5 things to know: 25 April 2017
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Ashford Trust responds to FelCor-RLJ deal: Officials with Ashford Hospitality Trust believe they made the better offer to purchase FelCor Lodging Trust, in a response today, despite the latter company’s decision to agree to an all-stock offer from RLJ Lodging Trust, according to a news release, which also detailed the former company’s later revised offer submitted on 20 April.
The release states “Ashford Trust believes its offer would have been more attractive to shareholders than the RLJ offer as it included 50% cash, would have provided a more certain path to future value creation through guaranteed synergies and operational enhancements and offered a higher dividend yield on the stock component of the bid.”
The latest offer included “a 50% cash consideration and valued at $8.22 per share based on the (24 April) closing share price of AHT of $6.43 per share.”
FelCor’s decision to opt for an all-stock deal from RLJ seemingly runs contrary to the message FelCor was sending Ashford Trust officials that they’d prefer a deal with a significant cash component.
Cost controls preserved hotel profitability in 2016: The U.S. hotel industry experienced slowing revenue growth in 2016, but a new report from CBRE Hotels claims that hoteliers were able to realize a 3.7% increase in gross operating profits for the year due to implementing strong cost control measures, according to a news release.
The 2017 Trends in the Hotel Industry report from CBRE Hotels’ Americas Research said hoteliers kept growth of operating expenses down to 1.6% for the year as occupancy grew 0.2% and average daily rate grew 2.5%. This marks the seventh consecutive year U.S. hoteliers saw an increase in profits.
A look at the hotel industry’s legal issues: Some of the top legal issues the hotel industry grappled with in 2016 continue to loom over and shape the industry in 2017, Hotel News Now senior reporter Bryan Wroten writes from the Hospitality Law Conference in Houston.
Ongoing mergers and acquisitions, liabilities concerns and a push for regulation in the short-term rental space topped the menu, according to speakers at the conference’s opening general session.
Legal experts and hoteliers alike continue to push for a balanced regulatory playing field with alternative accommodations companies like Airbnb, and Chuck Bedsole, managing director and global leader of hospitality and leisure at Alvarez & Marsal, said that’s only going to grow more important as time goes on, and use of the services become more commonplace.
“Once upon a time, I never thought I’d use Uber,” he said. “It’s going to be interesting. … They’re pretty much everywhere. I don’t see why they wouldn’t end up in mixed-use development.”
White House drafting corporate tax cut: President Donald Trump has ordered his staff to “draft a tax plan that slashes the corporate tax rate to 15%, even if that means a loss of revenue,” The Wall Street Journal reports.
The Journal notes that might be a hard sell to some of the more deficit-concerned members of the Republican Party in Congress.
“Trump’s willingness to let deficits run higher also could hinder the passage of tax cuts that are permanent,” the newspaper reported.
Whitbread reports results for full year ending 2 March: The latest financial disclosures from U.K.-based Whitbread PLC shows the company has seen a year-over-year increase in profit before tax of 6.2% and an overall revenue increase of 8.2%.
In total, the company generated £860.1 million ($1.1 billion) for the period.
The U.S. first quarter earnings season for the hotel industry kicks off tomorrow with Wyndham Worldwide’s earnings release and investor call.
Compiled by Sean McCracken.