, The Wall Street Journal reports.

“That has spelled disaster for much of the hospitality business. U.S. hotel revenue per available room is expected to decline by more than 52% in 2020 with a full recovery to pre-pandemic levels not happening until 2024, according to a projection by hospitality data tracker STR and Tourism Economics last month,” the news outlet writes.

The demand decline has had a negative impact on real estate investment trusts, such as Host Hotels & Resorts, which has lost 44% of its market value in 2020.

Compiled by Danielle Hess.

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