Hotel Earnings Season Viewpoints From Top Bank Analysts

In the next few weeks, the largest hotel companies will report their financial performance for the first quarter and provide a glimpse of future trends. Here's a survey of expectations based on recent reports from investment bank analysts.

A "Goldilocks" hotel market ...?

In the tale of Goldilocks and the three bears, the happy outcome is that the porridge isn't too hot or cold. Similarly, a Goldilocks hotel economy would be one where supply and demand are just right. Some research analysts think a Goldilocks outcome is possible for hotels. Analysts at investment banks seem to be counting on two things happening this year. First, the central banks will tame inflation without many more interest rate increases. Second, we'll dodge a recession in most markets. Or else we'll have a recession that will be so shallow that pent-up demand for travel — including fresh demand from Chinese tourists resuming international travel — will more than compensate for it. Truist's first-quarter lodging earnings preview expected hotel company results to be in line — but more likely ahead of — market views. Truist's analysts believe the financial markets have a "wall of worry" to climb, yet investors may underestimate the robustness of the hotel sector. Truist analysts expect the greatest strength in U.S. domestic revenue per available room results to come from group bookings and the upper-upscale segment that tends to get a lot of convention and business meeting bookings. In terms of profitability and returning to 2019 levels of revenue, hotel groups need a recovery in their international business. Truist believes first quarter international revenue per available room results will exce