Tag: BTIQ-Enl

As leisure demand wanes and hoteliers find room rate increases harder to implement than in recent years, PwC on Wednesday tempered its projection for 2024 U.S. average daily rate and revenue per available room, while noting significant hikes aren’t likely in 2025 either. Business travel continues to improve, however, according to the company.

PwC in its May 2024 Hospitality Directions US report projected 2024 U.S. ADR would increase 1.2 percent year over year to $157.70 while RevPAR increases 2.2 percent to $100.23. In November, PwC’s most recent projection, the company forecast 2024 ADR growth of 2.4 percent and a RevPAR increase of 2.7 percent.

“A 50 [basis point] increase in the unemployment rate over the past 12 months … now speculative reductions in policy rates, and a perceived lack of visibility in the public markets have resulted in downward pressure on room rates,” PwC wrote in its report.

PwC now projects average 2024 U.S. occupancy of 63.6 percent, up from 62.9 percent in 2023 and higher than the 63.2 percent the company forecast in November. “Occupancy levels have declined year-over-year in each of the past four quarters but are expected to gradually improve through the balance of this year and at least the first half of 2025,” according to PwC. Hotel analytics firm STR this week noted that U.S. occupancy in April increased year over year, the first such monthly increase in at least a year.

As for business travel, “Individual business travel and group demand have continued to improve but have still not been able to offset the softening of leisure demand,” according to PwC. Looking ahead, “for the remainder of 2024 and into 2025, the outlook for markets reliant on individual business travel remains uneven with substantial deviation in office attendance across different metropolitan areas.”

PwC projected full-year 2025 U.S. occupancy to increase 0.7 percent, while the average daily rate holds steady and RevPAR increases 0.7 percent. 

RELATED: PwC November 2023 forecast

Hyatt Hotels Corp.’s business travel demand in 2024 has been “extraordinarily encouraging,” with systemwide first-quarter revenue from the sector up 6 percent year over year, with some segments up even higher, president and CEO Mark Hoplamazian said Thursday during an earnings call. 

Global business transient revenue “increased approximately 6 percent in the quarter with strength in both January and February, and we saw similar trends in the U.S., a clear sign that business travel continues to recover,” he said.

April systemwide business transient revenue was up 21 percent year over year, Hoplamazian said, although that figure was inflated by the shift of the Easter holiday from April last year to March this year.

Still, Hoplamazian shared other statistics to illustrate the strength of the business travel segment. “Business transient, frankly, in the first quarter, into the second quarter is extraordinarily encouraging,” he said. “Our business transient hotels were up 15 percent, almost 16 percent in the first quarter. Convention hotels were up about 11 percent, just as a hotel type. New York City was up 19 percent. San Jose and Seattle are really going strong. Why? Because technology transient, business transient, was up 30 percent in the first quarter.”

It wasn’t clear if Hoplamazian’s figures were year-over-year revenue, and Hyatt didn’t immediately return a request for clarification, but on the call he said, “these numbers are staggering.”

First-quarter group revenue increased 6 percent year over year, Hoplamazian said, with the May-through-December booking pace up 7 percent from 2023. He called the segment “the gift that keeps on giving.”

Q1 Metrics

Hyatt’s systemwide first-quarter revenue per available room increased 5.5 percent year over year to $131.86, while average daily rate increased 2 percent to $202.33 and occupancy increased 2.2 percentage points to 65.2 percent.

In the United States, RevPAR increased 0.2 percent year over year to $132.68, while ADR dropped 0.4 percent to $205.41 and occupancy increased 0.4 percentage points to 64.4 percent. Hyatt CFO Joan Bottarini said U.S. RevPAR increased about 2 percent when the effect of the Easter shift was excluded. 

Hyatt maintained its outlook for a 3 percent to 5 percent year-over-year increase in full-year 2024 RevPAR.

The company’s first-quarter revenue increased to $1.71 billion from $1.68 billion one year prior. Net income increased to $522 million from $58 million in Q1 2023, a figure boosted by sales this year of Hyatt properties in Green Bay, Wis., Aruba and Zurich. 

Net rooms increased 5.5 percent year over year to more than 323,400, while Hyatt’s pipeline increased 10 percent to more than 129,000 rooms.

RELATED: Hyatt Q4 performance

Choice Hotels International’s systemwide first-quarter occupancy, average daily rate and revenue per available room all declined year over year, although its upscale holdings bucked that trend and executives during a Wednesday earnings call said April was a stronger month. 

Systemwide RevPAR in the first quarter declined 5.9 percent year over year, which Choice CFO Scott Oaksmith attributed to the shift into the first quarter of the Easter holiday this year, as well as “tougher year-over-year comps as we were the first hotel company to return to and significantly exceed pre-pandemic RevPAR levels.” 

Choice executives didn’t directly address business travel demand trends, but the company’s upscale holdings, including the Radisson brands the company acquired in 2022, fared better in the first quarter. Choice systemwide Q1 upscale RevPAR increased 1.3 percent year over year, while ADR increased 2.3 percent. Occupancy declined, however, as it did in all Choice tiers.

The company maintained its projection, issued last quarter, that full-year 2024 RevPAR would range from steady year over year to an increase of 2 percent. 

“We expected Q1 to be softer,” said Choice CEO Patrick Pacious. “April did turn positive. So we are feeling pretty good about the trend. And as we expect to see both in our forecast and in our guidance, we expect to see RevPAR improvement from here forward.”

Eyes on Wyndham?

Choice in March abandoned its effort to acquire Wyndham Hotels & Resorts, but Pacious declined to explicitly rule out a scenario posed by an analyst during the call in which the company could renew the pursuit. When asked by Truist Securities analyst Patrick Scholes if Choice could try again if Wyndham’s stock remains around $75 per share—Choice in its hostile bid offered Wyndham shareholders $90 per share—Pacious didn’t say no. 

“You don’t see a lot of opportunities to create over $2 billion in value creation for shareholders on both sides,” Pacious said, noting that the company “felt very confident about the progress we were making” concerning the deal’s possible regulatory obstacles. 

“So it’s really a question, I think, which should be answered by the Wyndham shareholders in the future,” he said.

Wyndham’s stock closed Wednesday at $72.56 per share. 

Choice Q1 Performance

Choice systemwide first-quarter ADR declined 2.1 percent year over year to $89.23 while occupancy declined 2 percentage points to 50.7 percent. Systemwide RevPAR was $45.24, down from $48.06 one year ago.

Total first-quarter revenue declined 0.3 percent year over year to about $331.9 million, while net income declined to about $31 million from $52.8 million one year prior.

Choice said its global development pipeline as of March 31 was about 115,000 rooms. The company reported a pipeline of about 105,000 rooms at the end of December.

RELATED: Choice Q4 performance

Accor has added the first U.S. property to its soft upper-midscale Handwritten Collection brand, the company announced Monday. The 94-room boutique Hotel Stratford San Francisco joins more than 35 properties worldwide as part of the Handwritten Collection, which Accor launched in 2023. The hotel is Accor’s third in San Francisco, joining Fairmont properties in Nob Hill and at Ghirardelli Square, according to the company.

Business travel revenue in the first quarter at IHG Hotels
& Resorts properties fell flat year over year and declined in the Americas
region, executives said on a Friday conference call. Still, overall revenue per
available room increased, and executives suggested business revenue picked up
April.

“Business revenue was flat,” said IHG CEO Elie
Maalouf on the call, “but that reflects the timing of Easter being in
March this year compared to April last year, as the week leading up to Easter
always experiences a lull in business travel.”

Business revenue in IHG’s Americas region declined about 2
percent year over year, according to IHG CFO Michael Glover, and overall
Americas RevPAR was down 0.3 percent, dragged down by a 1.9 percent decline in
the United States. Glover, though, suggested a subsequent upswing.

“When we look at the last eight weeks’ rolling
performance, which smooths out the shift of Easter that impacts not just
leisure travel but also the timing of business travel, our U.S. RevPAR in
aggregate over last eight weeks was ahead of last year,” Glover said. 

IHG systemwide first-quarter RevPAR increased 2.6 percent
year over year to $77.32, while ADR increased 2.3 percent to $123.95 and
occupancy increased 0.2 percentage points to 62.3 percent.

RELATED:IHG
Q4 performance

First-quarter occupancy, average daily rate and revenue per
available room at U.S. extended-stay hotels each declined year over year,
according to a new report by The Highland Group. Supply increases remain
relatively low, however, which could lead to increased occupancy soon,
according to the company.

First-quarter ADR for the segment was $116.56, down 0.2
percent year over year, the first such decline since the pandemic. However, the
drop was confined to the economy tier, as the upscale and midprice ADR
increased 0.7 percent and 1.8 percent respectively. 

U.S. extended-stay occupancy declined year over year for the
fourth consecutive quarter and sixth out of the past seven, down 1.4 percent to
71.5 percent. Occupancy declined in each tier. Outside of the pandemic,
Highland said this was the lowest quarterly occupancy level since 2013.

RevPAR for the segment in the first quarter declined 1.6
percent year over year to $111.88. As with ADR, much of the decline was
centered in the economy tier, where RevPAR declined 3.4 percent, with upscale
and midprice RevPAR holding roughly steady. It’s the first such quarterly
RevPAR decline since the pandemic, according to Highland. 

Still, supply growth remains low. Total available
extended-stay room nights increased 3.2 percent year over year, but that
includes the effects of the Feb. 29 Leap Day. Without it, that figure would be
about 2 percent, according to Highland, and almost entirely due to economy-tier
conversions. Sold room nights increased 1.7 percent year over year.

“The last time extended-stay supply growth was at its
current level was from Q4 2010 through Q3 2014, and the federal funds interest
rate was about one-tenth of its current level,” according to Highland. “With
interest rates expected to stay high during the near term and construction
costs rising, extended-stay supply growth should be relatively low nationally
for the foreseeable future.”

Added Highland Group partner Mark Skinner in a statement: “If
most forecasts for overall hotel industry performance are realized,
extended-stay hotels are likely to reverse the trend of declining occupancy in
the near future because demand has increased for 13 consecutive quarters and
supply growth is very low.”