HVS Portland Market Intelligence Report 2013 - By Desiree M. Flanary and Kasia M. Russell

Portland, Oregon’s reputation rests on its well-known microbreweries, cuisine, culture, city parks, innovative mass transient system, & arts and music scene. The following article shows trends in hotel supply, demand, & performance within the city.

Portland, Oregon’s reputation rests on its well-known microbreweries, cuisine, culture, city parks, innovative mass transient system, and arts and music scene. The city’s location relative to others in the Pacific Northwest, along with its relatively low energy costs and expansive marine-shipping facilities, support Portland’s economic network of high-tech, transportation and distribution, manufacturing, and professional services industries. These industries, together with strong tourism and natural attractions, help support a healthy lodging market in Portland.

Economy Update
The following table illustrates historical and projected employment, population, and income data for the overall Portland market.

HISTORICAL & PROJECTED EMPLOYMENT, HOUSEHOLDS, POPULATION,
AND HOUSEHOLD INCOME STATISTICS

The market has realized gains in total employment annually during the historical period, with the exception of the dot.com bust at the turn of the millennia and the recession that began in late 2007. Industrial employment has experienced the largest changes, concurrent with the hire and layoff cycles typical of the manufacturing and distribution industries. Households and population have grown consistently over the past decade, noting a 1% to 2% change from 2004 through 2012. Employment, household size, and population are forecast to grow modestly through 2017. Household average income is forecast to grow at rates that are more significant as higher-paying jobs in the technology industry, on which the Portland market heavily relies, are expected to increase in the coming years.
Unemployment statistics for Multnomah County, the Portland MSA, the state of Oregon, and the U.S. as a whole are illustrated in the table below.

UNEMPLOYMENT STATISTICS

Unemployment in the Portland MSA remains well above pre-recession levels, though job growth has continued to increase, most notably in the manufacturing and construction sectors; the professional services and leisure and hospitality sectors have also realized job growth. Intel leads the way for growth in the manufacturing and construction sectors as it continues to expand. Intel’s expansion of its D1X facility is also underway; the company announced in October of 2012 that it would double the size of its investment to $6 billion, expanding the facility to 2.5 million square feet. Nike is planning to invest $150 million in a capital project that will reportedly add 500 jobs in the Portland suburb of Beaverton. In addition, there has been enhanced activity at local port facilities, and construction of residential developments in Portland has realized an increase.

Office Space Market Update
The following table illustrates the Portland area’s office space statistics, which are important indicators of the market’s propensity to attract commercial lodging demand.

OFFICE SPACE STATISTICS – MARKET OVERVIEW

The office lease-rate recovery that started in 2011 was slow to grow in 2012. Office vacancy was lowest in the Central City and Eastside area, while Beaverton/Sylvan noted the highest vacancies in the greater market.

The following table illustrates a trend of office space statistics for the overall Portland market.

HISTORICAL AND PROJECTED OFFICE SPACE STATISTICS – GREATER MARKET

The greater Portland office market realized net absorption of only 117,000 square feet in 2012. The only construction completed during the past year was the 121,000-square-foot, single-tenant project at Cascade Station for the FBI. Construction remains subdued, with only three competitive general-purpose office projects that have broken ground; two of these have been put on hold indefinitely. The redevelopment of the 19,400-square-foot American Brush Company building should be completed in November of 2013. Available office space is forecast to increase only minimally; the decline in vacancy is therefore expected to continue, although not quite to levels seen during the peak years of 2007 and 2008. Average lease rate is forecast to increase modestly as the local economy improves and vacancy declines.

Hotel Construction Update
According to HVS research, several new hotels are currently in the pipeline: RiverPlace Hyatt House Portland (203 units)Residence Inn by Marriott Portland (225 units)Independent Project Pearl District (100 to 150 units)Headquarters Hotel(s), Oregon Convention Center (comprising a single 600-unit hotel or two separate 400-unit and 200-unit properties)No hotels are currently under construction in the greater Portland market; the proposed projects mentioned above are in the early planning phases. While new hotels are expected to enter the market in the coming years, the percentage increase to the overall market supply will be minimal.

Outlook on Market Occupancy and Average Rate
No new supply has entered the Portland market since 2008, and although the area was impacted by the effects of the recent recession, the lack of new supply has assisted hoteliers in regaining lost occupancy. Portland area hotels were able to reach pre-recession occupancy levels by late 2011; however, average rate has yet to exceed pre-recession levels. Market participants are hopeful that the 2013 summer season will allow hoteliers to recoup average rate losses and achieve new average rate highs. The market has now essentially reached the occupancy level ceiling, and although modest gains are anticipated, RevPAR growth will likely be driven by significant increases in average rate.

Recent Hotel Transactions
The following table summarizes hotel transactions in the state of Oregon over the past two years.

REVIEW OF HOTEL TRANSACTIONS

The four most recent sales in the Portland market are the most notable, as the Hilton and Hotel Vintage Plaza are two of the premier properties in Downtown Portland; the Hotel Vintage Plaza achieved a significantly higher RevPAR, accounting for the price-per-key difference. It should also be noted that the Hotel Vintage Plaza sold along with its sister property in Seattle in 2012. The Governor Hotel was an REO transaction, and therefore not equitable to the other two since it was a distressed sale. Kimpton Hotel & Restaurant Group LLC acquired the RiverPlace Hotel from Larkspur Hotels; this transaction represented the second-highest price-per-key sale of 2012 in Portland.

Brokers’ Outlook
According to HVS broker interviews, current cap rates for limited-service hotels in Portland range from 8% to 9%, depending on the quality and location of a given property. Area brokers report that, dependent on circumstances, now is the time to buy limited-service hotels in Portland. Select-service hotels are selling at similar cap rates, and brokers report that the market presently favors the purchase of these assets as well. Full-service hotels would be selling for a lower rate, and although there is significant interest from potential buyers to enter the Portland full-service market, little to no inventory is available.

Conclusion
The Portland hotel market has continued to show improvement from the depths of the recent recession. Hotels transactions have increased slightly, with four notable sales occurring in 2012. Occupancy and average rate are anticipated to continue to improve as the area economy strengthens; the lack of new supply within the immediate future is also expected to increase RevPAR. Overall, the near-term outlook for the Portland hotel market remains optimistic.

About Desiree M. Flanary

Desiree Flanary is a Vice President with the HVS Boulder office. Desiree earned her bachelor's degree from the University of Northern Colorado and has front-line hotel experience in both front office and housekeeping operations. Desiree travels and works extensively in the northwestern U.S. and throughout the west coast, with a particular emphasis in the Central Pacific region. Contact Desiree at (970) 381-9794 ordflanary@hvs.com.

About Kasia M. Russell

Kasia Russell is a Vice President with the HVS Boulder office. Kasia has front-line hotel experience with Extended StayAmerica and Best Western and also worked for the Hotel Bellwether in Bellingham, WA and the Skagit Valley Resort in Bow, WA. She is a state certified appraiser in Colorado and surrounding states. Contact Kasia at (970) 227-7799 or krussell@hvs.com.

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Nevada Jury Ruling Upholds Liquor Laws and Protects State’s Wine Consumers, Customers and Suppliers from Illegal Gray-Market Merchandise

Maisons Marques & Domaines USA, Inc. (MMD USA), a leading US wine importer and marketer of luxury brands such as Louis Roederer Cristal, along with Southern Wine & Spirits of America, Inc. (Southern), the country’s leading wine and spirits distributor, responded today to the recent decision of the eight-person Clark County District Court jury.

The jury found that two Los Angeles-based import companies had improperly imported, marketed and sold counterfeit and distressed—i.e., “gray-market”—versions of luxury imported wine brands owned by MMD and represented by Southern Wine & Spirits of Nevada (SWS-NV). The recent ruling addressed the improper actions of the two Los Angeles companies dating back to 2002—and included economic-loss and punitive-damage awards to MMD and SWS-NV.

“First and foremost, I want to acknowledge the wisdom of the eight-member jury in applying Nevada law in a thoughtful and fair manner that accounts for the impacts across Nevada’s consumers, retailers and suppliers alike.”

Commenting on behalf of MMD USA, Gregory Balogh, President & Chief Executive Officer, said, “This is a significant victory against gray marketers who are opportunists and have little interest in preserving the image or quality of the brand. I am humbled and pleased by the court’s well-thought-out decision of this decade-long journey of perseverance on behalf of the integrity of our brands marketed, sold and consumed in Nevada.” Balogh continued, “First and foremost, I want to acknowledge the wisdom of the eight-member jury in applying Nevada law in a thoughtful and fair manner that accounts for the impacts across Nevada’s consumers, retailers and suppliers alike.”

SWS-NV Senior Managing Director Larry Ruvo added, “This judgment will reassure retail customers and consumers that they are serving and enjoying, respectively, legitimate branded merchandise produced and distributed for this marketplace. It will also provide MMD USA—and our other imported luxury-brand suppliers such as Moët Hennessy USA—with the peace of mind that their brand quality, equity and image are being stewarded properly across Nevada. Last, and importantly, the positive impact of this judgment on the legitimate, local Nevada hospitality economy—which provides jobs for the thousands of workers who welcome and serve 40 million tourists per year—is a critical, ongoing effect of this landmark judgment.”

Balogh concluded by saying, “I couldn’t be prouder of the dogged perseverance of our company and our distributor partners over the past decade on this case. At its most fundamental level, this effort has been about the rule of law on behalf of consumers and all members of the supply chain. It illustrates that there is a reason laws are in place to regulate the wine and spirits industry—ensuring that everyone can be confident about the authenticity of the merchandise they are receiving at any step along the hospitality value chain, especially at the point of consumption.”

In the near future, there will be hearings to address the payment—by the two companies found to violate Nevada liquor laws in the jury’s judgment—of legal fees incurred by MMD USA and Southern.

Logos, product and company names mentioned are the property of their respective owners. © 2013 Restaurant News Resource

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Top Five Food Trends Spotted at Summer Fancy Food Show

Move over bacon. Make way for kale pops, chia pods, and simmer sauces from around the globe.

Move over bacon. Make way for kale pops, chia pods, and simmer sauces from around the globe. They are examples of the top five food trends for the year ahead picked by a panel of trendspotters at the 59th Summer Fancy Food Show in New York.

The show was held last week at the Jacob K. Javits Convention Center. It is the largest marketplace in North America for specialty foods and beverages, with 180,000 products from more than 2,400 food manufacturers, importers and entrepreneurs on display, including the latest artisanal cheeses, chocolates, vinegars, grilling sauces and natural and organic products.

The trends are:

Reinvented Frozen Treats
Green Wave Smoothies – Kalelicious Smoothie Pops
Life Ice – Freeze & Eat Bite-Sized Ices
DeeBee's Organics - Tea Pops
Bar Gelato by Naia - Blue Bottle Coffee Bar

Grains and Seeds in New Places
The Chia Co. - Chia Pods
La Pasta, Inc. – Sweet Potato, Quinoa and Kale Ravioli
Flamous Brands – Sprouted Multigrain Zatar Chips
Seattle Chocolate Co. - jcoco Agave Quinoa Sesame Milk Chocolate Bar

Global Meal Starters
Saffron Road – Harissa, Korean Stir Fry and Thai Red Curry Simmer Sauces
Kaldes Bros. Trading Co. – Greek Cooking Sauces
Kitchens of Africa – Maffe Peanut and Yassa Onion Simmer Sauces
Terrapin Ridge Farms – Pot Roast Meal Starter

Retro Mania Done New
Callie's Charleston Biscuits – Callie's Cheese Crisps
City Bakery – Hot Chocolate
Jeni's Splendid Ice Creams – Orchid Vanilla Macaroon Ice Cream Sandwich
Southern Culture – Short Stacks Banana Pudding Pancake Mix

Be Your Own Mixologist
Sociale – Lavender Martini Mocktails
Hella Bitter – Cocktail Bitters
Luke's Heirloom Tomato Juice – Bloody Delicious Mary Mix
Owl's Brew – Tea Crafted for Cocktails

A Photo Gallery of Top Five Trends is available here. 

Other trends identified are single-serve snacks with calorie counts, Vietnamese flavors, chickpea and seaweed snacks, maple products, and sweet and savory cookies. Trends with staying power identified at prior Fancy Food Shows include coconut, salted caramel and innovations in gluten-free foods.

The trendspotters are: Rachel Hofstetter, Author, "Cooking Up a Business;" Sara Moulton, Sara's Weeknight Meals; Kara Nielsen, CCD Innovation; Charles Passy, The Wall Street Journal Digital Network; Denise Purcell, Specialty Food Media; Lauren Purcell and Dana Bowen, Everyday with Rachel Ray, Regina Ragone, Family Circle Magazine; Beverly Stephen, Food Arts and Susie Timm, Girl Meets Fork.

Logos, product and company names mentioned are the property of their respective owners. © 2013 Restaurant News Resource

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ALPA Calls for Thorough Investigation of Asiana Flight 214 Accident

Warns Against Making Conclusions Based on Partial Data

The Air Line Pilots Association, Int’l, released the following statement regarding the crash landing of Asiana Flight 214 in San Francisco on Saturday, July 6, 2013.

First and foremost, our thoughts are with those who were involved in the accident this past Saturday. From the crew to the passengers to the families and first responders, we hope they can gain some comfort during this difficult time.

ALPA is stunned by the amount of detailed operational data from on-board recorders released by the National Transportation Safety Board (NTSB) this soon into the investigation. The amount of data released publicly during the field portion of the accident investigation is unprecedented.

It is imperative that safety investigators refrain from prematurely releasing the information from on-board recording devices. We have seen in the past that publicizing this data before all of it can be collected and analyzed leads to erroneous conclusions that can actually interfere with the investigative process.

The release of individual data points from the flight data recorder and the cockpit voice recorder—without the context of the entire body of factual investigative data—represents a potential detriment to flight safety. It encourages wild speculation, as we have already seen in the media, about causes of the accident before all the facts are known, before investigators have the ability to determine why the events occurred, and in this case before the flight crew had even been interviewed.

This premature release of partial data is often taken out of context and creates the impression that the NTSB has already determined probable cause even before the investigation has started. Since each factor of flight, landing, airport environment, and crew is part of safe air travel, we need to ensure that reckless release of information is not sensationalized by the media for the purpose of a few headlines.

ALPA has long supported an objective accident investigation process that is based on the fundamental principle of obtaining all the facts to perform accurate analysis in the context of all factors that may have led to an accident. We stand ready to assist the NTSB or any state investigative agency in obtaining those facts and ensuring that an appropriate operational context is maintained.

ALPA urges the NTSB to make sure that the objective investigative process continues by gathering all the facts and relevant information before leading the public to believe that a cause has been determined.

Founded in 1931, ALPA is the world’s largest pilots union, representing more than 50,000 pilots at 33 airlines in the United States and Canada.

Logos, product and company names mentioned are the property of their respective owners.

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