Entertainment

Analysis: US hotel developers run out of cash as construction lending dries up

Tighter lending standards from regional banks are making it harder for US hotel developers to secure funding, slowing construction of new hotels at a time Americans’ appetite for travel is ripe.

Hotel developers, private equity firms, and general contractors told Reuters the financial stress on regional banks — the largest lenders to hotels and other commercial real estate markets — has forced developers to postpone projects or find other creative ways to raise capital.

For the latest headlines, follow our Google News channel online or via the app.

The hotel industry’s predicament highlights the impact on the broader US economy of the regional banking crisis, which resulted in the failure of three mid-sized US lenders and prompted a flight in deposits to larger banks.

Following the collapse of Silicon Valley Bank in March, California developer Shopoff Realty Investments paused construction of Dream Las Vegas, a 21-story hotel and casino resort, and said the firm was trying to secure more financing.

Fifty-nine of the 98 total US hotel projects that have been paused this year were put on hold since March, when the banking crisis started, according to previously unreported data shared with Reuters by Build Central Inc., a subscription-based research and analytics firm used by some large hotel brands to gauge market opportunities by location. A total of 324 projects broke ground or are in the pre-construction phase so far this year.

“The regional banks that used to be active for us 9 to 12 months ago are not showing up to finance hotels for us today,” said MCR Hotels Chief Investment Officer Joseph Delli Santi, the third-largest US owner-operator of hotel brands including Hilton.

Over the past year, access to loans and higher construction costs have delayed projects across Florida, Texas, and California, said James Hansen, executive vice president of business development of hotel developer and operator Hotel Equities, adding that the regional bank upheaval had extended wait times for construction loan approvals.

Chief executives of major hotel companies, Hilton Worldwide Holdings Inc and Marriott International, have also alluded to the issue – warning of a reduction in hotel developments as credit becomes more expensive and less available, in their latest earnings calls.

Analysts say slower hotel development will also limit profits of blue-chip manufacturers like Caterpillar Inc., whose commercial real estate customers account for around 75 percent of construction sales. Customers are scaling back on equipment purchases, deterred by high interest rates to finance or lease machinery.

In the weeks after the collapse of Silicon Valley Bank, Signature Bank and First Republic Bank, many regional lenders began to consider reducing their exposure to commercial real estate by tightening lending standards and making fewer loans.

As lending criteria grew more stringent, smaller hoteliers without existing lending relationships began to hit roadblocks, said Andy Ingraham, a hotel developer and president of the National Association of Black Hotel Owners, Operators, and Developers.

Ingraham said he and other members are struggling to get financing for various projects.

In some cases, private equity firms have stepped in to fill in funding gaps for construction loans, but at steeper costs, said Evens Charles, chief executive of Frontier Development and Hospitality Group, a Washington DC developer whose portfolio includes 10 hotels.

“I’m hearing 9-10 percent (interest rates) and it’s coming from a 4 percent environment two-and-a-half years ago,” he said.

‘Sit on the sidelines’

Small to mid-size banks, including lenders with less than $250 billion in assets, hold roughly $2.3 trillion in commercial real estate loans for structures like offices, hotels and warehouses, the equivalent of 80 percent of their total liabilities.

Overexposed regional banks are now offloading commercial real estate loans at a discount. Troubled regional lender PacWest Bancorp announced in May it would sell $2.6 billion worth of real estate construction loans.

Banks started to reduce their hotel loan portfolios in the first quarter of 2023, an analysis by S&P Global Market Intelligence found. Based on available data from regulatory filings, the study showed 14 of 24 banks that held more than $125 million in outstanding hotel and motel loans reported quarter-over-quarter decreases.

Western Alliance was the anomaly. The Arizona-based bank boosted its hotel loan holdings in the first quarter by 14 percent from the previous quarter. In an emailed statement, a spokesperson said the bank had executed a “deliberate slowdown” in lending to the hotel sector near the tail end of the first quarter with an “eye toward slower economic growth overall.”

Elevated interest rates and inflated raw material costs due to supply chain backlogs were already hurting hotel developers even before the regional banking crisis, said Mitchell Hochberg, president of Lightstone Group, a New York-based private real estate investor and developer with a $3 billion portfolio of hotel properties.

The firm is putting the brakes on new projects.

“It’s getting harder to pencil in a good hotel deal,” he said. “A lot of developers would prefer to sit on the sidelines until rates come down rather than be burdened with the excess costs.”

Entertainment

EU Organic Journey Hosts Exclusive B2B Dinner in Dubai, Unveiling European Organic Excellence

The European program “EU Organic Journey”nhosted a distinguished B2B dinner on the evening of the 14th of December 2023 at 19:00, set against the elegant backdrop of MYOCUM Dubai Restaurant (2D St, Al Wasl, Dubai, United Arab Emirates).
Bringing together key players from the Horeca sector, importers, distributors, wholesalers, grocery chains, organic shops, and esteemed food bloggers, the event showcased an array of delectable European organic products, including virgin olive oil, olives, and organic dairy products.
Attendees were treated to a unique opportunity to engage with representatives from the contributing organizations, fostering connections while savoring the exquisite European offerings. The ambiance of MYOCUM Dubai Restaurant provided the perfect setting for meaningful discussions on potential business opportunities. Throughout the evening, participants delved into the heart of the European program “EU Organic Journey”gaining valuable insights into its initiatives, organic production methods,
and the superior quality of the promoted products. Representatives from the participating organizations were on hand to provide in-depth information, facilitating discussions on potential collaborations and partnerships within the organic industry.
The B2B dinner not only celebrated the richness of European organic products but also served as a platform for networking and knowledge-sharing. Attendees left the event with a deeper understanding of the “EU Organic Journey,” equipped with the information needed to explore new business avenues and enhance their involvement in the organic sector. The EU Financed campaign EU Organic Journey aims to promote and increase the awareness regarding the European organic products from Greece, Romania, and Bulgaria to consumers in UAE, Saudi Arabia and USA with the participation of the organizations Agrodiatrofiki Sympraxi Perifereias Stereas Elladas (ASPSE) from Greece, Bio Carpathia Cooperative from
Romania and National Organic Association (NAO)from Bulgaria.

Entertainment

Classification: Public New Murabba appointed AtkinsRéalis to masterplan the world’s largest modern downtown in Riyadh, Saudi Arabia

The New Murabba Development Company (NMDC), a fully-owned subsidiary of the Public Investment Fund (PIF), Saudi Arabia,
has appointed AtkinsRéalis (TSX: ATRL), a fully integrated professional services and project management company with offices around the world, to support the design of the New Murabba masterplan, the world’s largest modern downtown in Riyadh, and the Mukaab, an immersive destination that will revolutionize the way in which people experience hospitality, retail and
leisure. A signing ceremony, attended by Sabah Barakat, Acting CEO, New Murabba Development Company, and Campbell Gray, CEO of AtkinsRéalis, Middle East and Africa, was held to mark this milestone and celebrate the ongoing support to deliver Riyadh’s new iconic destination. Sabah Barakat, Acting CEO, New Murabba Development Company, commented: “We are proud
to recognize the important role that AtkinsRéalis has played so far in the translation of the incredible vision of this project into the design of the masterplan and the iconic Mukaab building. We’re also pleased to recognize the ongoing involvement of AtkinsRéalis in this project through a series of recent contract awards relating to the further detailing and definition
of the overall New Murabba masterplan and infrastructure design, as well as the concept design of the iconic Mukaab building.”
“The New Murabba project aligns with Saudi Arabia’s national vision aimed at developing the infrastructure, enabling the private sector, and creating job opportunities for local talent,“ added Campbell Gray, CEO of AtkinsRéalis, Middle East and Africa. “We are proud to work with NMDC on this ambitious project and bring our global engineering excellence and design
expertise, underpinned by cutting-edge technologies and sustainable solutions, to deliver a long- lasting legacy for the Kingdom and its future generations.” After successfully winning the international architectural and master planning competition for Riyadh’s new icon, AtkinsRéalis will provide its world class advisory, architecture, masterplanning and engineering services to deliver this groundbreaking project, a cornerstone to the visionary reinvention of the Kingdom’s capital city. Contributing to the city’s future development in line with the Saudi Vision 2030, the New Murabba masterplan is inspired by Riyadh’s original balance with nature, and its design is focused on a data-driven approach to sustainability, user convenience, reduction in the need for transport, walkability and people- centric design of its public realm. “Synonymous with designing iconic landmarks in the Middle East, AtkinsRéalis has established a stellar reputation for delivering people-centric destinations combining the region’s cultural identity with modern urban standards,“ said Matthew Tribe, Managing Director, Planning, Design, and Engineering at AtkinsRéalis, Middle East and Africa. “This project win is a testament to our innovative architectural design approach set to redefine downtowns of the future living experience not only in Riyadh but also globally.”

AtkinsRéalis’s competition-winning scheme is inspired by Najdi Architecture, with a focus on creating a futuristic landmark with deep contextual roots that blends Riyadh’s cultural heritage with its future ambitions. The Mukaab, which means cube in Arabic, will be the world’s largest immersive destination providing innovative experiences driven by digital and virtual technology.
The Mukaab’s exterior envelop shrouds an internal skyscraper, which will be one of the largest built structures in the world’s history, standing 400m high, 400m wide, and 400m long. The design of the Mukaab will also include first-of-its-kind hospitality, F&B and retail facilities.

Entertainment

ASPIRE’s A2RL Debuts Autonomous Racing Car in Abu Dhabi

-Abu Dhabi Autonomous Racing League to hold its first event in April 2024

– A2RL introduces an enhanced version of the 300 km/h Japanese Super Formula SF23 racing car

– Autonomous technology testing commences ahead of inaugural race in April 2024

ASPIRE’s grand challenge, the Abu Dhabi Autonomous Racing League – A2RL, has for the first time revealed its autonomous, highly modified Super Formula SF23 development car. The first glimpse
unfolded at ASPIRE’s offices in Abu Dhabi, near the world-famous Yas Marina Circuit, where the premier event of the season – the Formula 1 (F1) Abu Dhabi Grand Prix 2023 – is currently underway. The same venue will play host to the inaugural A2RL racing event scheduled for next April. Globally acclaimed journalists, representing the world’s most reputable automotive and
racing publications, were also present during the car’s spectacular reveal – further solidifying
the cars status as a trailblazer in the motorsports industry. In April 2024, ten teams spanning North America, Europe, the UAE, and Asia will battle it out to claim a stake in the US$2.25 million purse. The series aims to accelerate autonomous driving development and innovation, pushing the
technology forward for the eventual benefit of road car safety. The new series makes the best use of the forward-thinking and blisteringly quick Super Formula SF23 racing car, developed by motorsport powerhouse Dalarra. All cars will come equipped with an array of sensors and control units as well as a basic level of autonomous performance. The autonomous car unveiled today was fresh off the track, having completed a successful week of testing. Attendees were shown how A2RL’s extensive testing programme has begun to refine the base SF23 platform. This includes validating an array of sensors, controlmodules, and autonomous control software. Once finalized, this base platform will be madeavailable to the ten teams participating in the inaugural A2RL race at Yas Marina Circuit onApril 28, 2024.

His Excellency Faisal Al Bannai, Secretary General of the Advanced Technology
Research Council, ASPIREs parent entity, said, “This is an exciting opportunity to use
extreme sports as the basis for delivering technical advances. A2RL represents an
investment that will contribute to building an autonomous mobility ecosystem in Abu Dhabi,
showcasing safe deployment and encouraging OEM investments for widespread adoption,
ultimately enhancing road safety.”
Stephane Timpano, CEO at ASPIRE, commented: “We are thrilled to debut the A2RL
autonomous racing car to global media. It was an exciting opportunity to discuss our latest
developments and testing while also highlighting the motivation and competitors behind the
competition. A2RL will be the largest autonomous racing league in the world, shifting focus
from drivers to the engineers, scientists, and programmers behind brilliant autonomous
racing systems.”