Marriott International Inc. and Hilton Worldwide Holdings Co. led hotel stocks lower after Apple Inc. reported slowing sales in China — giving investors cause to worry about an important source of the travel industry’s future growth.
Marriott fell as much as 5.1 percent, and Hilton slipped as much as 5.2 percent. They were down 3.5 percent and 3.2 percent, respectively, at 11:57 a.m. New York time, compared with a 2 percent drop in the Bloomberg Americas Lodging Index. Hyatt Hotels Corp. fell 2.5 percent.
While China accounts for a relatively small share of global lodging companies’ current revenue, it’s an important development market, as the hospitality industry rushes to open hotels for foreign business travelers and the country’s emerging middle class.
“We expect Apple’s guidance reduction yesterday to serve as another sentiment headwind for the brands, despite the stocks already having underperformed in 2018 on fears of slowing macroeconomic growth,” Michael Bellisario, an analyst at Robert W. Baird & Co., wrote in a note to clients. “While the brands’ current exposure is relatively low, China remains a meaningful portion of the brands’ development pipelines, which could dampen their longer-term growth outlooks.”
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