Skift Take
Analysts signaled they like what’s happening with Hyatt’s push into more leisure-oriented properties following a nearly $2.7 billion acquisition.
Cameron Sperance
Here’s a sampling of what the Daily Lodging Report provided to its readers this past week. If you’re not a subscriber, you should be. Don’t wait. Sign up now here.
Sunday, Jan. 16
STR said the number of U.S. hotel rooms in construction is down roughly 61,000 from the country’s all-time high achieved in early 2020. STR’s December 2021 pipeline data showed rooms In Construction down -19.2% in comparison with December 2020 at 158,906 while Rooms in Final Planning were down -20.6% to 185,231 and Rooms in Planning were up 38.9% to 284,502. STR said as of January 5, 2022, NYC still leads the pipeline with 15,069 rooms in Construction. Las Vegas is second with 5,368.
Skift Note: The construction pipeline might be down from the U.S. all-time high, but the data doesn’t show interest fading in New York City. The death of the Big Apple may have been greatly exaggerated, at least from a developer perspective.
Monday, Jan. 17
Accor announced a new signing for their MGallery brand with Shenzhen Longhua Construction and Development Co. Ltd. This will bring the first MGallery Hotel Collection address to Shenzhen. The Shenzhen Dalang – MGallery will be the first international premium hotel to enter the prominent district within the city. The hotel will be located in Dalang, occupying the northern part of Longhua District. The MGallery will have 250 designer rooms and suites, an all-day dining restaurant, a specialty restaurant and a gourmet Chinese restaurant with private dining rooms. The hotel includes an upper story executive lounge and a lobby lounge, expansive banquet and meeting facilities, state-of-the-art fitness center, swimming pool and a luxurious spa.
Accor announced they will have more than 300 hotels and resorts opening around the world in 2022. Southeast Asia has 14 hotels on the books to open this year, starting with the 257 room Pullman Lombok Mandalika Beach Resort and the Mercure Rayong Lomtalay. The Pacific region will have three openings, starting with the Porter House Hotel, Sydney, MGallery and Hotel Morris, Sydney. In Greater China, Accor will open six hotels with the Raffles at Galaxy Macau and the Silveri Hong Kong – MGallery labeled as early 2022 openings. The Middle East is considered a stronghold for Accor, particularly with the 2022 World Cup in Qatar as Accor was selected as the official provider of accommodation for visitors of the event. Accor will also widen its Rixos portfolio in Qatar and in the region overall with three openings while also launching new Raffles, Fairmont, and Banyan Tree hotels throughout the Middle East region in 2022. Regarding their joint venture with Ennismore, they will continue to growth their lifestyle brands including Mondrian, SLS, The Hoxton, Morgans Originals and Mama Shelter. The first Mondrian in China will open this year while the TRIBE Phnom Penh Post Office Square will bring bold design to Cambodia’s hotel scene. A larger than life Mama Shelter Dubai will open, bringing the idea of a resort in the heart of the city with apartments, pools and an outdoor cinema.
Skift Note: Just because Accor’s stake in Chinese hotel company Huazhu is diminished doesn’t mean the Paris-based company is slowing down its development streak in the Asia Pacific region.
Tuesday, Jan. 18
Truist said the hotel companies they continue to favor the most are the more drive-to leisure-centric ones, namely Wyndham Hotels for the hotel C-Corps and the vacation ownership companies, BVH, HGV, TNL and VAC. The firm upgraded Hyatt to Buy from Hold with a price target of $106, up from $78. They look favorably on Hyatt’s long-term transition to a more asset-lite leisure centric company. Truist said they do not love the hotel REITs given the many concerns out there but would be cautious on being too negative given NAV discounts and prospects of private equity bids. They continue to see the biggest driver/wildcard and source of volatility for lodging stock performance in 2022 coming from progress and/or setbacks in the global fights against Covid and its variants.
Morgan Stanley upgraded Sunstone Hotels to Overweight while downgrading Choice Hotels to Underweight. They upped price targets on their covered names, raising 2022/2023 RevPAR and EBITDA estimates to reflect stronger pricing power. That being said, they believe pent-up demand, Covid and virtual meetings present growth risks. MS is forecasting 2022 US industry RevPAR to be 7% below peak 2019 levels, a rebound from 48% below peak in 2020 and 18% below in 2021. Their AlphaWise surveys of 200 corporate travel managers since the onset of Covid suggests a shift of 20% of travel volumes to virtual meetings long term. Leisure continues to outperform in the current environment. MS expects that to continue but at a diminishing rate. In terms of price target changes, their biggest one was Hyatt Hotels, upping it by 9% to $88 from $81 while maintaining their Equal Weight rating.
Skift Note: Investors and analysts appear to rally behind Hyatt’s increased focus on leisure travel with its recent Apple Leisure Group takeover.
Wednesday, Jan. 19
Oyo Hotels is expecting a valuation of about US$9 billion in its proposed initial public offering. That is a big drop from the $12 billion that was boldly predicted last year and supposedly OYO came down to earth after conversations with potential investors. The SoftBank-backed company is expected to get approval in the next week or so and will begin a formal roadshow. Remember that OYO was valued at $10 billion in 2019 but initial discussions had been for a 15% discount on the $10 billion valuation, so this is not all bad news. OYO’s offering in India will be the biggest IPO since the disastrous Paytm, raising $2.4 billion in November, only to see their stock price cut in half. OYO plans to raise US$1.1 billion through the sale of new shares and some secondary shares held by existing investors.
Skift Note: Oyo is finally going public with realistic expectations on its business model.
Thursday, Jan. 20
Jefferies said their top lodging picks are Hilton and Wyndham and while they lowered estimates across the space for 1Q22, they believe the historically high valuations are secondary and that the lodging names will continue to grind higher as demand recovers.
Skift Note: Grind, indeed. Earnings season is soon upon us, so let’s see if Jefferies’ picks can hold true.
