HREC Investment Advisors

Stock market: DJIA fell 219 points, Nasdaq was down 138, and S&P 500 fell 34 points. Pebblebrook Hotel Trust warns of weaker weekend leisure travel and expects slightly lower 2Q revenue. Various hotel announcements: HHM Hotels launches Echelon Luxury & Lifestyle division, Driftwood Capital acquires Hilton Dallas/Plano Granite Park, LBA Hospitality opens Homewood Suites by Hilton in Greenville, Renaissance Cleveland undergoing renovations, and more.

STR reported US RevPAR for the week ended May 13 was down -1.3% year over year, possibly impacted by Mother’s Day timing. CBRE is again raising its forecast for hotel performance this year . The company has revised its forecast for 2023 RevPAR to $97.89, up 6.0% YOY and an increase of $0.43 from its previous forecast. Hilton announced the opening of Canopy by Hilton San Francisco SoMA .

Hilton kicked off earnings season with solid results. You could not get much better than Hilton’s with a solid beat. Travel + Leisure beat expectations, bought back $102 million worth of stock and gave out more in dividends than expected. The stock went down. Sonder has become the first of the SPACs that are either penny stocks or close to it, to receive a deficiency notice from their trading exchange.

Heading into the upcoming 1Q earnings season, JP Morgan said they expect relative upside in 1Q23 RevPAR results and, for the C-Corps, at least in-line net rooms growth with both operating metrics benefiting from improvements in China. A record number of loyalty program members should help hotel brands lower their customer acquisition costs, increased direct-to-consumer engagement and offset any occupancy shortfalls during an economic downturn. Corporate travel spending is tracking toward full recovery to 2019 levels by 2024 or 2025 , but higher costs and climate concerns will keep trip volumes smaller than pre-pandemic levels in real terms.

DJIA, Nasdaq, and S&P 500 all rose on Friday, and lodging stocks saw gains as well. New properties were acquired or announced in Montana, Atlanta, Ohio, Texas, Colorado, and Madrid. Multiple hotels were sold, and Blackstone secured a €680 million loan for Hotel Investment Partners.

Airbnb definitely got a better response from investors on their 4Q earnings report than traditional lodging analysts. Choice Hotels continued the parade with 4Q revenue and EBITDA comfortably above estimates with the Radisson acquisition helping with that. STR reported U.S. lodging data for the week ended 2/11. RevPAR was up 18.9% year over year.

Morgan Stanley changed price targets on its covered hotel companies . Hilton’s PT was lowered to $167 from $171, while Wyndham’s PT was upped to $90 from $87. Chatham Lodging Trust announced they repaid in full three mortgages with outstanding principal of $73.3 million and a weighted average interest rate of 8%. Four Seasons Resort and Residences Los Cabos at Costa Palmas will begin taking reservations for its ultra-luxury Private Retreats collection soon.

BofA Securities initiated coverage on Marriott Vacations with a Neutral rating and a $180 price target. The Wall Street Journal published an article on how hotel companies are stepping up efforts to lure competitors’ hotels to their own brands. The article referenced Hilton’s new Spark by Hilton brand. We had heard those concerns about upcoming maturities from Service Properties Trust when we were positive about their resumption of the previous dividend, giving them an 11% yield at the time.

Lodging stocks were higher. SLNA topped the list with a 10% gain followed by AHT and VCSA, both up 6%. We start today’s newsletter on a sad note as many of you probably heard that Bruce White , the founder and chairman of White Lodging , passed away at the age of 70. Pebblebrook Hotel Trust gave a January operations update and include an update on 4Q preliminary results. Remember they roiled the Lodging REIT stocks when they preannounced weaker than expected 4Q results.

After 25 consecutive months of year-over-year declines, U.S. hotel construction increased slightly in December. Wells Fargo cut their price target on Airbnb to $130 from $165. They maintained their Overweight rating. STR said US hotel RevPAR the week ended 1/14 was up 33.1%. RevPAR was up 9.4% versus the same week in 2019.