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Total Hotel Revenues Fell for the First Time, Further Pressuring Profits

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Total Hotel Revenues Fell for the First Time, Further Pressuring Profits



  • Total Hotel Revenues Fell for the First Time, Further Pressuring Profits

    CBRE US Hotels State of the Union May 2024 Edition

CBRE US Hotels State of the Union May 2024 Edition

Key Takeaways:

  • Economy

    Q1 economic growth was slower than expected.
    1Q GDP came in at 1.6%, below CBRE’s 2.3% estimate. We expect disappointing 1Q growth will result in a downward revision to CBRE’s full-year 2024 real GDP growth forecast of 2.3%. Inflation is proving stickier than expected, resulting in a 70-bps increase in CBRE’s 4Q Fed Funds rate from 4.4% to 5.1%.

    Higher leverage and the burndown of COVID savings put consumers at risk.
    Excess Covid savings fell to essentially zero in March, from a high of $2.16 trillion in September 2021 and the personal savings rate fell to 3.2%, below the long-term average of 6.6%. Consumer leverage remains below pre-pandemic levels but has increased 0.24 percentage points since 1Q23.

    The 82-bps contraction in borrowing rates drove a 3x increase in loan size.
    The average hotel CMBS loan size increased from $15.3 million in March 2023 to $48.9 million in March 2024, however the number of loans originated fell from 28 to 10. Credit spreads contracted ~140 bps y/y partially offsetting the higher base rates.

  • Current Trends

    March RevPAR decline was steeper, partly because of the shift in Easter.
    March RevPAR declined 4.1%, owing to a 1.1% ADR decline and a 3.1% occupancy decline. Surprisingly, despite the benefits of the Easter shift, Resort RevPAR continued to decline in March, dropping 5.3%. Independents continued to weaken as trends continued to normalize to pre-pandemic levels.

    Brand.com continued to take share from other channels during the quarter.
    Brand.com market share increased 350bps in the quarter and segment demand hit 120% of 2019’s levels. Corporate and Group continued to improve, with demand nearly reaching 2019’s levels.

    Total hotel revenues fell for the first time, further pressing profits.
    Total hotel revenues per available room fell 0.2% in February, the first decline since the post-pandemic recovery. Top line declines and a 0.8 percentage point contraction in margins resulted in a 4.8% decrease in GOP.

  • Food for Thought

    Easter shift drove short-term rental outperformance in March.
    Short-term rental demand rose 15.2%, outpacing the 2.5% decline in hotel demand. This is no surprise as STRs are essentially 100% leisure, and they benefitted from the Easter shift. Cruise lines and short-term rentals continue to take share from traditional hotels, reaching 113% and 142% of 2019 levels, respectively in Q1.

    Outbound international travel continues to outperform inbound.
    Outbound international travel was 117% of 2019’s level in March compared to inbound visitation of 94%. Inbound visitation to both the East and West Coast hit post-pandemic highs in March as inbound visitation from Asia continued to increase, hitting 74% of 2019 in March.

    TSA throughput increased 5.1% year-over-year in April.
    TSA throughput reached 106% of 2019 levels during the month. Despite continued strength in passenger volumes, searches for paid and redeemed travel remained soft in April and Airport hotel RevPAR has lagged at down 1.5% in Q1.

Click here to download the report.

170 Ukrainian residents of Leitrim hotel told to move by the end of the month

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Lough Allen Hotel, Drumshanbo, County Leitrim has been home to Ukrainian refugees for the past two years.

The hotel, which is housing around 170 people, is predominantly used by women and children.

However, the hotel’s contract is coming to an end and the residents must vacate the property by May 31, 2024.

It is believed the residents were informed of the move at a recent meeting and hotel management has attempted to have the contract extended to allow the residents to stay at the hotel.

The Department of Children, Equality, Disability, Integration and Youth (DCEDIY) said it will provide residents with alternative options, however, it is unknown where they will be moved too.

The residents can also seek to find a private rental option.

A spokesperson for The Department of Children, Equality, Disability, Integration and Youth (DCEDIY) said, “Temporary accommodation for those fleeing the war in Ukraine was provided at the Lough Allen Hotel, Drumshanbo, County Leitrim.

“This arrangement is due to come to an end shortly.

“All accommodation contracted by the Department is temporary in nature, moves occur frequently when contracts end.

“Those who are residing at the accommodation have been contacted by the Department to notify them of the change.

“Alternative offers of accommodation will be provided to the residents, and every effort will be made to ensure that the alternative accommodation will be in the general area.

“Beneficiaries of temporary protection are also entitled to make their own private arrangements, including potentially availing of pledged accommodation if they wish or private accommodation, and can avail of some supports to do so.”

Cornstalk Hotel in New Orleans French Quarter up for sale | BusinessNews

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The historic Cornstalk Hotel, the 208-year-old French Quarter landmark that shut down four years ago during the pandemic and never reopened, is back on the market after a sale of the property fell through earlier this year.

The boutique hotel — named for the cornstalk pattern of its cast-iron fence — is one of the historic neighborhood’s iconic properties. Located in the 900 block of Royal Street two blocks from Jackson Square, it has been featured in countless movies and TV shows, most notably Elvis Presley’s 1958 classic “King Creole.”

The asking price for the property is $5.2 million, according to the database of commercial property listings.







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The historic Cornstalk Hotel in the French Quarter, which never reopened after shutting down during the pandemic four years ago, is back on the market for sale after a deal to sell the property fell through earlier this year. (Staff photo by John McCusker, The Times-Picayune | NOLA.com)




“It’s a fabulous property and we’ve had a lot of interest,” said Michael Bain of Dorian Bennett Sotheby’s, who is listing the property. “It’s a historic building in a historic district.”

Rich history

The Cornstalk Hotel was built as a private residence in 1816 for Francois Xavier Martin, the state’s first attorney general and, later, a long-serving justice of the Louisiana Supreme Court. The famous fence came 40 years later, when a subsequent owner commissioned it for his wife, a native of Iowa, who missed the cornfields of home (or so legend has it).

The fence is one of just two in the city — the other is in the Garden District — and was created by a Philadelphia ironworks firm. In addition to ears of corn, the fence has pumpkins at the bases of the columns entwined by vines and morning glories. An iron butterfly adorns the gate.







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The historic Cornstalk Hotel in the French Quarter, which never reopened after shutting down during the pandemic four years ago, is back on the market for sale after a deal to sell the property fell through earlier this year. (Staff photo by John McCusker, The Times-Picayune | NOLA.com)




The house was damaged by fire in 1900 and renovated in the Queen Anne style for which it is known today, with its turret and bay. It was converted to a hotel early in the 20th century and has hosted Paul Newman, Richard Burton and Elizabeth Taylor, and Bill and Hillary Clinton, according to Fodor’s Travel.

Interested buyers

In more recent years, the hotel, which boasts fireplaces, stained glass windows and canopy beds in the 14 guestrooms, was managed by HRI Hospitality. It’s not clear why hotel owner Deborah Spencer chose not to reopen after tourists began to return to the city after the pandemic.







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The historic Cornstalk Hotel in the French Quarter, which never reopened after shutting down during the pandemic four years ago, is back on the market for sale after a deal to sell the property fell through earlier this year. (Staff photo by John McCusker, The Times-Picayune | NOLA.com)




In August, Spencer said by phone that the property was undergoing a renovation and would eventually reopen, but she declined to provide additional details. She could not be reached for comment Monday.

In the meantime, Bain said the hotel has been actively listed for sale even though there’s no “For Sale” sign on the gate. He said the online listing has attracted the interest of several potential buyers, including a local hotel group, which entered into a purchase agreement several months ago to buy the property.

“But they’re in the middle of doing another renovation and they decided to back out of the deal for a little while, through no fault of ours,” he said. “They said they’ll come back to us in the fall.”