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What Even is AirBNB Anymore?

tree house versus hotel room

This article by Rosie Spinks on travel site Quartzy is, I believe, an excellent look at the challenges facing the home sharing business ahead of its proposed IPO. Check it out.

Dave Hogg

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U.S. lodging outlook good through 2020

copy-of-home2-suites-by-hilton-york-exterior-1151004

ATLANTA – A favorable economic outlook will lead to continued growth in U.S. hotel revenues and profits through 2020. However, an economic slowdown in 2021 will cause a short-lived softening of lodging industry fundamentals that year. According to the March 2019 edition of Hotel HorizonsCBRE Hotels Americas Research is forecasting U.S. hotel rooms revenue per available room (RevPAR) to increase by 2.5 percent in 2019 and an additional 2.0 percent in 2020.  However, for 2021, CBRE is projecting a slight decline in RevPAR of 0.6 percent. Fortunately for hoteliers, that immediately is followed by 1.4 percent RevPAR growth for 2022.

“In the near-term, the fundamentals of supply, demand and pricing in the U.S. lodging industry are very similar to what we have observed the past few years,” said R. Mark Woodworth, senior managing director of CBRE Hotels Americas Research. “For the most part, the supply of hotel rooms entering the market will be absorbed by newly generated demand buoyed by a healthy economy. Further, while the nominal rate of change may be disappointing, we are projecting average daily rate (ADR) growth above the pace of inflation for 2019 and 2020.”

Gross Domestic Project (GDP) is a good barometer of the overall health of the U.S. economy. CBRE Econometric Advisors is forecasting the pace of GDP growth to be 2.4 percent in 2019, 1.5 percent in 2020, and 0.7 percent in 2021. Given the strong correlation between the health of the economy and travel, CBRE is projecting a commensurate deceleration in the demand for hotel rooms. CBRE forecasts lodging demand to increase by 1.9 percent in 2019 and 1.2 percent in 2020, followed by a decline of 0.1 percent in 2021.

“I would characterize the economic slowdown in 2021 as a blip (an unexpected, minor and typically temporary deviation from a general trend), not a dip (to sink, drop or slope downward). Further, the performance of the U.S. lodging industry in 2021 should be viewed as a slowdown, not a recession,” Woodworth said. “In fact, we see the U.S. hotel market bouncing back strong in 2022 with a 2.5 percent increase in demand.”

ADR Conundrum
Despite the anticipated slowdowns in the economy and lodging demand, the occupancy levels for the overall U.S. hotel market are forecast to remain at an average of almost 300 basis points above the long run average annual occupancy level through 2023. Unfortunately, despite such lofty occupancy levels, ADR growth will fall below inflation in 2021 and 2022.

“We have identified several factors that have muted ADR growth the past few years. These include low levels of inflation, increasing competition from non-traditional forms of lodging and the intervention of intermediary sales channels,” said John B. (Jack) Corgel, Ph.D., professor of real estate at the Cornell University School of Hotel Administration and senior advisor to CBRE Hotels Americas Research.

The Blip
As noted before, CBRE is projecting a 0.6 percent decline in RevPAR in 2021. All chain-scales are forecast to suffer declines in RevPAR during the slowdown, but some will be impacted more than others. “The RevPAR falloff for upper-priced properties is expected to average just 0.8 percent,” Woodworth noted.

“Despite the first indications of a potential softening in U.S. lodging performance, the industry still is forecast to operate at exceedingly high occupancy levels and profit margins. The growth story may not be as strong as hoteliers would prefer, but I would hardly classify hotel sector performance as poor,” Woodworth concluded.

(This article by Tatiana Rokou- with minor edits by Dave Hogg here for brevity – was published February 27, 2019 in TravelDailyNews.com)

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Hilton CEO says direct marketing paid off in 2018

Hilton CEO Christopher Nassetta emphasized in the recent quarterly investor call that the company’s Hilton Honors investment is now paying off with record guest loyalty.

A Travel Weekly article about the quarterly call notes that Nassetta says Hilton Honors has not only grown in size but also in level of engagement. He estimated that five or six years ago, just 15% to 20% of total Hilton Honors members could be categorized as “engaged,” with recent stay or purchase activity. Today, nearly 50%, or 42 million Hilton Honors members, are considered engaged.

Read the entire Travel Weekly Article

Dave Hogg

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CBRE: Hospitality Industry Growth to Continue in 2019

homewood-suites-by-hilton-frederick-exterior-1080853Note: This article is reproduced from a November 28, 2018 article in Hotel Management online by Elliott Mest

Due to a continued upswell in the U.S. economy, CBRE Hotels’ Americas Research is forecasting a strong performance for U.S. hotels in 2019, anticipating a 10th consecutive year of growth.

In its December 2018 edition of “Hotel Horizons,” CBRE anticipates U.S. hotel occupancy will increase to 66.2 percent in 2018, a fifth straight record level for the industry. Occupancy will receive a boost from an anticipated 2.1 percent increase in demand, overcoming an estimated 1.9 percent net increase in supply for the year.

“It all starts with the demand for lodging accommodations. Without leisure, corporate and group travelers on the road seeking hotel rooms, there is no need to worry about all the other performance metrics,” R. Mark Woodworth, senior managing director of CBRE Hotels’ Americas Research, said in a statement. “From 1988 through 2017, the average annual gain in accommodated room nights in the U.S. was 2 percent. For 2018 and 2019, we believe demand growth will exceed this long-run average.”

Hospitality professionals turn to Operations as their go-to source for breaking news on guest rooms, food & beverage, hospitality trends, management, and more. Sign up today to get news and updates delivered to your inbox daily and read on the go.

After analyzing data through the third quarter of 2018, CBRE Econometric Advisors, CBRE’s in-house source for the economic forecasts that drive its models, issued an upward revision to its outlook for U.S. gross domestic product in 2018 and 2019.

The improvement in the CBRE-EA economic forecast is based on the remaining impact of the fiscal boost from tax-law changes, capital spending, improving wage growth and consumer confidence. “We have already seen the positive influence these factors have on the economy, and lodging industry, in 2018. The impact will persist in 2019,” John B. (Jack) Corgel, professor of real estate at the Cornell University School of Hotel Administration and senior advisor to CBRE Hotels’ Americas Research, said in a statement.

“Given the upward revision to the economic forecast, our projections for 2019 growth in demand have risen from the 1.9 percent figure presented in our September 2018 report to the 2.1 percent in the current December 2018 report. The direct result is a boost in our 2019 projected occupancy level from 66.1 percent to 66.2 percent,” Woodworth said in a statement.

Market Forecasts

While lodging demand for the entire U.S. market is forecast to increase 2.1 percent in 2019, the demand for accommodations in the 60 markets covered by CBRE is projected to grow 3.3 percent. This is significant because the majority of hotel investment activity occurs in the nation’s largest cities. Supply growth in the 60-market Hotel Horizons universe (3.6 percent) is forecast to be almost double that of the nation as whole (1.9 percent).

“Supply is expected to grow at a greater pace than demand in 65 percent of our Horizons markets during 2019. However, despite the surge in new competition in these preferred markets, all 60 will enjoy an increase in [average daily rate]. In fact, we are forecasting ADR increases greater than the projected 2.2 percent pace of inflation in 39 of our 60 markets,” Woodworth said. Jacksonville, Fla.; San Jose-Santa Cruz, Calif.; San Francisco; Newark, N.J.; and Atlanta are all lodging markets forecast to enjoy 4.4 percent or more ADR growth in 2019.

“Despite the continuation of demand growth and record occupancy levels, concerns persist about the level of room-rate increases. To that, I direct people’s attention to the pricing dynamics we are seeing at the local level,” Corgel said. “Looking at the Hotel Horizons market data, we find a correlation between the occupancy level, changes in occupancy and changes in ADR. In short, markets with the greatest increases in ADR are those with the highest occupancy levels and strongest changes in occupancy. It is apparent that property-level operators in high-performing markets are taking advantage of the basics of supply and demand when setting their room rates.”

Beyond 2019

With so many consecutive years of record occupancy levels and demand growth, hotel owners and operators worry about the inevitable time when this period of extended prosperity will come to an end. After all, lodging is a cyclical industry.

CBRE is not forecasting any economic or lodging industry recessions through 2022. However, industry growth is forecast to curtail beyond 2019. CBRE-EA expects higher interest rates, equity market corrections, credit-market problems and some shrinkage in employment as risk factors occurring in late 2019 and 2020 adversely affect the lodging industry in 2021. Fortunately, the economic slowdown is expected to be relatively mild and short.

“The year 2021 seems far away for most industry participants; however, those with an ownership interest need to be planning their future investment strategies. In the meantime, the magnitude of profit growth may not be spectacular, but the probability for revenue growth is solid, and operating margins remain well above historical levels,” according to Woodworth.

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Home2 Suites Lancaster, PA & Frederick, MD Dedication Celebration

Thank you to everyone who attended last week’s dedication party for the two, newest Home2 Suites by Hilton hotels that Springwood has opened in the past few months. It is always a pleasure for us to celebrate hotel dedications with our investors, our development team, and with others who help make the new hotel(s) happen.

Our guests enjoyed 400 of the freshest oysters they’d ever tasted. These fabulous crustaceans were enjoying the Chesapeake Bay just two mornings before our party!

They also savored dozens of hand-rolled cigars made with fresh Brazilian tobacco; rolled by a Cuban expert, to order, while we watched.

For those who like black cherries, my home-made “Cherry Cordial” beverage (84 proof) made its debut and earned itself a select fan base. Without mentioning how much wine and beer we also served, I’ll just say that folks enjoyed themselves and that all investors had the option of spending the night at their new hotel. It was a special evening of relaxing and socializing.

It’s good to celebrate every now and then. Thank you to everyone who helps us make the hotel “magic” happen!

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Hampton by Hilton Continues Rapid Growth

Hampton-Inn-and-Suites

Hampton by Hilton, Hilton’s upper-midscale brand and longtime category leader, announced the opening of 24 new hotel properties.

These openings include Hampton Inn by Hilton Chicago McCormick Place, part of Hilton’s first tri-brand hotel, Hampton Inn by Hilton Astana Triumphal Arch, Hampton’s first property in Kazakhstan, and Hampton by Hilton Dubai Airport, the brand’s first property in the Middle East and largest hotel in the portfolio.

“Our explosive growth in 2018 has put Hampton on pace to open more than 100 properties for the fourth consecutive year, and our strong global pipeline of more than 620 hotels indicates no signs of slowing down,” said Shruti Gandhi Buckley, global head, Hampton by Hilton. “Our commitment to innovation, consistency and quality accommodations continues to make this award-winning brand a favorite among both owners and guests.”

In the Northeastern United States, Hampton opened five new properties including Hampton Inn by Hilton Teaneck Glenpointe, a dual-brand property with Homewood Suites by Hilton, adding 190 rooms in the New Jersey area. Additionally, Hampton Inn & Suites by Hilton Philadelphia/Media in Pennsylvania expanded the brand’s presence in this “surban” area just 12 miles south of Philadelphia.

Hampton opened five new hotels in the Midwestern U.S., including Hampton Inn by Hilton Sikeston in Missouri, situated within walking distance to the city’s historic downtown with many shops and restaurants, as well as the 100-room Hampton Inn by Hilton Brooklyn Park Minneapolis in Minnesota, located only seven miles from Downtown Minneapolis.

Additionally, the brand’s U.S. footprint expanded in the South with six openings across Alabama, Georgia, North Carolina, Oklahoma, Tennessee and Texas. Travelers exploring one of the region’s most popular destinations can choose Hampton Inn & Suites by Hilton Asheville Biltmore Area and enjoy easy access to Biltmore Estate and the Blue Ridge Parkway. Music lovers can head to Hampton Inn & Suites by Hilton Nashville/Goodlettsville, which is near Nashville’s Grand Ole Opry and Ascend Amphitheater.

Continuing the brand’s global expansion strategy, Hampton’s international footprint grew with eight new properties outside of the U.S. including China, Colombia, United Arab Emirates and Kazakhstan. With five recent property openings in China, Hampton now has 50 hotels operating in the country, reinforcing the brand’s status as the fastest growing international hospitality brand pipeline in China.

Every Hampton guest will enjoy the brand’s signature free, hot breakfast with healthy options; On the Run™ breakfast bags; and free Wi-Fi in every room. Hampton continues to lead the pack in terms of guest experience, with each hotel promising guest happiness with the 100% Hampton Guarantee.

Hampton by Hilton is part of Hilton Honors, the award-winning guest-loyalty program for Hilton’s 14 distinct hotel brands. Hilton Honors members who book directly through preferred Hilton channels have access to instant benefits, including a flexible payment slider that allows members to choose nearly any combination of points and money to book a stay, an exclusive member discount that can’t be found anywhere else and free standard Wi-Fi.

Members also enjoy popular digital tools available exclusively through the industry-leading Hilton Honors mobile app, where Hilton Honors members can check-in, choose their room and access their room using a Digital Key.

Article From Travel Pulse October 8, 2018

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First-Half 2018 Extended-Stay Industry Report

The Highland Group publishes an industry-leading quarterly report on the U.S. extended-stay hotel market, which we follow closely. This year’s second-quarter 2018 version just arrived over the Springwood transom. Highlights from the report are:

  • Record high occupancy
  • Strongest mid-year demand growth since 2010
  • Seventh consecutive quarter with double-digit room revenue increase
  • Fourth consecutive quarter of RevPar growth above 4%
  • Rooms under construction up 8% over the past year
  • Extended-stay hotels continue to absorb record levels of new rooms while maintaining occupancy above their long-term average.

The two-year trend of accelerating supply growth and declining occupancy reversed in 2017, and demand has grown faster than supply for the last four consecutive quarters. After picking up in the second half of 2017, ADR growth moderated over the last six months but is well ahead of inflation.

The exceptionally good extended-stay hotel performance in 2018 is welcome as rooms under construction climb above 50,000. The supply growth rate is accelerating but only incrementally and is short of the most recent peak levels that occurred throughout most of 2009. Recent trends in rising demand and high occupancy indicate extended-stay RevPar growth should continue to exceed general inflation over the next year.

copy-of-home2-suites-by-hilton-york-exterior-1151004Dave’s notes: What the report does not explicitly say is that Home2 Suites by Hilton is the primary driver of these strong numbers. It’s been a long time since a single brand shifted demand for an entire industry, but this powerful Hilton brand has been a game-changer.

That’s why it’s now “the darling” brand (so we’re told), in heavy demand by institutional investors who are – for the moment – specifically targeting the Home2 Suites brand with premium pricing. These trends come and go like the tides, but it’s an interesting phenomenon that seems to be in place as we approach our first package sale next quarter.

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