Finance & DevelopmentFinanceRLJ Lodging Trust Acquires DoubleTree Grand Key Resort

RLJ Lodging Trust Acquires DoubleTree Grand Key Resort

BETHESDA, Md.—RLJ Lodging Trust has acquired the 215-room DoubleTree Grand Key Resort in Key West, Fla., for a purchase price of $77 million, or approximately $358,000 per key.

“We are excited to add an additional Key West asset to our portfolio at a significant discount to both replacement cost and recent per-key trades,” commented Thomas J. Baltimore Jr., president and chief executive officer. “We expect that our knowledge of the market along with the implementation of various initiatives will create additional upside at this strategically-located hotel.”

The company plans to implement several enhancements including upgrading the property and replacing the hotel’s management company. Upon completing an estimated $7 million renovation in 2015, the company expects that the purchase price plus capital expenditures will represent a forward capitalization rate of approximately 8 percent based on the hotel’s projected 2016 net operating income.

The hotel benefits from its location in Key West, which is one of the highest barrier-to-entry hotel markets in the country. Key West’s Rate of Growth Ordinance caps the number of building permits allowed on the island. As a result, new supply is highly constrained, providing a very favorable environment for lodging fundamentals and hotel ownership on the island.

In 2013, the Key West market revenue per available room (RevPAR) was almost $218, one of the highest RevPAR markets in the country. Key West’s RevPAR growth in 2013 was 17.8 percent and the trailing 12 months as of July 2014 was 20.5 percent. The hotel’s 2013 RevPAR is nearly a 50 percent premium to the company’s 2013 pro forma RevPAR, which will further enhance the composition of the company’s portfolio.

The market’s extremely restrictive development profile and strong leisure demand are expected to maintain positive lodging fundamentals in this premier market. The hotel is expected to capture additional upside after the completion of a comprehensive renovation and the implementation of new revenue management and cost containment initiatives.

With the addition of this asset, the company now owns 150 properties, comprised of 148 hotels with more than 23,300 rooms and two planned hotel conversions, located in 21 states and the District of Columbia.

RELATED ARTICLES

Dreamscape Hospitality Assumes Management of Three Hotels in Houston

HOUSTON, Texas—Dreamscape Hospitality announced that it has assumed management of three hotels in Houston, Texas. "We are excited to deepen our presence in Texas through...

Hilton Announces Plans to Debut Spark by Hilton in Puerto Rico

PONCE, Puerto Rico, and MIAMI, Florida—Hilton announced the signing of Spark by Hilton Ponce, marking the upcoming debut of the brand in the Caribbean...

Wyndham Announces Partnership With Cygnett

DELHI—Wyndham Hotels & Resorts announced a new strategic alliance with Cygnett Hotels & Resorts that will not only introduce its La Quinta by Wyndham...

New Pyramid Global Hospitality COO Continues Focus on Big Data to Benefit Owners

Pyramid Global Hospitality Chief Operating Officer Eric Habermann retired in April following seven years with the company and a nearly 40-year career in hospitality....

Grand Hyatt Kauai Resort & Spa Launches Scholarship Program

Grand Hyatt Kauai Resort & Spa, a 605-room resort, announced the launch of a scholarship program to support the continued education of its colleagues...

Hilton Surpasses 500 Hotels in Florida

MCLEAN, Virginia, and MIAMI, Florida—Hilton announced a major milestone as the company surpassed 500 open hotels across Florida. This growth was fueled in part...