David Eisen - 10 Minutes News for Hoteliers - Page 9

8 min

Picking the lock: The cruciality of key money in hotel deals

🏨 Global hotel brands are utilizing key money—a payment not exceeding 5% of total deal cost—to secure hotel management or franchise agreements. Marriott uses key money in about 33% of deals, while Hilton does so for roughly 9%. Sonesta International Hotels, managing 1,100 hotels, employs key money to stimulate growth and compete for conversions. The trend has surged in the past 24 months due to higher construction costs, supply-chain issues, and inflation. Choice Hotels spent 21% of gross fees on key money in 2023, and Wyndham's spending represented 9% of their gross fees. Key money can also be a defensive strategy to maintain marquee assets. Despite its benefits, some owners and operators, like Stonebridge Companies, view key money critically, preferring performance-based relationships without the strings attached.

4 min

Aimbridge Hospitality’s deal with lenders likely staves off prolonged Chapter 11 process

💰 Aimbridge Hospitality, the world's largest third-party management company, has agreed to convert over $1.1 billion in debt into equity and inject $100 million in new capital. This deal will reduce Aimbridge’s debt from $1.3 billion to a maximum of $210 million. First- and second-lien lenders have shown "overwhelming support," with first-lien lenders becoming majority owners. Although not explicitly stated, the Restructuring Support Agreement (RSA) often precedes Chapter 11 bankruptcy proceedings. Aimbridge, under CEO Craig Smith, aims to strengthen its balance sheet and continue investing in operations, targeting improvements and industry leadership. The company manages over 1,000 hotels in more than 20 countries and has recently reshaped its operational structure for greater efficiency.

3 min

In-room automation isn’t just a money-saver for hotels—guests like the experience, too.

🏨 Honeywell, headquartered in Charlotte, N.C., with its INNCOM Energy Management System, can save up to 40% on HVAC energy use. Verdant by Copeland, based in Saint-Laurent, Quebec, is present in 8,000 hotels, reducing heating and cooling run times by about 40% and cutting energy bills by 20%. Loxone from Kollerschlag, Austria, claims 70% savings on heating and cooling and 80% on lighting. Italy's Telkonet reports 37% energy savings and $300,000 annual savings for hotels, potentially increasing real estate value by 15%.

1 min

HOTELS Magazine to provide free apartments to wildfire evacuees

🔥 HOTELS Magazine CEO Ali Jahangiri is offering 90 days of free rent to two low-income families displaced by the L.A. wildfires. Available are two newly remodeled, furnished apartments in Costa Mesa, CA, with 2 bedrooms and 1 bathroom each. Affected families can apply by contacting Cole O’Neil at cole@jvgroupinc.com. Decisions will be made shortly to provide some relief to victims of the disaster.

4 min

Los Angeles-area hotels step up to accommodate, comfort wildfire evacuees

🔥 Over 180,000 people evacuated due to Los Angeles wildfires, with the hospitality industry offering assistance. Hotels in Los Angeles provide discounted rates, essentials, and pet accommodation. The American Hotel & Lodging Association and President Biden support relief efforts; Biden approved a Major Disaster Declaration. Some luxury hotels are fully booked. Local hotels like Hotel Figueroa, Hotel Per La, and others offer special rates and services for evacuees and first responders. Airbnb.org provides free temporary housing for those impacted.

8 min

As 2025 barrels forward, HOTELS speaks with industry experts to gauge the top trends and topics of the year

🏨 Brian Chesky, CEO of Airbnb, predicts a profound impact of AI on the world, comparing it to the Industrial Revolution. Hotel industry leaders expect AI to transform guest experiences, with GenAI delivering hyper-personalized services. In 2025, a burst in group travel and stability in interest rates have been observed. Luxury and lifestyle travel is expected to grow to $369 billion by 2032. Environmental consciousness is pushing for sustainable practices. Eighty percent of investors plan to maintain or increase their capital investment in hotels over the next 12 months. The wellbeing trend continues to rise post-COVID, with a demand for holistic retreats. Interest rates and infrastructure developments, like in oil and gas markets, are influencing hotel industry transactions. Hilton anticipates GenAI to change booking processes in the coming years, while the return of Asian travelers, especially the Chinese, to pre-COVID levels remains uncertain. Overall, industry resilience and adaptability are highlighted for 2025.

2 min

How lodging companies are taking a page from Amazon

🛒 Relentless.com, originally registered by Jeff Bezos, redirects to Amazon, the world's most-trafficked retail website with over 2.5 billion monthly visitors. Founded in 1994, Amazon started as a book seller before search engines like Google existed. In a 1997 letter to shareholders, Bezos emphasized Amazon's customer-focused approach. Lodging giants like Marriott, Hilton, Hyatt, and IHG are now expanding their offerings beyond traditional lodging, following Amazon's example of offering everything to everyone. Marriott began as a root beer stand, showcasing the necessity of adaptation. As of 2025, the top five hotel companies aim to be more agile in their ventures, echoing Bezos' strategy.

4 min

Playa Hotels & Resorts manages many brands. What a Hyatt acquisition of it could mean.

🏨 Hyatt Hotels Corporation announced on Monday an exclusivity agreement with Playa Hotels & Resorts for potential strategic alternatives, including acquisition. The agreement lasts until February 3, 2025. Playa manages 24 resorts and works with Hyatt on 8 all-inclusives. In November 2021, Hyatt acquired Apple Leisure Group, adding to its inclusive offerings. Hyatt's Inclusive Collection room portfolio is expected to grow by 30% through a strategic joint venture with Grupo Piñero, managing Bahia Principe-branded hotels. Marriott and Hilton are also expanding in the all-inclusive segment. Hyatt holds 9.99% of Playa’s shares and has disclosed the discussions as per securities laws.

4 min

What interest rate cuts really mean for hotel real estate

🏨 U.S. hotel transaction volume peaked at $45.7 billion in 2015, then dropped to $8.1 billion in 2020 due to COVID-19 and recovered to $42.5 billion in 2022. September 2024 saw the Federal Reserve cut rates by 50 basis points, the first reduction since 2020, followed by a third consecutive cut in December to 4.25%-4.5%. Portfolio sales decreased to 8.3% of total volume in Q3 2024. SOFR is forecasted to fall to 3% during 2025-2027. Construction costs increased by 4.10% in Q2 2024, contributing to limited hotel development, with an increase in supply unlikely before late 2027 or early 2028.

3 min

Marriott International’s latest deals are outside the box

🏕 Marriott International, the world's largest hotel company, has announced deals with Postcard Cabins and Trailborn for an outdoor-centric accommodations collection set to launch next year. Postcard Cabins, known for its tiny cabins within two hours of major cities, has over 1,200 cabins across 29 U.S. properties. Trailborn offers bespoke hotels near outdoor destinations, with 559 rooms across five locations and more in development. Both brands will integrate into Marriott Bonvoy in 2025, expanding Marriott's portfolio following the outdoor travel trend heightened by the pandemic. Marriott's move follows Hilton's partnership with AutoCamp in February 2024 and Hyatt's collaboration with Under Canvas in July. Marriott's CFO, Leeny Oberg, emphasizes the company's commitment to nature-immersive travel.

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