The imminent arrival of Universal’s next theme park drove hotel investment activity around Orlando’s I-Drive corridor in 2022— including recent sales of the iconic Castle Hotel and a Wyndham La Quinta Inn & Suites.
“Epic Universe has been fueling a lot of our hotel sales over the past year,” said Paul Sexton, who brokered the La Quinta transaction with HREC Investment Advisors.
Orlando-based Everwood Hospitality Partners closed on the purchase of the 184-room Wyndham La Quinta Inn & Suites at 8504 Universal Blvd. on Dec. 1 for $19.1 million, according to Orange County deed records.
Meanwhile, Banyan Investment Group snagged the 214-room Castle Hotel, part of Marriott’s Autograph Collection, in October for $37.4 million — Orlando’s second priciest hotel deal of the year. Berkadia brokered this sale.
In total, there have been 56 hotel deals to close in the Greater Orlando market this year, according to Co-Star. That’s down from 69 trades in 2021, but still higher than pre-pandemic totals.
“Prior to the pandemic, Orlando averaged about 41 trades per year between 2015-2019,” said Daryl Cronk, Co-Star’s director of Hospitality Analytics for the South region.
The number of trades in 2021 was elevated by some sales delayed from 2020 due to the pandemic, and by the 14 properties in Orlando that were part of the recent acquisition of the Extended Stay America brand by Blackstone Real Estate Partners and Starwood Capital Group, Cronk said.
Conversion to multifamily has also factored into the number of hotel sales this year, including a couple on U.S. 192 in the Kissimmee area and the $7.1 million November sale of the Ambassador Hotel on Colonial Drive near downtown Orlando.
But the pending arrival of Epic Universe certainly plays a role as well, Cronk added.
NBCUniversal CEO Jeff Shell said at a conference this week that the Orlando attraction is “right on track” to open by summer 2025.
“Interest is likely to grow as the opening date draws nearer,” Cronk said.
But despite the excitement surrounding a new theme park, there’s more for investors to consider as the calendar flips over to 2023, he noted.
“As we look ahead to 2023 investor interest is being pulled in opposite directions,” he said. “Orlando’s recovery from the pandemic accelerated this year as group meetings began to return, which complemented the strong leisure segment. And the long-term outlook is very positive given the track record of continuous investment in the market by the theme parks, including Universal’s new theme park, Epic Universe.
Cronk added, “However, in the short-term rising interest rates, uncertainty around the 2023 economic outlook and talk of a recession are impacting investor activity.”
This is the second time the La Quinta near the Orange County convention center has changed hands this year — and it’s the latest in a string of La Quinta deed exchanges that have occurred recently nationwide.
CorePoint Lodging, which for years controlled the La Quinta brand and some 170 hotel properties across the country, was acquired in November of 2021 by Texas-based Highgate Capital as part of a $1.5 billion deal.
As part of the merger, Highgate took over more than 100 La Quinta assets, including four in Orange County. The sale of two La Quintas near the Orlando International Airport, one near UCF, and the one off I-Drive closed in March. These other deals were broked by Natalie Castillo and Austin LaPoten with CBRE.
The plan for Highgate all along was to dispose of the properties individually, said Sexton.
“They purchased the whole portfolio at whatever price with the understanding or belief that they could turn around and sell the properties individually for more than what they paid for them,” he said.
An entity affiliated with Highgate still owns the other La Quinta properties in Orange County. According to media reports, Highgate recently parted with two hotels in Miami for a combined total of $33 million and a hotel in Palm Beach for $13 million.
Ahead of the La Quinta purchase in Orlando, Everwood Hospitality Partners took out a $26 million loan from Vystar Credit Union.
This is the 18th hotel sale in the Orlando market this year with a closing price exceeding $15 million, according to Co-Star.
Orlando’s largest hotel sale so far in 2022 occurred in March when the Wyndham Grand Orlando Resort Bonnet Creek, just south of Disney World, sold for $120.5 million — or $301,000 per room — to New York-based Tishman Hotel & Realty.
The Castle Hotel posted the second-largest sale price.
At the time of that transaction, Samir Yajnik, principal and executive vice president of investments with Banyan Investment Group, said in a statement that the proximity of the convention center as well as the future opening of the Epic Universe theme park played a role in the investment.
“The Castle Hotel is the only four-star Marriott product within walking distance of the convention center,” he said “It is ideally suited for upscale visitors looking to stay with one of the most trusted hotel companies in the world. With the increased traffic to the convention center, airport and area attractions, as well as the expected opening of Epic Universe by Universal, the collective, positive impact on the hotel will be substantial, allowing the hotel to quickly take its place as the rightful market and segment leader.”
The hotel recently underwent a comprehensive, $8.2 million investment to improve guestrooms, public space, and the exterior of the building, according to a news release.
Other top hotel sales for 2022 include:
- The 400-room Grand Orlando Resort at Celebration sold for $36.3 million in March to New York-based Tishman Hotel Corporation.
- The 115-key Bohemian Hotel Celebration, a Marriott Autograph Collection hotel in the heart of the Disney master-planned community, sold for $27.75 million in October to Chattanooga-based Vision Hospitality Group.
- The 153-room Marriott Townplace Suites at 5433 Altamira Dr. near Universal Studios sold in May to Philadelphia-based HHM Hospitality for $25.2 million.
Among other notable sales along the I-Drive corridor: In May, Orlando-based investment and asset management company Radix Hawk Group purchased the 40-year-old, 192-room SureStay Plus by Best Western on International Drive for $19.7 million.
Pedro Marrero, founder and CEO of Radix Hawk, told GrowthSpotter the company plans to renovate the 192-room hotel in order to rebrand it into the Orlando market’s first Aiden by Best Western.
Then, once the new flag is in place, Radix Hawk will use an adjacent vacant parcel to build on another wing to the existing hotel, adding 142 suites.
In total, Marrero expects his company to invest roughly $18.5 million into the revitalization and expansion effort.