Tag: BTIQ-Enl

Choice Hotels International’s third-quarter revenue per available room and occupancy slipped year over year alongside lean average-daily-rate growth, the company reported Tuesday. Meanwhile, Choice remains confident it will complete its proposed acquisition of Wyndham Hotels & Resorts, Choice president and CEO Patrick Pacious said Tuesday during an earnings call, despite the opposition of Wyndham’s board.

Choice made its $7.8 billion bid to acquire Wyndham public in October following stalled negotiations between the two hotel companies. Since then, Wyndham late last month detailed its “well-substantiated reasons” to decline the offer during its third-quarter earnings call, reasons that Choice executives said Tuesday they can remedy at the negotiation table.  

“The top priority is to get reengagement, to come back to table,” Pacious said, adding that “every issue that’s been identified can be solved by coming back to the table and negotiating.”

Choice remains “very committed” to this transaction, according to Pacious, calling it “too compelling not to see it all the way through.” There “can be additional value unlocked if Wyndham reengages,” he said, and he is “confident we’ll get the transaction completed.” 

One benefit to Choice making its Wyndham bid public has been what Pacious called encouraging conversations with franchisees who “support” the potential acquisition. One group of franchisees, the Asian American Hotel Owners Association, stated it “doesn’t support the deal” in a statement on its website in October.

Following its 2022 acquisition of Radisson Hotel Group Americas, Choice has migrated 75 percent of Radisson Americas’ properties onto its program, and of the company expects that process to be complete by the end of the year, Choice executives said on the call. 

The Radisson Americas acquisition experience shows Choice “knows how to acquire companies and get them integrated,” Choice CFO Scott Oaksmith said during his first earnings call with the hotel company since being promoted in August.

Q3 Results

In Q3, Choice’s systemwide average daily rate was $103.33, up 1.3 percent year over year. The hotel company’s occupancy slipped 1.3 percentage points to 62 percent. 

Also down slightly was revenue per available room. RevPAR in Q3 was $64.02, a 0.8 percent decrease year over year, but still up from 2019 levels.

The company still believes there is the “ability to push rate” Oaksmith said, highlighting that business transient will continue to accelerate through the “second quarter and beyond” next year. “It’s a function of the economy as we ride through this … the prognosticators said we feel like we avoided a recession,” Oaksmith said.

Choice’s total revenue in Q3 was $425 million, up from $414 million in 2022 but down from the company’s “quarterly record” of $427.4 million in Q2. The hotel company’s net income was approximately $92 million in Q3, down from $103.8 million in 2022. 

Business Performance

The company continued to improve its international business performance; a sector Choice eyed as “white space” for growth opportunities last quarter. 

“Our international portfolio-wide third-quarter RevPAR increased 14 percent, with the Americas region growing 25 percent compared to the same period of 2019,” Pacious said, adding that the company believes it has a “significant opportunity” to grow international market share.

The company also highlighted its pipeline growth, with new hotel openings growing 24 percent year over year. 

Extended-stay hotel openings grew 13 percent year over year, according to Oaksmith, and conversion properties grew 36 percent year over year. Two-thirds of the company’s hotel openings come from conversion, hotel executives said on the call. 

RELATED: Choice Q2 results

Corporate travel managers on average expect their organizations’ travel budgets in 2024 to grow approximately 8 percent year over year as expectations for virtual meetings decrease, according to a new Morgan Stanley survey released Monday.

Morgan Stanley in October surveyed 135 corporate travel managers from organizations that collectively account for approximately $8 billion in global travel spend. Their travel budget expectations for 2024 “look promising,” according to Morgan Stanley. Overall, 78 percent of respondents project their travel budgets to increase in 2024 compared to the year prior, the highest such figure in the survey since 2011, the report noted.

Respondents also project hotel rates to rise, at increases “not dissimilar” to 2023, according to Morgan Stanley. 

Globally, respondent travel managers project room rates in 2024 to increase 5 percent year over year. Rates in the United States and U.K. are expected by respondents to increase 4 percent to 5 percent year over year, while rates in Greater China are projected to drop 1 percent.

Meanwhile, corporates have tapered their expectations for virtual meetings in 2024, and some are opting to trade down to lower lodging service tiers to save on costs.

Respondents projected that about 12 percent of their organizations’ events that would have been in-person prior to the pandemic would be virtual in 2024 and 2025. That figure decreased 5 percentage points from the 2022 survey.

“This suggests a degree of permanence in the shift to virtual, but the ongoing decline in expectations could provide a tailwind to spend,” report authors wrote. Virtual meetings have a larger presence in Europe, where they are expected to rise in 2025 year over year, according to the report. 

To mitigate potential “tailwind to spend,” more than one-third of respondents are trading down to lower-tier hotels, according to Morgan Stanley. Compared to 2022, this percentage has increased 11 percentage points. Approximately 62 percent of respondents said they are not swapping accommodations to cut costs, according to the report. 

Additionally, the use of alternative accommodations for corporate travel appears to be “stable,” according to the report.

“While 39 percent of respondents used alternative accommodation such as Airbnb in the last 12 months—up from 28 percent last year—32 percent expect to use alternative accommodation in the next 12 months, which is stable vs. last year, presenting a lessening competitive threat to traditional hotels,” according to Morgan Stanley.

The U.S. hotel pipeline in the third quarter increased 7 percent year over year, with 5,704 projects in the development pipeline, led by midscale properties, according to a new Lodging Econometrics report. Dallas again reported the largest hotel construction pipeline among major U.S. markets with a record-high 189 projects in Q3.

While Q3 U.S. hotel pipeline growth mirrored Q2’s year-over-year 7 percent increase, the hotel construction pipeline “continues to grow at a moderate pace,” according to Lodging Econometrics. 

In Q3, U.S. hotels under construction totaled 1,063 projects and more than 140,000 guest rooms, up 8 percent and 4 percent year over year, respectively. Projects scheduled to start construction in the next 12 months also increased, with 2,234 projects and nearly 258,000 rooms in the pipeline, up 8 percent and 9 percent, respectively.

There are 2,407 projects in the early planning stages, up 7 percent year over year and just 27 projects shy of the “all-time high,” according to LE. Accompanying those projects, there are nearly 275,000 rooms in the early planning stages, also up 7 percent year over year.

Midscale Leads

According to the Lodging Econometrics, the upper midscale tier represents 38 percent of the total U.S. construction pipeline with 2,149 projects, which total nearly 210,000 rooms. Behind is the upscale sector, which accounts for approximately 24 percent of the total U.S. construction pipeline, with 1,376 projects, which total nearly 171,000 rooms in the pipeline. Together, upper midscale and upscale chains account for 57 percent of rooms in the pipeline.

The extended-stay segment also made its mark in Q3, with 2,176 projects and nearly 224,000 rooms in the U.S. construction pipeline. Extended-stay projects account for 38 percent of total project pipeline, the majority of which are mid-tier brands, according to Lodging Econometrics. 

Together, conversion and renovation projects totaled 1,912 in Q3 with nearly 286,000 rooms—a peak total room count at the end of Q3, according to Lodging Econometrics, which expects steady growth to continue through 2025.

Through the end of Q3, 345 new hotels and more than 41,000 rooms have opened in the United States in 2023. 

“LE analysts forecast a total of 527 new hotels with 65,905 rooms to open in 2023, representing a 1.2 percent increase in new hotel supply,” according to the report. This trend is also expected to continue, according to LE, through 2025.

Dallas Leads, Again

In Q3, the U.S. construction pipeline again was led by Dallas, “an all-time high” of 189 projects and nearly 21,800 rooms, according to LE. Close behind, Atlanta had 140 projects and nearly 17,800 rooms in the pipeline, and Nashville totaled 122 projects and more than 16,000 rooms. 

Dallas also represented the largest number of projects scheduled to started in the next 12 months (80), and greatest number of projects in the early planning stages (84).

New York City, however, took the top spot of projects under construction, totaling 46 projects and nearly 8,400 rooms.

Lodging Econometrics did not release U.S. pipeline counts by brand report this quarter, a company spokesperson told BTN.

RELATED: Q2 U.S. pipeline details

Hyatt Hotels Corp.’s third-quarter transient business travel revenue increased 19 percent year over year and has recovered to approximately 90 percent of 2019 levels, hotel executives said Thursday during an earnings call.

Although most of the hotel company’s corporate accounts use a dynamic pricing model, CEO Mark Hoplamazian said, Hyatt is “about halfway through our discussions for our fixed-rate accounts,” and he expects “rates to increase in the high single-digit range in 2024 compared to 2023.” 

Meanwhile, demand for all customer segments “remains solid,” Hoplamazian said, adding that the lines between business transient and group are increasingly blurring.

Hyatt has about 70 percent of its 2024 group business booked—a typical booking level for the hotel company by this time, Hoplamazian said—representing “equal measure of growth” across corporate, association, regional and specialty groups. While the corporate group segment is showing the highest level of growth, “they’re all strong and it’s balanced,” he said.

Hyatt’s business mix now features “a continued blurring of the line between what means group and what means business transient,” Hoplamazian added. “Some of the use cases have continued to move from what we used to call business transient into what we would call group,” which is 10 or more rooms and a room block.

Overall, “whether you want to call it business transient or group in corporate, that total demand level is going to be higher and grow over time from 2019 levels,” he added.

In Q3, group room revenue increased 10 percent year over year and was up 5 percent from 2019 levels, according to Hyatt. Growth in group revenue “accelerated during the quarter” and was up 13 percent year over year.

Q3 Results

Hyatt’s systemwide revenue per available room in the third quarter was $145.40, up 8.9 percent year over year. Average daily rate was $202.13, up 2.6 percent. Revenue growth was driven by “strong rates and meaningful occupancy growth,” Hyatt executives said, highlighting the Asia-Pacific region as a standout performer. 

Systemwide occupancy also was on the up, at 71.9 percent in the quarter with a year-over-year increase of 4.2 percentage points. Occupancy levels continued to recover, according to Hyatt, with the month of September slightly below 2019 levels. 

In Q3, Hyatt reported $1.62 billion in revenue, up from $1.54 billion in 2022. The hotel company’s net income was $68 million, an increase over $28 million in 2022.

RELATED: Hyatt Q2 results

Marriott International’s third-quarter business transient revenue increased at a “slow and steady” year-over-year pace, executives said Thursday during an earnings call. Meanwhile, Marriott expects “to see another year of strong growth in our special corporate rate on top of very strong growth in that rate in 2023,” CFO and executive VP of business operations Leeny Oberg said.

Revenue from the business transient sector, which accounted for one-third of the hotel company’s global room nights in the quarter, increased about 4 percent year over year in the U.S. and Canada, Marriott president and CEO Anthony Capuano said.

Small and midsize enterprises have continued to “show strength” in the business transient sector, according to Capuano, but large managed corporate accounts have yet to fully recover.

“There are a number of factors that are impacting some of the big corporates,” he said, citing macroeconomic conditions and sustainability goals. “Whatever it might be, it is having some impact on the pace at which their travel volumes recover.”

Still, Capuano added, “I absolutely don’t think travel is permanently impaired. I just think it’s going to look a little different.” 

While day-of-the-week numbers and travel segments may look different—i.e. SMEs, group or blended travel offsetting business—”overall volumes are encouraging,” Capuano said.

A standout performer for Marriott in the third quarter was group business, a sector which Capuano said has been “remarkable” coming out of the pandemic and is “expected to continue to be a meaningful driver of revenue growth going forward,” he said, but at a more normalized pace, executives said on the call.

According to Marriott, group room night-share stood at 23 percent in Q3, and global group revenue increased nearly 9 percent year over year. Group revenue in the U.S. and Canada increased 5 percent year over year, also representing a sense of seasonal normalization, according to Marriott executives. 

Group business is back to approximately the same percentage of Marriott’s business that it was pre-Covid, Oberg said.

Q3 Results

Overall, third-quarter travel demand “remained strong,” for Marriott. Systemwide revenue per available room was $129.73, up 8.8 percent year over year. Worldwide average daily rate was $179.84, up 4.1 percent. Systemwide occupancy increased 3.2 percentage points to 72.1 percent.

In the U.S. and Canada, Marriott’s Q3 RevPAR was $133.92, up 4.3 percent year over year. ADR was $183.28, up 2.7 percent. Occupancy was 73.1 percent, up 1.1 percentage points.

In Q3, Marriott reported $5.93 billion in revenue, up 11.7 percent year over year. The hotel company’s net income was $752 million, up from $630 million in 2022.

Looking Ahead

Marriott executives remain optimistic about travel demand, citing the company’s “record-high pipeline” in the quarter, totaling nearly 557,000 rooms, excluding MGM rooms. Capuano pointed to “real momentum” with its City Express brand and “global opportunity” for midscale. 

With that said, Marriott’s strategy going forward is “to continue to strengthen our leadership position in luxury and upper upscale, while expanding our growth potential in a new segment for us, which is midscale,” Capuano said.

RELATED: Marriott Q2 results