Hotel Companies and Governments Take Long View on Omicron Impact

Skift Take

The world may be on edge with a surge of new cases stemming from the Omicron variant, but governments are generally staying the course in keeping borders open. Hotel companies are maintaining growth mode with new deals and a potential blockbuster sale.

Here’s a sampling of what the Daily Lodging Report provided to its readers this past week. If you’re not a subscriber, you should be. Don’t wait. Sign up now here.

Sunday, Dec. 19

Wyndham Hotels & Resorts announced an agreement with Ceres Development for three new Wyndham hotels, two in Indiana and one in Ohio. The newly rebranded properties include: The 132-suite Wyndham Noblesville in Indiana. The hotel offers more than 3,000 square feet of meeting space, a business center, fitness center, heated indoor pool, and an onsite restaurant and bar. The Wyndham Westfield in Indiana featuring 152 guestrooms and suites and four event venues. The 113-suite Wyndham Avon in Ohio offering a heated indoor pool, hot tub, bar, and outdoor fire pits. WH said these newly rebranded hotels continue the company’s steady conversion growth where it experienced 100% more domestic conversions in 3Q21 than in 3Q19. Baird called this Choice Hotels’ loss as these three hotels were previously affiliated with CHH’s Cambria brand.

Skift Note: It’s a dog-eat-dog world in the hotel industry when it comes to signing new franchise deals with owners of existing hotels. Look for more deals like this while construction financing remains low — and for hotel companies to offer more incentives to woo owners under their brand umbrella. 

Monday, Dec. 20

We told you that all these countries reopening borders at the same time was not going to result in success. Even before Omicron set everything back, the results were extremely spotty with no real success stories. Then you have this new horror story with the Daily Hunt reporting only two foreign tourists in the first month of reopening, in October and still not a single direct international flight landing on its shores since. Entering Bali is more difficult than other beach destinations in the region as travelers must apply for a visa that requires a local sponsor, hold an international health insurance and quarantine for at least 10 days. Thailand and Vietnam have areas that removed most of the quarantine for vaccinated travelers, something that may change soon with Omicron. Indonesia has less than 40% of their country inoculated. The good news is bookings are picking up in Bali. The bad news is the holiday season is showing bookings at -57% lower than the same period in 2019.

Skift Note: It isn’t always a case of reopening borders translating to a rushing return of travelers. Countries relying more on international tourism will likely have to wait for the latest variant fear to die down.

The nearly 210-room Standard Downtown LA will close indefinitely on January 22, the latest blow to the brand in Southern California. The Standard’s West Hollywood location closed in January 2021 and that building and the land it sits on was put up for sale in October by property owners. With ownership up in the air, the hotel’s future is unclear. Public records indicate Ferrado LA LLC owns the Standard’s Downtown LA location.

New York City’s Standard High Line Hotel owner, Gaw Capital Partners, is countersuing its lenders to prevent foreclosure on the property. Wells Fargo & Co.sued on behalf of the lenders in November to foreclose on the hotel, contending the owners defaulted on a $170 million mortgage. Gaw Capital’s counterclaim accuses the lenders of an “illicit scheme” to extract $50 million from its coffers by offering only “outrageous new loan terms.” Gaw Capital also wants Apollo Global, Wells Fargo and other lenders to be denied interest on delinquent debt.

Skift Note: Standard International touts itself as a company in major growth mode, but these are two stinging blows at what would normally be some of the company’s most valuable points in the brand portfolio.

Tuesday, Dec. 21

Mahindra Holidays & Resorts India Ltd. said they don’t fear Omicron, in fact they downplayed the prospects of the variant to cause major disruption to India’s tourism industry or the firm’s expansion plans. With occupancy back to pre-pandemic levels they expect it to rise to 80% this quarter. Their optimism is because India is not seeing as many omicron cases as elsewhere. This is also despite some Indian states already restarting light restrictions as Delhi and Mumbai register a small but growing number of Covid infections in recent days after the detection of omicron within India’s borders. India is only reporting 5,300 cases per day, the lowest level since May 2020 so it is easy to become complacent. Indian health officials seem to differ from health officials around the world, saying they don’t expect Omicron to be a problem due to high levels of previous exposure to Covid and increased vaccination rates. So far omicron has run over vaccinated and previously infected like they were nothing, at least in the US and South Africa. Mahindra is moving ahead with plans to invest $150 million to $200 million to bolster the number of holiday venues.

Skift Note: Blind optimism in a pandemic isn’t smart, and Omicron will inevitably impact the tourism sector. But this does play into the swelling sentiment the new variant will be a quick hiccup to travel’s recovery momentum.

Wednesday, Dec. 22

Thailand has temporarily canceled a Covid-19 quarantine waiver for foreign visitors, reinstating its quarantine requirement due to the presence of the Omicron variant. In November they started the “test and go” scheme, known as Thailand Pass, where visitors were required to isolate for a night until they returned a negative Covid-19 test, after which they could travel freely around the country. That scheme will now be suspended for at least two weeks to try to stem the spread of the variant. The decision will be reviewed on January 4. The government also announced the suspension of the “sandbox” programs that allow visitors to roam around specific destinations while serving their quarantine, except the for the resort island of Phuket. The 200,000 plus people already registered for the Thailand Pass scheme will still be permitted to arrive but the government will stop processing new applications under the entry scheme and any new visitors will need to undertake at least 7 days of hotel quarantine at their own expense. The news came right after Thai health authorities identified the country’s first local transmission of the Omicron variant. Thailand also found 63 inbound travelers infected with the variant. Meanwhile Thailand’s daily cases have dramatically plunged with only 2,476 cases and 32 deaths recorded yesterday. There were more than 20,000 cases each day in August.

Macau’s Secretary for Social Affairs and Culture said quarantine-free travel with Hong Kong may resume within a week for vaccinated travelers on a first come, first served basis. Travelers will need at least 14 days for their second vaccination and have a negative nucleic acid test. The border reopening will be on a limited basis at the beginning with priority given to those with medical or personal reasons. There is likely to be a cap on the number of travelers, which may be about 3,000 initially.

Skift Note: These may be two different takes on travel restrictions, but even Thailand’s pause on quarantine waivers appears to be a short one. All signs point to Asia continuing its slow path to reopening to the world.

Thursday, Dec. 23

Bloomberg reported Blackstone may be weighing a sale of the Motel 6 budget hotel brand’s holding company. Blackstone is said to be working with advisers and in the early stages of soliciting interest from potential suitors in G6 Hospitality LLC. The price tag is said to be more than $1 billion. Blackstone bought the Motel 6 and Studio 6 brands from Accor in 2012 for $1.9 billion in a deal that included 1,100 hotels. Blackstone sold most of the real estate with more than 1,050 hotels owned by franchisees at the end of last year.

Skift Note: If true, Motel 6 presents a massive growth opportunity for any hotel operator looking for a stronger footprint in the U.S. It doesn’t fit the customer profile for Accor’s future outlook, but it does line up with the kind of brands a certain fast-growing hotel company acquired earlier this year. Just saying.