{"id":5484,"date":"2024-03-26T09:00:51","date_gmt":"2024-03-26T07:00:51","guid":{"rendered":"https:\/\/ch.jfdi.cc\/?p=5484"},"modified":"2024-03-26T09:00:51","modified_gmt":"2024-03-26T07:00:51","slug":"big-hotel-chains-and-unbranded-hotel-owners-find-they-need-each-other","status":"publish","type":"post","link":"https:\/\/ch.jfdi.cc\/?p=5484","title":{"rendered":"Big hotel chains and unbranded-hotel owners find they need each other"},"content":{"rendered":"<div><img decoding=\"async\" src=\"http:\/\/ch.jfdi.cc\/wp-content\/uploads\/2024\/03\/big-hotel-chains-and-unbranded-hotel-owners-find-they-need-each-other.jpg\" class=\"ff-og-image-inserted\"><\/div>\n<p><strong>Independent hotel operators and giant global chains are increasingly linking up in franchise agreements as high-interest rates have slammed the hospitality industry, slowing down new hotel construction.<\/strong><\/p>\n<div class=\"cypru-video-ads\" id=\"cypru-203910978\">\n<div id=\"cypru-2007044750\" data-cypru-trackid=\"478051\" data-cypru-trackbid=\"1\" class=\"cypru-target\">\n<div id=\"gpt-ad-6480178300707-0\">\n<\/div>\n<\/div>\n<\/div>\n<p>For big chains, new franchise agreements from conversions keep investors happy by opening new hotels in the short term. Meanwhile, independent, unbranded hotels like switching to franchise agreements because it gives them greater access to potential bookings and cheaper financing from lenders.<br \/>\n\u201cHistorically, global conversions have been 10 per cent to 20 per cent of the rooms entering the system, today it is probably closer to 40 per cent,\u201d said Patrick Scholes, Truist equity analyst.<br \/>\nFor US-based Marriott International (MAR.O), conversions in 2023 accounted for 40 per cent of organic room signings, double the 20 per cent rate a year earlier. Half of France-based Accor\u2019s hotel openings last year were through conversions. That matches trends across the industry.<br \/>\n\u201cIn a climate where the debt markets for new construction are somewhat constricted, the importance of conversions is elevated,\u201d Marriott\u2019s CEO Anthony Capuano said on an earnings call earlier this year.<br \/>\nHotel operators benefited from the surge in \u201crevenge travel\u201d as the pandemic receded. However, the economic rebound also brought higher interest rates \u2013 making life more difficult for smaller operators who rely on capital borrowing to fund their operations.<br \/>\nRoughly 1,980 hotels opened in 2023, down from 2,730 in 2019, according to hotel development intelligence firm Lodging Econometrics.<br \/>\n\u201cAccess to hotel financing, especially in South America, is currently limited since many hotels faced difficulties in meeting their debts during the pandemic,\u201d said Fernanda L\u2019Hopital, South America director of consulting and valuation at hospitality consulting firm HVS.<br \/>\nA branded hotel may be more appealing to owners refinancing loans or facing a \u201cwall of maturities\u201d that were pushed back, said Robin Farley, UBS equity analyst.<br \/>\nApproximately $217 billion in hotel loans are slated to mature globally by 2025, said Zach Demuth, JLL global head of hotels and hospitality research.<br \/>\nThose loans are likely to be refinanced at higher interest rates. In the US, interest rates for new branded hotels are between 6.75 per cent to 8.25 per cent, up from 5-6 per cent before the pandemic, said Shivan Perera, senior vice president of debts and participations at real estate lender Avana Capital. Un-branded operators generally have slightly higher rates between 7 per cent and 9 per cent.<br \/>\nBrand-affiliated hotels have a lower cash-flow risk than independent hotels, according to a 2022 Cornell University study based on 4,000 hotels over 20 years.<br \/>\n\u201cGood brands, their loyalty program, their reservation system, typically will help a property perform better and so a lender will often have that as a requirement,\u201d UBS\u2019 Farley said.<br \/>\nIn Europe, real estate interest rates are trending at around 6 per cent and 8 per cent, up from 2.5 per cent to 3 per cent before the pandemic, said Tim Barbrook, head of debt advisory at HVS London. For branded hotels, rates are about 0.25 per cent lower.<br \/>\n\u201cSome people have had 13 years of extremely low-cost money, said Barbrook. \u201cThey\u2019re coming off fixed rate loans into this much-higher rate environment. Many of our clients wish they could simply extend the facilities that they already have.\u201d<br \/>\nLarge operators have launched \u201csoft\u201d and conversion brands aimed at picking up independents. Those brands help boost net unit growth, analysts said.<br \/>\nHilton\u2019s franchise and licensing fee revenue rose 14.6 per cent year-over-year in 2023 and 38.5 per cent in 2022, while Marriott\u2019s were up 13 per cent in 2023 and 40 per cent in 2022.<br \/>\n\u201cEvery couple 100 or 1,000 more rooms matter because there\u2019s a franchise fee associated with it,\u201d said Jan Freitag, director of US hospitality at analytics firm CoStar.<br \/>\nOne such brand is Hilton\u2019s \u201cSpark\u201d chain, announced in January 2023. For smaller operators, a conversion gives them access to guests who exclusively rely on the chains\u2019 loyalty programs to book rooms.<br \/>\n\u201cWe would have never done [the conversion] if we couldn\u2019t have done it with Hilton,\u201d said Lou Carrier, chief executive of Distinctive Hospitality Group, a development firm that opened the first Spark Hotel in Connecticut. \u201cWithin the first two months over 45 per cent of that hotel\u2019s guests were Hilton Honors members. That was remarkable to me.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Fact: Independent hotel operators and giant global chains are increasingly linking up in franchise agreements due to high-interest rates in the hospitality industry, which have slowed down new hotel construction.<\/p>\n","protected":false},"author":3,"featured_media":5485,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"Default","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[1521,1512,1625,3,898,641,203,201,499,3414,250,3330,283,2987,3415,1991,899,1401,187,3404,450,34,1346,2628,3331,284,287,1565,1182,414,380,2439],"class_list":["post-5484","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-other","tag-1521","tag-cash","tag-construction","tag-cyprus","tag-debt","tag-earnings","tag-environment","tag-europe","tag-france","tag-franchise-agreements","tag-google","tag-google-news","tag-guests","tag-hotel","tag-hotel-construction","tag-industry","tag-interest","tag-interest-rates","tag-international","tag-investors","tag-london","tag-markets","tag-meeting","tag-money","tag-news","tag-property","tag-real-estate","tag-surge","tag-travel","tag-un","tag-us","tag-valuation"],"acf":{"keyphrase":"","keywords":"","sourceimg":"","country-category":""},"yoast_head":"<!-- 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