May 17, 2021 By: G. F. Gay Le Breton and Ryan Gerton
Two New Orleans hotels changed hands last month as the hospitality industry begins to recover from more than a year of pandemic shutdown.
Dallas hotelier Mark Wyant sold The Saint Hotel to New York City-based developer Dreamscape Companies for $40 million. Wyant and his mother purchased the once-derelict building at 931 Canal St. for $5.3 million in 2010 and put $39 million into converting it into a 171-room hotel. The purchase price translates to approximately $234,000 per room.
Wyant is the creator of the adult-oriented Saint Hotel brand, a chain of boutique hotels whose motto is “Play Naughty. Sleep Saintly.” Dreamscape plans for substantial changes to the hotel to broaden its appeal.
Scott Broder, head of hospitality acquisitions at Dreamscape, considered the sale price a bargain compared to the $80 million it could cost to build a similar hotel from scratch. Broder also said that Dreamscape is betting big that leisure will recover after a year in survival mode. He estimates that The Saint could see “80% – 90% occupancy on weekends” almost immediately.
This estimate is a stark contrast compared to the average New Orleans occupancy rate of 55% for the week ended April 24, as reported by hospitality intelligence firm STR. However, this is up from less than 20% in the same week of 2020. Rates have improved steadily this year due in part to a ramp-up in vaccinations.
A couple blocks away, Park Hotels & Resorts, Inc. exited a high-end hotel with the sale of the 97-room W New Orleans French Quarter Hotel to an undisclosed buyer for $24.1 million, or $249,000 per room. Thomas J. Baltimore Jr., chairman and CEO of Park, said that “The sale of the W New Orleans French Quarter helps to streamline our portfolio to focus our resources on our larger assets as well as reduce our exposure in a market where we already have a strong presence with our 1,622-room Hilton Riverside hotel.”
Park, one of the largest hotel-focused REITS in the country, scooped up the W Hotel and the downtown Le Meridian Hotel in mid-2019 as part of a package deal when it bought Chesapeake Lodging Trust for $2.7 billion. Park sold Le Meridian for $84 million that same year to chip away at its debt. The W Hotel is the first sale of a “non-core” hotel for Park Hotels since the onset of the COVID-19 outbreak, and it marks the 25th hotel divestiture since the company spun off from Hilton in 2017.
Park now has 52 of its 59 locations open for business, and the rest are slated to reopen as travel restrictions ease.
In the technology sector, New Orleans-based Striker VR, a subsidiary of HapTech, Inc., raised $4 million through a sale of a minority stake in the business to an unnamed strategic investor in the United Kingdom.
Striker VR develops and manufactures high-end haptic VR guns and other peripherals for the out-of-home market. The fundraise is part of an initiative to help this virtual reality production and gaming company transition to the consumer market. The company is using the cash infusion to double its staff as it ramps up to launch its new product.
The move follows the announcement in March that Striker VR and Immersion Corporation, a leading developer of haptic technologies, signed a multi-year agreement to collaborate on cutting-edge force-feedback peripherals. “Striker VR is thinking ahead and building a product that will excite users with its advanced features,” said John Griffin, vice president of products and marketing at Immersion.
“Haptics is an important part of making the gaming and VR experience as realistic as possible, said Martin Holly, co-founder of HapTech along with partner Kyle Monti. “The more we can do with the sense of touch and haptics, the better the experience. Touch brings it all together and creates a sense of presence.”
Part of the growing game development industry in Greater New Orleans, Striker VR and Haptech are based in Scale Workspace, a shared workspace offering advanced manufacturing equipment and personnel to its members. Crediting Scale with accelerating their process, Holly said that “As tenants, we have access to all their 3D printing technology, which is millions of dollars of equipment that (we) would otherwise have had to pay for.”
G.F. Gay Le Breton is managing director for Chaffe & Associates Inc., responsible for the merger and acquisition activities of the firm. Ryan Gerton is financial analyst for the firm. Investment banking services are provided by Chaffe Securities Inc., member FINRA/SIPC.