Speculation Blooms After KSL/Hersha Deal: Top Stories in Hotels

01.09.2023 - 04:39 / skift.com / Sean Oneill / Alan Woinski

Here are the top stories from the Daily Lodging Report newsletter in the past week. Get news on hotel deals, development, stocks, and career moves. Sign up here now.

The biggest story in hotel deals and development this week was that KSL Capital Partners said on Monday it wanted to merge with Hersha Hospitality Trust. Other topics include Hilton’s luxury push in Asia, a big hotel asset sale in New York, uncertainty about Caribbean resort demand, some hope for San Francisco’s beleaguered market, and Thailand’s struggling budget hotels.

Private equity firm KSL said it would betaking Hersha Hospitality Trust private in anall-cash transaction valued at approximately $1.4 billion. 

From Daily Lodging Report: “The initial commentary from the sell-side analysts was positive. The deal’s value was 60% above Friday’s closing price for Hersha Hospitality when you include the one additional dividend that will be granted. That sent a signal to Wall Street, judging by the rally in the hotel REIT group this week. Investment bank analysts of lodging REITs have been more bearish on the sector recently. Will they turn bullish?”

KSL’s purchase price was 14 times Hersha’s estimated year-to-date EBITDA of $99 million for 2023, according to S&P Capital IQ.

As for other real estate investment trusts (REITs), the big debate now is whether the Hersha Hospitality/KSL deal means more are in the pipeline.

“The amazing thing about this is that it won’t take much for Wall Street to narrow the gap between net asset value and current stock prices for hotel REITs, making transactions less attractive to private equity firms,” wrote Alan Woinski, founder and editor of Daily Lodging Report.

Nikkei Asia published an article on Hilton planning to expand its luxury offerings in Asia. Hilton will bring its Waldorf Astoria brand to Malaysia, Vietnam, India, and other countries for the first time as part of its plans to open 25 new luxury hotels in the Asia Pacific region over the next few years. (Hilton today runs 33 luxury hotels in the Asia Pacific region.)

For example, In 2027, Hilton will open India’s first Waldorf in Jaipur, the capital of the state of Rajasthan. Hilton has a management agreement with the Dangayach Group, which will own the hotel.

Hilton is also bringing Waldorfs to Kuala Lumpur, Malaysia; Hanoi, Vietnam; and Sydney, Australia, Nikkei reported.

In China, Hilton will add its top-of-the-range hotels in Xi’an and Shanghai, while Japan’s first Waldorf will open in Osaka in 2025, followed by Tokyo in 2026.

JLL estimates that the Asia Pacific region has 560,000 luxury hotel rooms, a number that is expected to increase by 90,000 in 10 years. See Skift’s story on Hilton for context.

Qatar’s sovereign wealth fund, the Qatar