A year after acquisition, Bunkhouse inspires Hyatt's approach to lifestyle hotels
Bunkhouse Hotels has been fully integrated into Hyatt's brand portfolio over the past year, and the lifestyle brand opened its latest hotel in Houston just in time for the holidays.
Hotel Daphne opened its doors this month slightly ahead of schedule, said Lisa Bonifacio is managing director, The Lifestyle Group, Hyatt, on the recent episode of the CoStar News Hotels podcast. She added the Hyatt team expects the new hotel to play a key role in its new home in the Heights neighborhood of Houston.
"It was really designed and built to be like an extended living room," Bonifacio said. "The houses in the Heights area are bungalow-style and generally smaller than some of the Houston neighborhoods, so maybe there's not room for families to stay or people that are traveling to visit friends. We wanted to be that place that was kind of the extension of the neighborhood."
To accomplish this goal, the 49-room hotel has very strategically designed communal spaces including a library, an all-day restaurant and a courtyard for guests to enjoy.
Bonifacio said the design is "arts-and-crafts-inspired," which she admits might sound a little weird, but she added the architecture is "vintage meets modern" and intended to "take the past and bring it into the future of Houston Heights."
Hotel Daphne is the second Bunkhouse hotel to deliver in the Houston area in just over a year. Hotel Saint Augustine opened a year ago in Houston's Montrose neighborhood, which is a walkable area near museums, award-winning eateries and other cultural mainstays.
The Hotel Saint Augustine has been well received by visitors and Houstonians alike, Bonifacio said. The property is anchored by the success of Perseid, the hotel's restaurant led by award-winning chef Aaron Bludorn.
"When you really want to be part of the neighborhood, you build a restaurant for the neighborhood. You don't build it for the hotel guests," Bonifacio said. "And that's what makes a hotel guest want to eat at it. ... What's going to sustain a restaurant is the people coming on a Tuesday night, not the Friday night hotel guest."
With the lifestyle hotel sector continuing to grow, Bonifacio said Hyatt is focused on differentiating its lifestyle hotels from each other, as well as from its competition. Bunkhouse and Standard, for instance, have their own brand distinctions, Bonifacio said. Bunkhouse hotels are meant to be soulful, while Standard hotels stand out as a modern, urban hotel that's "anything but standard."
"So, how do you keep them distinct, and how do you keep them different? I think it's a challenge, but it's a challenge we like and focus on a daily basis that we've been doing for a long time," Bonifacio said. "It's the passion of all of us that work on these teams and work on these hotels, so we'll continue to do so within the greater Hyatt group."
The original Bunkhouse team in Austin still works on the brand and has been brought in to work on other Hyatt entities, like JdV, Hyatt's collection of independent lifestyle hotels, Bonifacio said.
Hyatt is continuing to grow, with a specific focus on the U.S., Canada and Mexico, Bonifacio said. Standard is opening a hotel in Mexico City, a region Bunkhouse is already in.
"Our focus for Bunkhouse continues to be a lot of Texas and Mexico, so we have a few things that we're working on potentially in Mexico that we're excited about, and some more in Texas that hopefully we'll be able to announce soon," she said.
For more from the interview with Hyatt's Bonifacio, listen to the podcast interview embedded above.
Lotte acquires New York Palace hotel land for $490 million
South Korean hotel company Lotte Hotels & Resorts has acquired the land beneath its Lotte New York Palace hotel for $490 million.
The seller of the land is the Archdiocese of New York, according to Yonhap News. The Korea Herald reports the land had been leased in a 25-year agreement but now has changed hands “following years of negotiations.” It added the “transaction is expected to improve cash flow over time, reduce lease-related liabilities and strengthen [Lotte Hotels’] balance sheet.”
Lotte was already the owner of the 909-room Lotte New York Palace, which it bought in 2015 for $805 million from New York City-based Northwood Investors. In total — without considering inflation — Lotte has spent $1.3 billion on both the leasehold and freehold of the property.
Northwood bought the hotel, parts of which were built in 1884, in 2015 from the Sultan of Brunei. The site was first developed as a hotel by Harry Helmsley and Leona Helmsley and called the Helmsley Palace Hotel.
In the past two years, Lotte Hotels sold two of its South Korea hotels to Lotte Holding’s real estate investment trust Lotte Trust Management, according to Seoul-based news site Top Daily. Both were sales-and-leaseback deals, and both properties are located in Seoul. The first was the L7 Gangnam by Lotte for 330 billion South Korean won ($223 million) in late 2024, and the second was the sale of the L7 Hongdae by Lotte for 265 billion South Korean won in November.
By the end of this year, Noble Investment Group’s extended-stay hotels portfolio will reach 100 properties thanks in part to its recent acquisition of 35 Sonesta Simply Suites hotels.
Noble launched in earnest its branded long-term accommodations platform, known internally as BLTA, in August 2023, said Dustin Fisher, senior vice president of investments at Noble.
He called the platform "a focus on the nexus of hospitality and flexible living."
The Simply Suites portfolio deal "bolts into that strategy as a good way to add to that platform and scale,” he said. “That’s really key when we’re trying to grow a platform that gets to a durable cash-flow yield where we can add operating alpha and generally get into good markets that have this depth of extended-stay generators.”
The acquired portfolio sits across 19 states and 25 unique markets, mostly in the Southeast and Sunbelt regions. The portfolio comprises more than 4,000 rooms.
Noble bought the hotels from real estate investment trust Service Properties Trust, which has been progressing in a long-term strategy of selling off some of its Sonesta-branded hotels to reduce debt levels and increase liquidity. Initial data showed the portfolio size as 31, but Noble has shared the portfolio size is 35.
The hotels in the portfolio are in locations that Fisher said would be difficult to enter and build on their own, thanks to the lack of available land and cost of construction. Entering attractive markets this way, Fisher said, means Noble can implement its own operating strategies to achieve desired results.
Noble will make some guest-facing improvements to the hotels to bring them into alignment with its planned operating model, Fisher said.
"We're pleased with the product," he said, adding that in general, the hotels are well built, with good room layouts and public areas that are in good shape.
The extended-stay space has been attractive to Noble for some time, Fisher said. Earlier this year it bought 16 WoodSpring Suites hotels in two portfolio transactions. Recently, the company has broken ground on several purpose-built StudioRes by Marriott extended-stay hotels and opened one, in Newnan, Georgia.
The extended-stay space proved its resiliency during the pandemic and recovery, Fisher said. Even though the segment has had some challenges lately, that’s mostly a U.S. macro statistic, and Noble’s extended-stay portfolio hasn’t experienced that much turbulence.
“When you focus in on the types of markets that we’re selecting to invest in, you don’t get necessarily the amount of noise that you see at the U.S. macro,” he said.
Through Noble’s 30 years in business, the company has invested through every cycle, Fisher said.
“There’s no pause,” he said. “We always remain opportunistic, and we do so with an ability — unlike I think a lot of groups — to create operating alpha, which differentiates us from just a pure leveraged finance acquisition model, which is obviously difficult right now if that’s your investment strategy.”
Noble has closed on $600 million in hotel acquisitions so far this year with another $450 million under agreement, he said, adding the company isn’t waiting around for moments of perfect clarity. Other investors may be holding back, and some institutional capital is moving to other sectors, such as data centers and artificial intelligence.
“We kept plugging away I think, for lack of a better term, because we think we can find value at any point in the cycle, and that's what I think we've done this year,” he said.
Noble also has sold a few hotels this year. With no strict disposition goals in mind, the company's deals are all opportunistic, Fisher said.
Fisher said he expects an uptick in overall hotel deals volume into next year. The Noble team senses there’s a moment of capitulation bubbling up that is manifested by some of the softening seen through the fourth quarter that will prompt more activity next year. Refinancing alternatives will remain attractive, so traditional sale processes will be solved through the capital markets. Debt will end up being a tailwind and that will make for a more efficient capital markets environment, which helps spur transaction activity.
“We're bullish on the volume,” he said. “I think the overall landscape should be more liquid than it was this year.”
NATIONAL REPORT – The value that online travel agencies (OTAs) provide in a world of artificial intelligence (AI) is being debated across the travel industry.
Brands such as Booking.com ad Priceline, which emerged in the nineties to aggregate travel content and enable consumers to search, compare and book for themselves, are assessing their future role.
Booking Holdings’ Chief Strategy Officer Rob Ransom said the group is excited about the opportunity AI brings but stressed OTAs provide significantly more value than just aggregation.
“You need to figure out where you want to go, what your trip looks like, where you’ll stay, how you’ll get there. You also need to know if you’re getting a fair and competitive price, what happens if your plans change, how you get support before and during the trip and how you pay in a secure and trusted way,” he said during an executive interview at The Phocuswright Conference.
Ransom addressed online marketing and said AI could change brand strategy, especially if consumers don’t ask for a specific brand in their initial queries on an AI platform such as ChatGPT. And he is confident Booking Holdings’ brands will figure out any new ad formats that might emerge as those AI platforms develop.
“The platforms and companies like ours have a mutual interest in ad products that work for them, for us and for the customer.”
He also discussed the Booking.com app and said it’s “still the center of our business today,” accounting for more than half of bookings. And he doesn’t see mobile going anywhere.
“A dozen years ago, there was debate about whether to invest in mobile apps and whether this mobile thing was real. That’s a useful analogy for today’s AI debate. I think AI is going to change everything, and mobile is going to be a big part of that.
“One thing I would add about the intersection of mobile and AI is that the frontier model builders are making their models accessible to anyone to anyone who wants to take advantage of them. We’re certainly investing in how do we take advantage of models, how do we transform those models, how do we use our own data, our own expertise to enhance the models and deliver a better solution.”
The interview also touched on gatekeeping and fairness in the market, the increasing importance of tours and activities and where the next unicorn might emerge from.
See below for the full discussion with Mitra Sorrells, SVP of content for PhocusWire and Phocuswright.
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