Skift Take

A top investment bank points to signs that augur well for fourth-quarter hotel company performance. One key factor is rising bookings for group events. Plus, other news in hotel deals and development worldwide.

Series: Daily Lodging Report

Daily Lodging Report

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Here are the top stories from the Daily Lodging Report newsletter in the past week. Get news on hotel deals, development, stocks, and career moves. Sign up here now.

Robust Fourth-Quarter Forecast

Truist analysts gave their forward-looking booking and pricing trends for U.S. hotels, and said they see no signs of a slowdown in demand. In fact, they expect revenue per available room will grow at a faster pace in the fourth quarter.

Truist said the strength will be driven by several factors: group business; a lower seasonal mix of leisure business; a moderate acceleration of business travel growth (especially for smaller and midsized businesses); and international visitors returning to the U.S.

Based primarily on group bookings, Truist said 2024 looks very encouraging. A group recovery might neutralize any potential leveling off of leisure demand or pricing power. Some analysts have a negative view, and expect a decline in RevPAR in 2024. Truist’s analysts said they actually see the opposite happening.

Marriott has its investor day at the end of this month and Truist analysts said they wouldn’t be surprised if RevPAR growth for the third quarter in the U.S. and Canada comes in at the high end of guidance of 2-4%, if not slightly above. Of the lodging stocks, Truist continues to have Hyatt as their favorite name among the hotel groups.

Flickers of San Francisco Optimism

In July, San Francisco/San Mateo hotels had occupancy down 31.7% compared with 2019 levels, according to hotel benchmarking service STR. Its hotels were, on average, only 57.5% full. Headwinds affecting the city’s slow recovery from the pandemic include the remote work habits of many local employers (making inbound business travel less practical) and reduced tourism from China, which was a major source of visitors pre-pandemic.

Truist reported on its visit to San Francisco for the Visit Impact Summit. The good news is that the fall 2023 events in San Francisco are modestly improving. The bad news is that the 2024 convention pace in the city so far remains soft; 2025-2029, for now, remains far below the more than 800,000 annual room nights Truist views as needed for hotel sellouts and pricing power and profits.

Truist is still cautious about the San Francisco tourism recovery through at least 2024 but believes market performance may improve faster than consensus expectations. Asia Pacific international airlift may also help with non-group business.

Thailand Tries to Woo Chinese Visitors

Thailand seeks to lure back Chinese tourists with visa exemptions to go into effect in October. The move comes as a response to a noticeable drop in Chinese tourist arrivals in the year’s first seven months. The estimate was for 5 to 7 million Chinese tourists in the first seven months. Instead, there were only 2 million. It had 11 million Chinese visitors back in 2019. (Read more in the South China Morning Post.)

The Thai Hotels Association said new ministerial regulations allowing places of accommodation with no more than eight rooms and 30 guests to be excluded from the hotel business would lead to a 15% to 20% loss of tourism revenue and an increase in safety risks, reported the Bangkok PostThe Tourism Council of Thailand pushed this new rule, saying it would boost local homestays.

All of Asia is disappointed by the lack of a post-pandemic surge in Chinese outbound tourism. Macau and Hong Kong are the only destinations with higher-than-expected visitations.

Ultra-Luxury Hotel Expansion

SH Hotels & Resorts would like to bring its ultra-luxury Baccarat brand to MelbourneAustralia, after it opens the group’s first Australian property, a 1 Hotel on the north bank of Melbourne’s Yarra, according to the Australian Financial Review.

Currently, there’s only one Baccarat hotel, and it’s in Manhattan. But a handful are in the works worldwide.

SH is also looking to bring 1 Hotels to Sydney and to make Australia a hub for its expansion in the Asia Pacific region.


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Tags: business travel, daily lodging report, future of lodging, hotel development

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