Blackstone sells Orlando resort for $900m
An Elliott Management partnership has agreed to buy the Grande Lakes luxury hotel resort in Orlando, Fla., from Blackstone Group for approximately $900 million, according to Real Estate Alert.
New York–based Elliott is teaming up on the deal with Trinity Investments.
The new owners plan to launch an extensive renovation of the resort, which encompasses the 998-room JW Marriott Grande Lakes and the 582-room Ritz-Carlton Grande Lakes. The adjacent hotels are subject to long-term management contracts with Marriott International.
Blackstone Group acquired the asset in 2015 as part of a two Orlando hotel portfolio for $1.3 billion from a group led by Paulson & Co.
Orlando ranks among largest tourism markets in the world, according to the World Travel & Tourism Council’s annual City Travel & Tourism Impact Report, which focuses on the global impact of tourism within the top 72 cities. In 2017, Orlando became the first U.S. destination to surpass 70 million annual visitors, and for the third year in a row can boast the title of “Most Visited Tourist Destination in the U.S.,” reporting more than 72 million visitors in 2017, up 5 percent from the previous record set in 2016.
Approximately 86.2 percent of Orlando’s tourism GDP is from domestic visitors. Tourism remains a crucial part of Orlando’s economy, making up 18.9 percent of the city’s total GDP. The report estimates tourism spending becoming increasingly important for Orlando, with it increasing from 18.7 percent to 20.6 percent by 2027. However, Orlando’s tourism industry shows few signs of slowing with it increasingly distancing itself from its U.S. competitors, including Miami.
Orlando, however, recorded a double-digit decline in occupancy (_11.6% to 67.2%) and RevPAR (–12.5% to $73.95) in September, according to data from STR.
Overall, the U.S. hotel industry reported mixed results in the three key performance metrics during September 2018.
In a year-over-year comparison with September 2017, the industry posted the following:
- Occupancy: –2.1 percent to 68 percent
- Average daily rate (ADR): +1.9 percent to $131.00
- Revenue per available room (RevPAR): –0.3 percent to $89.10
The slight dip in RevPAR broke the industry’s 102-month streak of year-over-year growth in the metric. That run, which began in March 2010, was the longest on record.
“Very important to state, this is not the beginning of a downturn,” said Jan Freitag, STR’s senior VP of lodging insights. “The industry smashed the monthly demand record last September because of the rush of post-hurricane business in Houston and parts of Florida. That created a level of demand that the industry fell just short (–0.1 percent) of matching this September. In fact, that slight dip in demand was the first year-over-year decline in the metric since August 2015.”
And separately, new hotel rooms coming onto the U.S. market shouldn’t be a concern for established hotel operators because demand will continue to exceed moderating new-supply levels through 2019, according to CBRE Hotels’ Americas Research’s recently released September 2018 Hotel Horizons forecast report.
CBRE Hotels Research forecasts supply will peak at a 2.0 percent gain in 2018 and then stabilize at the long-run average of 1.9 percent for the next two years. Further, the number of projects entering all phases of the development pipeline is declining.
“On a broad national basis, the supply increases have been surpassed by lodging accommodation demand growth for the past eight years, and this trend is forecast to continue through 2019,” said R. Mark Woodworth, senior managing director of CBRE Hotels’ Americas Research. “However, when you look at the projected 2019 performance of the 60 major U.S. markets in our Hotel Horizons universe, you can clearly see the impact of new lodging supply at the local level.”
For 2019, CBRE is forecasting a very slight (0.02 percent) increase in the nation’s occupancy level. Conversely, occupancy is forecast to decline in 47 of the 60 Horizons markets covered by CBRE. A primary difference among markets gaining occupancy and those losing it: anticipated levels of new supply. The 47 markets forecast to register declines in occupancy in 2019 will see an average 3.8 percent gain in supply from new rooms. The 13 anticipated to gain occupancy will see only 2.5 percent supply growth.
