The hotel industry is largely heading into 2024 with momentum, but the adage is that hotels are a street-corner business, meaning hotels are affected by the particular dynamics of a market as much as by the national or global outlook.
Hotel News Now has take a deep dive into the big issues affecting several key hospitality markets across the U.S. Here are some of the top storylines from large markets.
New York
Several factors are affecting the hotel performance outlook across New York, particularly changing supply-demand dynamics.
CoStar's Jan Freitag and Nicole Shih took a look at more than 16,000 hotel rooms that are offline across the market to house "the unhoused, refugees and migrants."
"As of October, 140 hotels have been temporarily or permanently taken out of inventory and are no longer open to travelers. Over the past quarter, various city and county authorities have secured these accommodations via long-term leases, which in turn decreases future hotel room supply.
The driver for this shift is the promise of consistent revenue, although significant wear and tear is likely to cause problems for owners looking to reopen these properties as operating hotels in the future.
“Everything boils down to economics,” said Dan Lesser, president and CEO of New York-based LW Hospitality Advisors. “For many [hotel] owners, it makes sense to have a somewhat guaranteed stream of income. It’s every single night 100% occupancy.”
This all comes at a time when the city is imposing severe restrictions on short-term rentals, which many assume will lead to a rate spike for hotels. That might not be a given, though.
STR's Kelsey Fenerty said the difference is Airbnb demand and hotel demand are not necessarily the same thing. Airbnb is more comparable to extended-stay hotels.
"If you think of extended stay as only 5% of the total sample, you have to wonder how many of those people staying in Airbnbs were really actually considering staying in a hotel to begin with, so was there a lot of demand?" she said. "But even at the same time, that'll probably help allow some pricing power into the city if there is more demand, if there are more people looking for a place to stay."
New Jersey
In nearby New Jersey, a legislative push could change the landscape of franchising companies such as hotels.
Industry groups the American Hotel & Lodging Association and the Asian-American Hotel Ownership Association are on opposing sides of Assembly Bill 1958 because of the new rules it would create for how hotel brands can interact with owners.
“The language of the bill would seem to introduce a series of protections for franchisees and limit the power of franchisors to change or enforce brand standards without the direct consent and involvement of the franchisees,” said Jane Bokunewicz, faculty director of the Lloyd D. Levenson Institute of Gaming, Hospitality and Tourism in Stockton University’s School of Business.
Dallas
In more positive news, good feelings are reigning across the Dallas-Fort Worth Metroplex, which has grown into one of the major hospitality hubs across the U.S. and has successfully made consistent growth its calling card.
CoStar News reporter Candace Carlisle said the latest change in the market is the addition of more high-end hotels.
Growth is "not just like these limited-service hotels, either," she said. "We just got our first JW Marriott. We have a Four Seasons that's in the design phase. It's coming. We're told there's going to be a second Ritz-Carlton in the Dallas-Fort Worth region. And it just seems like the level of amenities and hospitality that's coming to the market is something that Dallas-Fort Worth has never really had before."
Chicago
In Chicago, confusion abounded recently when a city alderman started a rumor the city was looking into converting the Pebblebrook Hotel Trust-owned Hotel Chicago into migrant housing, which both the mayor's office and Pebblebrook officials balked at.
It was later clarified by Alderman Brendan Reilly of the city's 42nd Ward that the city was really eyeing a neighboring property at 360 N. State, which still drew Reilly's "strenuous objections."
San Francisco
San Francisco continues to work on finding its footing after the depths of the COVID-19 pandemic, with multiple hotel real estate investment trusts scaling back their presence in the market.
Park Hotels & Resorts celebrated walking away from two properties and the $725 million in debt attached to them as those hotels were officially placed in receivership.
"We've eliminated the noise around San Francisco," Chairman, President and CEO Thomas J. Baltimore Jr. said. "We could not be prouder. ... We are glad to be moving forward. There is a clear path forward and really positive tailwinds for Park as we look forward."
Similarly, Pebblebrook announced the $68.5 million sale of the Hotel Zoe, although CEO and Chairman Jon Bortz has told HNN he remains optimistic about the market.
Recent reporting from CoStar News and Hotel News Now has highlighted how many in the city feel the "Doom Loop" narrative around the city is more negative than the reality, but the eventual recovery will require patience.