The Surge in Extended-Stay Hotel Projects

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The rise in remote work, the resurgence of air travel, inflation-driven price-consciousness, government funding for infrastructure projects and higher labor costs for full-service hotels have contributed to an increase in demand for extended-stay hotels. In response, many of the major U.S. hotel chains have recently announced plans for new extended-stay hotel brands. Choice Hotels International, Inc. announced Everhome Suites in January 2020; BWH Hotel Group (Best Western) announced the launch of HOME by BWH in October 2022; Wyndham Hotels & Resorts announced ECHO Suites Extended Stay by Wyndham in November 2022; Hyatt Hotels Corporation announced Hyatt Studios in April; Hilton announced Project H3 in May; and Marriott announced Project MidX Studios in June. Outside the U.S., French multinational hospitality company Accor S.A. announced the creation of Accor One Living in January and in May, Marriott announced the acquisition of City Express by Marriott in Latin America. The U.S. hospitality industry had 51.5 million extended-stay room nights available in the first quarter of 2023, up 43 percent from 2016, according to Axios (citing data from a report by The Highland Group).

Extended-stay hotels are less expensive to operate. Smaller common area footprints (efficient, less grandiose lobbies and no full-service restaurants), weekly rather than daily housekeeping, fewer check-ins/check-outs, reduced laundry expenses (towels and bedsheets are not changed as often), reduced hotel toiletry costs (more resourceful use of toiletry products) and a higher percentage of direct/online booking (thus less travel agent commissions) all contribute to lower costs. Labor costs at full-service hotels were approximately 24 percent higher in 2022 than the year before, while costs at extended-stay hotels increased by just under 12 percent, according to The New York Times (citing a study by Actabl).

Extended-stay hotel revenue has been growing at a CAGR of 3.2 percent over the past five years (2018 to 2023), including an estimated 2.9 percent increase in 2023, according to IBISWorld, which states that revenue is expected to total $20.9 billion in 2023, with profit set to reach 18.1 percent. Hotel News Resource reports that over the past 10 years, globally recognized hotel brand families have expanded their extended-stay portfolios by more than 50 percent—a CAGR of 7.1 percent versus 3.2 percent for the U.S. market as a whole.

Primark To Open Its First Maryland Store on September 7

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Ireland-based fast fashion retailer Primark will open its first Maryland store on September 7 at Arundel Mills mall, according to Retail Insight Network. Fibre2Fashion reports that the Primark space at Arundel Mills is 36,000sf. CoStar quotes Kevin Tulip, Primark’s United States president, as stating that “[i]n most of our continental Europe market, we typically open in a space that’s over 50,000 square feet. But here, we’ve downsized our stores to about 35,000 square feet, which has shown to be more profitable.” Indianapolis-based REIT Simon Property Group, Inc. owns Arundel Mills, according to public records.

Primark, which started out as Penneys in Dublin in 1969, aims to have 60 stores in the United States and 530 stores worldwide by the end of 2026, according to CoStar. Fibre2Fashion reports that the Arundel Mills opening will bring Primark to 430 stores globally and 21 stores in the U.S. At least for now, online sales are not a part of Primark’s business model, though the retailer has launched a “Click And Collect” service by which customers may shop over the Internet and pick up the product at the store.

Primark owner Associated British Foods plc (ABF) reports that for the 24 weeks that ended on March 4, 2023, Primark sales were up 19 percent to £4,228m. The April 2023 ABF report further states: “Today we are announcing our plans to establish a significant presence for Primark in southern states of the U.S. In the coming months we expect to sign leases for stores in states across the region, including locations in Texas. We are locating our second U.S. distribution centre[sp] in Jacksonville Florida and construction is progressing well.”

George Mason University Acquires 3300 Fairfax Drive

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George Mason University (“GMU” or “Mason”) has acquired the 26,482sf office building located at 3300 Fairfax Drive in Arlington’s Virginia Square neighborhood. The Fairfax-based public university paid $8,250,000 for the thirty-seven-year-old, three-story property, according to public records.

As reported in ARLnow, GMU media relations manager John Hollis has stated that “[i]n the near term, Mason expects to continue current or similar operations to the existing tenants, while longer term opportunities include potential developments in support of Mason’s faculty, students, and mission.”

George Mason University’s Arlington campus (known as Mason Square) is located across the street from 3300 Fairfax and is home to the university’s law school, the School of Policy and Government and the School for Peace and Conflict Resolution, among other programs. It is also the site for Mason’s 345,000sf development project called Fuse, which is expected to deliver in 2024.

As of Fall 2022, Mason reported a total enrollment of 39,607 students.

3300 Fairfax Drive
Photo: Ramin Seddiq

Biden Administration Pursues an Assertive Antitrust Policy

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According to a U.S. Department of Justice (DOJ) press release, the DOJ and the Federal Trade Commission (FTC) have released a draft update of the Merger Guidelines (the “Draft Guidelines”), which describe and guide the agencies’ review of mergers and acquisitions to determine compliance with federal antitrust laws. As stated in the press release, “[t]he Draft Guidelines build upon, expand, and clarify frameworks set out in previous versions”; they “give an overview of 13 principles, or ‘guidelines,’ that the agencies may use when determining whether a merger is unlawfully anticompetitive under the antitrust laws”; and they “are not mutually exclusive, and a given merger may implicate multiple guidelines.”

The 13 Draft Guidelines are:

  1. Mergers should not significantly increase concentration in highly concentrated markets;
  2. Mergers should not eliminate substantial competition between firms;
  3. Mergers should not increase the risk of coordination;
  4. Mergers should not eliminate a potential entrant in a concentrated market;
  5. Mergers should not substantially lessen competition by creating a firm that controls products or services that its rivals may use to compete;
  6. Vertical mergers should not create market structures that foreclose competition;
  7. Mergers should not entrench or extend a dominant position;
  8. Mergers should not further a trend toward concentration;
  9. When a merger is part of a series of multiple acquisitions, the agencies may examine the whole series;
  10. When a merger involves a multi-sided platform, the agencies examine competition between platforms, on a platform, or to displace a platform;
  11. When a merger involves competing buyers, the agencies examine whether it may substantially lessen competition for workers or other sellers;
  12. When an acquisition involves partial ownership or minority interests, the agencies examine its impact on competition; and
  13. Mergers should not otherwise substantially lessen competition or tend to create a monopoly.

The public comment period for the Draft Guidelines ends on September 18, 2023. As mentioned in the DOJ press release, the agencies will use the public comments to evaluate and update the draft before finalizing the Draft Guidelines.

According to the FTC, antitrust laws prohibit conduct by a single firm that unreasonably restrains competition by creating or maintaining monopoly power. Section 2 of the Sherman Act makes it unlawful for any person to “monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations … ” As explained by the FTC, “[a]s a first step, courts ask if the firm has ‘monopoly power’ in any market. This requires in-depth study of the products sold by the leading firm, and any alternative products consumers may turn to if the firm attempted to raise prices. Then courts ask if that leading position was gained or maintained through improper conduct—that is, something other than merely having a better product, superior management or historic accident. Here courts evaluate the anticompetitive effects of the conduct and its procompetitive justifications.”

Sweden-Based H&M To Launch in Brazil

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The Business of Fashion reports that fashion retailer H&M will launch stores and online trade in Brazil in 2025. H&M will partner with Dorben Group to support its expansion in the South American country, according to the report.

The size of Brazil’s retail market was BRL2,071 billion in 2021, according to GlobalData. Retail sales in the nation of 215 million rose 3.8 percent in January from December, and 2.6 percent year-on-year, according to The Brazilian Report. Brazil’s GDP per capita (current prices, PPP, international dollars per capita) is 18.69 thousand, according to the IMF.

São Paulo
Photo: Ramin Seddiq

New York Aims To Curb Illicit Cannabis Sales

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On June 22, the New York City Council passed legislation that will prohibit commercial property owners from knowingly leasing commercial premises to, or otherwise allow the use of such premises by, unlicensed sellers of cigarettes, electronic cigarettes, tobacco products, or illicit cannabis. If, after receiving written notice of a violation, the owner fails cure, the owner could be fined $5,000 for a first violation and $10,000 for each subsequent violation. The legislation also requires that a quarterly report be submitted to the mayor and the speaker of the council detailing enforcement efforts relating to unlicensed sellers.

The City Council action follows the enactment of legislation by New York State to curb the illicit cannabis market. The state law, signed by the governor on May 3, “provides additional enforcement power to the Office of Cannabis Management and the Department of Taxation and Finance to enforce the new regulatory requirements and close stores engaged in the illegal sale of cannabis”, according to a state press release.

Financial Entities in Argentina Are Enabled To Open Bank Accounts Denominated in Renminbi Yuan

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Struggling with dollar scarcity, the Central Bank of Argentina (BCRA) announced on June 29 that it has incorporated the renminbi yuan as an accepted currency for deposit-taking in savings banks and checking accounts, enabling financial entities to open bank accounts denominated in renminbi yuan. The measure is complementary to the decision of the National Securities Commission which enabled the negotiation of negotiable securities in RMB yuan, according to the announcement.

Bloomberg reports that in first 10 days of June, yuan transactions in Argentina’s currency market totaled about $285 million, double that for all of May. Furthermore, the share of yuan transactions in Argentina’s foreign currency market hit a daily record of 28 percent in June, up from five percent in May, according to the report, which cites data from Mercado Abierto Electrónico.

Argentina’s annual inflation rate topped 114 percent in May, according to Reuters, which reported on June 14 (citing the country’s statistics agency) that the monthly rise in the consumer price index (CPI) was 7.8 percent—a high number but less than the 8.4 percent posted in April. According to Blue Dollar, as of July 3, 2023, the informal buy rate for the dollar is ARS 489, whereas the official buy rate is ARS 255.

New Law Creates the Virginia Residential Sites and Structures Locator

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A new law, which goes into effect on July 1, 2023, instructs the Director of the Department of Housing and Community Development to develop and operate a Virginia Residential Sites and Structures Locator database “to assist localities in marketing any structures and parcels determined by the locality to be suitable for future residential or mixed-use development or redevelopment and that are under (i) public ownership, (ii) public and private ownership, or (iii) private ownership if the owner or owners have authorized the locality to market the structure or parcel for future residential or mixed-use development or redevelopment purposes.”

The bill creating the database requirement (SB 1114) is codified as § 36-139(29) of the Code of Virginia. The centralized database would be of interest to developers and builders and could bring attention to potential development opportunities that would otherwise go unnoticed or receive less attention.

The Texas “Death Star” Bill

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According to LegiScan, House Bill 2127 (known as the “Texas Regulatory Consistency Act”) was signed into law by Gov. Greg Abbott on June 14 and will go into effect on September 1. According to the bill text, “[t]he purpose of th[e] Act is to provide statewide consistency by returning sovereign regulatory powers to the state where those powers belong in accordance with Section 5, Article XI, Texas Constitution.”

The law amends certain sections of the Texas Code with a field preemption clause stating that “[u]nless expressly authorized by another statute, a municipality or county may not adopt, enforce, or maintain an ordinance, order, or rule regulating conduct in a field of regulation that is occupied by a provision of this code. An ordinance, order, or rule that violates this section is void, unenforceable, and inconsistent with this code.” According to ChangeLab Solutions, preemption is a legal doctrine that allows a higher level of government to limit or even eliminate the power of a lower level of government to regulate a specific issue.

Bloomberg reports that HB 2127 explicitly strips from cities the ability to set or enforce eviction regulations. Four Texas cities have eviction-related ordinances on the books today, according to the report, including Dallas which has established a ten-day “right to cure”, affording tenants a window of time to avoid eviction by catching up on their rent or applying for rental assistance. Bloomberg, citing Mark Melton (a Dallas-based attorney and housing advocate), reports that under HB 2127, those rights would be preempted.

The law (HB 2127) states that “[a]ny person who has sustained an injury in fact, actual or threatened, from a municipal or county ordinance, order, or rule adopted or enforced by a municipality, county, or municipal or county official acting in an official capacity in violation of any of the [listed] provisions or a trade association representing the person has standing to bring and may bring an action against the municipality, county, or official” and may recover declaratory and injunctive relief, costs and reasonable attorney’s fees.

Opponents of the legislation have nicknamed it the “Death Star” bill and see it as being part of a prolonged effort by those on the political right to rein in the power of Texas’ left-leaning metropolitan areas, according to Bloomberg.

New York’s LLC Transparency Act Aims To Correct the “Public Policy Mistake” of Anonymous Corporate Ownership and Require Public Disclosure of Beneficial Owners

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The New York legislature passed the LLC Transparency Act (Bill No.: A03484A) on June 20. According to the Bill Memo, the bill aims to end the practice of anonymous ownership of limited liability companies in New York by defining beneficial ownership, requiring the disclosure of the identities of beneficial owners upon company formation or registration, and publishing beneficial owners of limited liability companies in New York’s publicly searchable business entity database. The Memo goes on to state that “[a]nonymous LLCs leasing real property are correlated with more numerous code violations, higher rents, and more evictions compared to non-corporate owners.” According to Commercial Observer, Assembly member Emily Gallagher of Brooklyn introduced the LLC Transparency Act and State Senator Brad Hoylman sponsored the bill in the Senate. Globest.com reports that the bill, which drew support from trade unions and public policy groups, is expected to be signed by Gov. Kathy Hochul.

The bill adopts the same standards promulgated by the Treasury Department pursuant to the Corporate Transparency Act and requires that the same information also be filed with New York’s Department of State, according to the Memo, which notes that the bill creates a waiver process “[t]o protect genuine privacy interests that some individuals may have”. A key difference between the LLC Transparency Act and the federal statute (Corporate Transparency Act) is that FinCEN’s database is held private in a confidential, encrypted database, whereas New York is creating a publicly available database on the NY Secretary of State’s website, according to Globest.com.