Marriott, Hilton, Hyatt: What This Top Analyst Sees For 2024

The 2024 prospects for Marriott, Hilton, Hyatt, and Wyndham look bright. That’s according to a report released on Tuesday by David Katz, a managing director at Jefferies Research.

Katz is one of the leading research analysts covering the major hotel groups. He offered an updated view of the underlying factors that may drive the performance of the major hotel companies this year.

Here are key takeaways from Jefferies’ 5,000-word report.

Room Rates, Inflation, and Occupancy

If interest rates fall (as many expect), that could favor hotel groups. As banks become willing to underwrite more loans and loan terms become more attractive, more business people will seek to do deals — expanding hotel group pipelines.

Yet Katz said a critical question is “whether revenue per available room growth can continue to exceed cost inflation, notably driven by labor, utilities, and other services.” The answer is hard to predict. Katz is cautiously forecasting modest growth in room rates in 2024, with overall average occupancy rates to edge back to pre-pandemic levels by 2025.

A Potential (Mild) Recession?

Barring a surprise, the U.S. economy will likely experience only a mild recession in 2024 or none at all, according to two-thirds of economists surveyed by Bloomberg. Jefferies has a similar forecast for Europe.

Katz argued that the travel lodging industry’s fundamentals are mixed.

On the positive side, demand for corporate events and other large groups appears set to remain a growth driver in 2024.

On the negative side, business travel is recovering more gradually than many expected, with large corporations likely to still lag behind 2019 levels this year. It’s also hard to see if vacationers will keep spending on travel to the same degree they did in the past two years. Plus, unfavorable exchange rates and visa policy snafus have dampened the recovery of international travel.

Marriott

Marriott has a “strong growth outlook” in 2024, Katz said, referring to revenue and earnings.

The company’s management has guided investors to expect a two-year compound annual growth rate of revenue per available room in the range of 3% to 6% for 2024 to 2025 and a similar rate for its hotel development of at least 5% through 2025. Katz said those growth rates “reflect international markets that will outperform its more mature U.S. market.

In 2024, Marriott will begin a licensing partnership with MGM Resorts that should expand its group business. The deal will let Marriott Bonvoy loyalty members earn points when staying at 17 MGM resorts, which could make the loyalty program more popular and eventually encourage more hotel owners to flag their properties with Marriott’s brands. 

Hilton

Hilton’s introduction of a few brands in recent years is a leading driver of growth for this hotelier, according to Katz. The company is also getting better at boosting sales of products beyond traditional hotel stays, such as upgrades and spa services, which is also setting up the company for growth.

Hyatt

Hyatt has a few question marks around its 2024 forecast, Katz said. How will its all-inclusive resorts perform this year as consumers spend down the savings they built up during the pandemic? Will Hyatt be able to sell some of its assets? And will group corporate and association events keep booking out its venues?

• Hyatt acquired Apple Leisure Group for $2.7 billion. Since then, its all-inclusive resort business has enjoyed an outsized post-pandemic boom in demand from vacationers. It’s unclear how long that demand can last.

• Hyatt’s management has said they want to sell two hotel assets sometime before June as part of a broader plan to sell about $2 billion in assets and become more asset-light. If those sales come in early and fetch high prices, they could boost the company’s net income this year.

• “The company is well-positioned for group and convention demand, despite near-term disruption from international inbound travel,” Katz said.

Choice Hotels

Katz predicted that Choice Hotels would face headwinds this year as it pursues a hostile merger with Wyndham.

“The lack of support from its franchisees presents significant business risks,” Katz wrote. He highlighted a survey of franchisees by the largest owners association for the two companies. The survey found strong opposition.

“An acquisition of Wyndham is not consistent with Choice’s stated strategic direction towards growing into higher-priced segments of the markets, including its acquisition of Radisson in 2022 and the development of the Cambria brand,” Katz wrote.

If a deal goes through, Katz predicted, “the combined entity would have an outsized presence in the economy and midscale segments [greater than 50% each], which should lead to a prolonged antitrust investigation.”

Wyndham

“[Wyndham] continues to refine the quality of its systems and builds strong pipeline and unit growth through new offerings,” Katz wrote. “The new brand ECHO Suites marks its most recent entry into the economy extended stay segment, which is currently underserved with outsized growth opportunities.”

Accommodations Sector Stock Index Performance Year-to-Date

What am I looking at? The performance of hotels and short-term rental sector stocks within the ST200. The index includes companies publicly traded across global markets, including international and regional hotel brands, hotel REITs, hotel management companies, alternative accommodations, and timeshares.

The Skift Travel 200 (ST200) combines the financial performance of nearly 200 travel companies worth more than a trillion dollars into a single number. See more hotels and short-term rental financial sector performance.

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