Pebblebrook closes sale of Westin in Chicago
Pebblebrook acquired the well-located hotel with two aging towers in 2018 for $156 million after LaSalle Hotel Properties bought it in 2006 for nearly $215 million.
Amin earlier this year acquired the dual-branded Hampton Inn/Homewood Suites Mag Mile for a discounted $28.3 million. His portfolio is managed through Vinayaka Hospitality, run by his wife, Komal Patel.
Following the sale of The Westin Michigan Avenue Chicago and the previously announced $44.25 million sale of Montrose at Beverly Hills, Pebblebrook will have reduced its outstanding debt by $100 million and its preferred securities outstanding by approximately $5 million. Following these transactions, Pebblebrook expects to have approximately $2.1 billion of consolidated debt and convertible notes outstanding and $761 million of preferred equity, with net debt to trailing 12-month corporate EBITDA reduced to approximately 5.9x.
Because the loss of hotel-level EBITDA for the remainder of the year is expected to be fully offset by lower interest expense from reduced outstanding debt, Pebblebrook does not anticipate any meaningful impact to Adjusted Funds from Operations, and its outlook for key fourth-quarter and full-year 2025 earnings metrics remains largely unchanged.
For the trailing 12 months ended September 30, 2025, the Westin Michigan Avenue Chicago generated EBITDA of $4.6 million and net operating income of $2.5 million. The $72.0 million sales price equates to a 15.6x EBITDA multiple and a 3.5% NOI capitalization rate, before consideration of a brand-mandated property improvement plan and other significant capital expenditures.
Pebblebrook expects to use the sale proceeds for general corporate purposes, with a primary focus on reducing outstanding debt and preferred equity, and opportunistically repurchasing the company’s common shares, while supporting other capital allocation priorities to enhance long-term shareholder value.
Hoteliers are seemingly on the naughty list this year, with the timing of both the Christmas and New Year's holidays hitting midweek and possibly discouraging travel.
With both Christmas Eve and New Year's Eve falling on Wednesday, STR senior director of analytics Isaac Collazo said that's close to the worst timing possible for hotel occupancy in the U.S.
"It's going to feel weaker based on history," he said. "Everything points that it's going to be weaker."
Christmas Day being on a Thursday is at least better but still not ideal, Collazo said.
Based on data going back to 2000, hotel occupancy on Christmas Eve averages just 31.5% when it falls on a Wednesday, the lowest mark for any day of the week. The highest is Saturdays when it hits 39.3%.
Christmas Day falling on Thursday is tied for the second-worst outcome for hoteliers at 37.2% compared to 34.7% on Tuesdays and the high water mark of 41.9% on Saturdays.
In total, the eight-day holiday period sees its worst occupancies when Christmas Eve falls on a Wednesday, down to 47.1% compared to 50.7% when it falls on a Saturday.
This all comes on the heels of a prolonged difficult stretch for the hospitality industry and dwindling hopes for a fourth-quarter turnaround to maintain momentum heading into 2026.
"We have a weaker demand environment overall, and then the placement of the holidays is going to feel weaker," Collazo said. "That's what the data shows."
Priya Chandnani, senior vice president of sales, revenue and distribution strategy at Sage Hospitality Group, said her company has been seeing slower-than-usual bookings pace for its upscale hotels for the holiday season but steady pace for its luxury and upper-upscale properties.
But one area where there's been a clear decline is in social, military, educational, religious and fraternal groups — commonly known in the hospitality industry as SMERF business.
"We're not seeing a lot of group SMERF book for December now," she said. "Some of it could be the booking window. I do feel like the booking window has shortened this year compared to last year, but we're pivoting very quickly toward a more leisure-driven discount strategy."
Sage's patterns follows broader hotel industry trends of bifurcation with demand and spending remaining strong among more affluent spenders and continually weakening at among consumers with lower incomes.
The silver lining of all this might be how it affects the outlook for late 2026, with the fourth quarter of next year set up for easier comparisons for a number of reasons.
Both Christmas Day 2026 and New Year's Day 2027 will fall perfectly on a Friday, which analysts at Truist recently described as "a perfect storm of holiday shifts."
And Chandnani said there is some hope going into early 2026.
"If you take away the noise from [comparisons to the the 2025 presidential inauguration], we're seeing transient demand pace is flat to up," she said, adding that booking for group business is also strong. "We're actually ahead to the same time last year for the first quarter, and I'm feeling pretty optimistic there. What I'm more concerned about is the second quarter and third quarter and how they're going to form, but it's early days."
In the two weeks ending Nov. 29, U.S. hotel revenue per available room decreased 0.3% as occupancy fell 0.7 percentage points and average daily rate rose 0.9%.
Since the end of April, U.S. hotel room demand has fallen in 21 of 31 weeks while occupancy has dipped in 28 weeks. Slowly increasing hotel supply has negated some of the demand growth during this period, but in the two most recent weeks, supply gains abated a bit.
In the week before the Thanksgiving holiday – Nov. 16-22 – RevPAR was flat. During the week of Thanksgiving from Nov. 23-29, RevPAR retreated 0.7%.
Hurricane markets – the 13 U.S. hotel markets affected by Hurricane Helene and Hurricane Milton in September 2024 – continued to factor into year-over-year comparisons. Excluding those 13, RevPAR in the remaining hotel markets across the U.S. was up 0.9% in the fortnight and up in both individual weeks; in the week before Thanksgiving, RevPAR rose 1.3%. More importantly, the occupancy declines that have plagued the hotel industry all year slowed considerably when excluding the hurricane markets as occupancy was basically flat over the past two weeks (-0.1 percentage points). ADR, however, remained below the inflation rate, rising by 1.1% in the fortnight.
Among the top 25 U.S. hotel markets, Dallas, Philadelphia, San Francisco and St. Louis all saw strong, double-digit RevPAR growth over the two-week period; San Francisco (+51.3%) and St. Louis (+35.5%) hotels posted exaggerated RevPAR increases. Both saw very strong gains in the week before Thanksgiving, but the growth also extended into Thanksgiving week.
On the other end of the spectrum, Tampa hotels saw RevPAR decline 28.2% over the fortnight due to last year’s hurricane-led growth. Other markets with falling RevPAR included Atlanta, Boston, Chicago, Houston and Seattle, where two-week RevPAR dropped by more than 6%. In total, 13 of the top 25 U.S. hotel markets saw RevPAR retreat during the fortnight.
Group demand driving several key markets
Group demand for luxury and upper-upscale hotels for the two weeks ending Nov. 29 was down 1% even with strong growth in five top 25 markets: St. Louis (+88.2%), San Francisco (+77.7%), Oahu (+35%), Detroit (+27.9%), and Washington, D.C. (+12%). The growth was mostly in the week of Nov. 16-22, but strong group demand growth also lingered into Thanksgiving week in several of these markets.
Both St. Louis and San Francisco hotels have benefited greatly this fall from increased conference activity. In the week of Nov. 16-22, San Francisco hosted Microsoft Ignite 2025, while St. Louis welcomed The International Conference for High Performance Computing, Networking, Storage, and Analysis (SC25). St. Louis has seen strong, group-led performance this year as the market’s convention center, America’s Center, reopened early last year after a renovation. Since the beginning of the second quarter, St. Louis’ RevPAR has advanced 12.7% on a 5.2-percentage-point occupancy increase and ADR growth of 3.2%. San Francisco has seen a similar RevPAR increase (+13.3%) led by ADR (+7.4%).
Among the various hotel types, the bifurcation contrast was really apparent as hotels in the luxury chain scale rose 7.3% over the two weeks, whereas economy hotels fell 8%. During Thanksgiving week, both luxury and upper-upscale chains saw solid occupancy growth with moderate ADR gains. Room demand for both chain scales was up more than 5%, while all other chain scales were down.
Thanksgiving week wasn’t a bust
Looking back at the past 26 Thanksgiving weeks since STR began recording daily results, Thanksgiving Week 2025 showed the third-highest demand, albeit down slightly (-0.2%) from a year ago. The demand decrease nearly mirrored the 0.4% decline in TSA weekly screenings.
In total, 19.8 million U.S. hotel rooms were sold in the week as compared to the record 20.6 million sold in Thanksgiving Week 2021. While the week only ranked as the third best, Wednesday and Thursday (Thanksgiving Day) individually ranked second in demand behind 2021. Thanksgiving Day hotel occupancy reached 54.9%, the eighth best in history. Thanksgiving weekend occupancy was 57.9%, down a full point from a year ago and ranking 16 of the past 26 Thanksgiving weekends.
A weak finish for the US
Our general conclusion is that U.S. hotel performance over the final two weeks of November was decent with hurricane markets accounting for most of the percentage decrease year over year. The low ADR gains, which remain well below inflation, are still a concern as the pressure on hotel operating margins will continue.
Looking ahead, U.S. hotel RevPAR for the full month of November will come in weaker than what the current month-to-date results show (-1.3%) due to the loss of a Friday and the addition of a Sunday as compared to last year. We estimate that the month will fall by roughly 2%. December also looks to be on the weak side with RevPAR flat to down due to the movement of holidays. Our analysis shows that a Wednesday Christmas Eve and New Year’s Eve have historically resulted in the lowest occupancy for those two days and the days in between.
RevPAR surges outside the US, particularly in the Middle East
Global hotel performance, excluding the U.S. and on a same-store basis, remained robust with RevPAR increasing 8.7% over the past two weeks on a 6.9% ADR gain. ADR has increased by more than 5% in seven of the past 10 weeks. Occupancy was also solid, rising 1.2 percentage points in the fortnight to 73.9%.
The Gulf Cooperative Council countries led the way as hotel RevPAR surged 30.4% with the region in the midst of events season. Australia, the Caribbean, France, India, Japan, and Spain all saw RevPAR advance more than 10% with Italy and Germany not far behind.
China’s RevPAR grew by 1.2% in the final two weeks of November and has increased for the past six weeks. Like in the U.S., RevPAR growth over the past two weeks bifurcated with Chinese luxury-class hotels seeing a 9% increase driven by nearly equal gains in occupancy and ADR, whereas midscale- and economy-class hotels saw RevPAR decrease more than 3% on falling occupancy. Besides luxury, upper-upscale was the only other class to see growth in the period. On a market basis, Sanya and Hong Kong saw the highest RevPAR growth rates (15%+). Among the five largest markets, only Shanghai posted a RevPAR increase.
Canada and Mexico saw same-store hotel RevPAR fall in the week of Nov. 16-22 followed by growth in the following week. In Canada, the decrease two weeks ago was focused in the two largest markets, Toronto and Vancouver, as RevPAR fell 32% in Toronto on a 30% ADR decline due to difficult comps to last year’s final three Taylor Swift shows. Vancouver’s RevPAR was down 16% on decreases in both occupancy and ADR. In the week of Nov. 23-29, Canadian RevPAR rebounded (+4.9%), but Toronto remained in arrears (-3.4%) with Vancouver up 4.7%.
Mexico saw a similar pattern down 2.3% two weeks ago and up 2.1% during Thanksgiving week. Most of the resort markets were down the week before the U.S. Thanksgiving holiday followed by strong growth during the holiday week.
At this point, there seems to be no stopping the growth outside the U.S., and we expect the year to end on a solid footing.
Isaac Collazo is senior director of analytics at STR.
Realty Income has agreed to make an $800 million preferred equity investment in Blackstone's Aria Resort & Casino and Vdara Hotel & Spa, setting up a multibillion-dollar refinance of the 5,500-room portfolio on the Las Vegas Strip.
Realty Income's investment backs the larger CityCenter mixed-use complex, which comprises the Aria and Vdara and is owned by funds affiliated with Blackstone. The private equity giant is expected to retain 100% of the ownership of the Aria and Vdara real estate.
With the investment, a consortium of major banks led by JPMorgan Chase agreed to refinance a $3.15 billion commercial mortgage-backed securities loan on CityCenter, according to a federal filing for a new CMBS offering in the works, BX Trust 2025-ARIA.
The mortgage agreement comes one month after Blackstone exercised its final one-year maturity extension on the loan, extending the due date to October 2026.
Blackstone declined a request for comment from CoStar News.
The transactions demonstrate continued institutional appetite for Las Vegas assets despite market headwinds.
The Strip has faced pronounced demand erosion since early 2025, according to CoStar analysis. The 12-month average revenue per available room through October dropped 9%, driven by trade disputes, tariffs, inflation and federal employment cuts.
International visits have faltered amid geopolitical uncertainty, the CoStar report said. Meanwhile, online gaming and generational entertainment shifts are eroding traditional leisure demand. Through August, Strip occupancy averaged 82%, with average daily rates $100 above other markets.
MGM Resorts operates both the Aria and Vdara under Blackstone's ownership.
MGM's Las Vegas Strip properties recorded $601 million in earnings before interest, taxes, depreciation, amortization and restructuring or rent costs, or EBITDAR, down $130 million year over year, CEO Bill Hornbuckle reported in the company's third-quarter earnings call. Net revenue declined 7% while occupancy fell to 89% from 94%. Revenue per available room dropped 8% to $210.
MGM expects market stabilization in the fourth quarter and growth starting in 2026. More than 90% of conventions are contracted for next year, according to the company. The Aria and Vdara properties feature gaming, luxury retail, upscale dining and about 500,000 square feet of convention space.
"This represents an immediately accretive investment for Realty Income with a favorable initial yield and [internal rate of return] profile, further demonstrating the value of our size, scale and diversification," Sumit Roy, Realty Income's president and CEO, said in a statement.
The deal represents Realty Income's second Las Vegas casino resort investment with Blackstone, following a Bellagio joint venture completed in 2023.
For the record
JPMorgan Chase, Citi, Deutsche Bank, Goldman Sachs and Evercore advised Blackstone. Simpson Thacher & Bartlett served as legal counsel to Blackstone. Latham & Watkins represented Realty Income.
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