by Calculated Risk on 6/08/2009 01:00:00 PM

From HotelNewsNow: U.S. hotel industry enters 19th month of recession

economic research firm e-forecasting.com, in conjunction with STR, announced that following a decline of 1.1 percent in April, HIP declined 1.3 percent in May. HIP, the Hotel Industry Pulse index, is composite indicator that gauges business activity in the U.S. hotel industry in real-time. The latest decrease brought the index to a reading of 83.1. The index was set to equal 100 in 2000.
...
The U.S. hotel industry is still in its recession, having officially entered the 19th month of decline, said Evangelos Simos, chief economist of e-forecasting.com.

Click on graph for larger image in new window.

And from the Chicago Tribune: Chicago hotels racked by glut of rooms (ht dum luk)

Hotel occupancy and average daily room rates have posted double-digit percentage drops over the first four months of this year compared with the same time last year. ... Despite demand being down, the city's supply of hotel rooms is on the way up.

The opening of four new hotels, plus rooms that will join the inventory at Trump International Hotel & Tower, will add 989 rooms to the downtown Chicago market this year.
...
In April alone, the average room rate in downtown Chicago hotels was about $162 a night, 23 percent less than the roughly $210 per night guests paid during April 2008, according to data from Smith Travel Research Inc.

As a result, total revenue for the 35,000-plus rooms in downtown Chicago has plunged 25 percent year to date.

The decline in revenue per available room (RevPAR) in Chicago is only slightly worse than the national average decline of 18.9% compared to last year, see: Hotel Occupancy Rate Falls to 51.6%.

by Calculated Risk on 6/08/2009 12:28:00 PM

From Crain's Chicago Business: Mag Mile facing a glitz gap

The vacancy rate in the Mag Mile corridor rose to 7.2% in the year ended April 30 from 6.3% the year before, according to an annual survey by real estate brokerage CB Richard Ellis Inc. provided exclusively to Crain's.

Empty storefronts large and small dot the avenue, a big departure from seven years ago, when the rate dropped to as low as 1%. Based on historical demand and announcements by stores of possible closures next year, the vacancy rate could approach its 1992 level of 9%.
...
"In this recession, high-end merchants have been negatively impacted, and that's reflected in the vacancy numbers on the street," [Bruce Kaplan, a senior vice-president in Chicago at CB Richard Ellis] says.

by Calculated Risk on 6/08/2009 09:15:00 AM

The Obama administration will announce this week that several large banks will be approved to repay TARP funds. Some of the rumored banks are J.P. Morgan Chase ($25 billion), Goldman Sachs ($10 billion), Morgan Stanley ($10 billion), American Express ($3.4 billion), Bank of New York Mellon ($3 billion), State Street ($2 billion), US Bancorp ($6.6 billion) and BB&T Corp. ($3.1 billion).

Also today is also the deadline for regulators to approve capital-raising plans and for banks to complete a management review. From the WSJ: Bank Chiefs Await Report Cards

Monday is the deadline for federal bank regulators to approve capital-raising plans at nine of the country's largest banks, a culmination of the stress-test process. But the moment could be overshadowed by a less publicized deadline: banks' equally in-depth review of their management.

Several top banks, including Bank of America Corp. and Citigroup Inc., have had to assess top executives and directors "to assure that the leadership of the firm has sufficient expertise and ability to manage the risks presented by the current economic environment" ...

by Calculated Risk on 6/07/2009 10:12:00 PM

From the NY Times: U.S. to Propose Wider Oversight of Compensation

The Obama administration plans to require banks and corporations that have received two rounds of federal bailouts to submit any major executive pay changes for approval by a new federal official who will monitor pay, according to two government officials.

The proposal is part of a broad set of regulations on executive compensation expected to be announced by the administration as early as this week. Some of the rules are required by legislation enacted in the wake of the worst financial crisis since the Great Depression, and would apply only to taxpayer money.

Others, which are being described as broad principles, would set standards that the government would like the entire financial industry to observe as they compensate their highest-paid executives, though it is not clear how regulators will enforce them.

by Calculated Risk on 6/07/2009 06:23:00 PM

"At some point, you just stop the bleeding and hand the keys back."
John Arabia, an analyst with real estate research company Green Street Advisors

From the WSJ: Sunstone Hotel Investors to Turn Over W San Diego to Mortgage Holders

Sunstone Hotel Investors Inc. intends to forfeit the 258-room W San Diego to its lenders after its efforts to reach a compromise on the luxury hotel's $65 million securitized mortgage failed.

Sunstone ... bought the W for $96 million in 2006 ... Sunstone estimates the W San Diego is worth much less than the $65 million balance on its mortgage. At the end of last year, the hotel posted an occupancy of 69% and generated revenue per available room of nearly $153.

Much less than $65 million? That means the price has probably fallen 50% or more since 2006.