Hotel CEOs upbeat about 2016 despite outside pessimism
 
Hotel CEOs upbeat about 2016 despite outside pessimism
24 MAY 2016 8:39 AM

Despite investor and Wall Street doubts, executives of publicly traded hotel companies anticipate strong growth for the remainder of 2016.

REPORT FROM THE U.S.—Pessimism continues to swirl about the fate of hotels for prognosticators outside the industry, but many hoteliers seem to remain confident for the rest of 2016.

While the markets reacted negatively after Bank of America Merrill Lynch’s decision to downgrade the industry as a whole and analyst Shaun Kelley’s proclamation that the lodging cycle has reached the end, CEOs of some of the major C-Corps and real estate investment trusts painted a rosier picture during first-quarter earnings calls. Even with a rough first quarter, many executives said they see signs of life for the rest of 2016.

Here are some of the comments and guidance expectations for publicly traded hotel companies:


Steve Joyce, CEO, Choice Hotels International: “What we're sensing is a very strong summer and then strong end of the year. But when we say strong, we mean in terms of the relative range that we've given is where we'll end up. … We'll have a stronger summer, fall and close to the year that looks more like the guidance we’ve given.”

The company projects 2016 RevPAR growth between 3.75% and 4.5%, down slightly from earlier projections of 3.75% to 4.75%.


Richard Smith, president and CEO, FelCor Lodging Trust: “It's not like we're jumping for joy and we think we're in the height of the upturn or anything of that nature, but we are cautiously optimistic because we haven't seen (negative) trends yet, and we're still gaining share. I'm not sure everyone can say that.”

The company projects RevPAR growth between 3.5% and 5.5%, which matches its earlier guidance.


Neil Shah, president and COO, Hersha Hospitality Trust: “We talk a lot about international demand, but by far, our greatest contribution is from domestic demand. And the U.S. economy is in very good shape. We see employment continue to increase. Oil prices haven’t been great for the overall stock market, but they are really good for consumers. And I think we’ll start to see, even corporates start to enjoy the benefits of lower energy prices in the coming quarters as well.”

The company projects RevPAR growth between 4% and 6%, which matches its earlier guidance.


Chris Nassetta, president and CEO, Hilton Worldwide Holdings: “We're not suggesting we're going back to 2014-type transient growth numbers or the first half of last year. It's obvious the growth is somewhat more tempered than that, but we do believe… you're going to see performance in Q2 through Q4 that is superior to Q1 performance.”

The company projects RevPAR growth between 3% and 5%, which matches its earlier guidance.


Edward Walter, president and CEO, Host Hotels & Resorts: “I don't know that we would necessarily expect to see occupancy growth at the same rate going forward as we have right now. We probably would expect to see our RevPAR growth lean a little bit more toward rate growth going forward, just because these next couple quarters are months where we start off with a really strong occupancy base. But we would still expect to see some gains in occupancy throughout the rest of the year.”

The company projects RevPAR growth between 3% and 4%, which matches its earlier guidance.


Mark Hoplamazian, president and CEO, Hyatt Hotels Corporation: “We've seen a lengthening of the booking curve, which we believe is evidence that associations in particular are paying close attention to the occupancy levels and are sensitive to the need to secure dates that they rely upon for their large gatherings. This period of high occupancy and constrained inventory, coupled with high transient demand, should provide us with revenue management opportunities over the remainder of the year.”

The company projects RevPAR growth between 3% and 5%, which matches its earlier guidance.


Arne Sorenson, president and CEO, Marriott International: “What causes a downturn is a meaningful change in the demand environment. And that change is not going to occur unless we have a meaningful change in GDP growth and economic growth around the world, period. … We have got to go back and say, ‘OK, what do we think GDP is going to do in the quarters ahead?’ And the more pessimistic about that you are, the more pessimistic you should be about this industry. … By and large, we're not going to be able to grow demand if economic activity is contracting because that will cause demand broadly to decline.”

The company projects RevPAR growth between 3% and 5%, which matches its earlier guidance.


Tom Baltimore, former president and CEO, RLJ Lodging Trust: “While a stronger dollar and weak global economic growth are headwinds to corporate profits, we remain hopeful that positive employment trends and the improving health of the consumer will continue to drive economic expansion in the U.S. We therefore believe that moderate GDP growth should continue to support increases on lodging demand. At the same time, high occupancy should remain and enable the industry to absorb supply growth this year and expand rates.”

The company projects RevPAR growth between 3% and 5%, which matches its earlier guidance. Baltimore resigned as president and CEO of RLJ, effective 11 May, to become president and CEO of Hilton Worldwide’s planned hotel REIT.

2 Comments

  • Observer May 24, 2016 2:13 PM Reply

    And with that, what remained of any credibility with management teams is now gone.

  • Robert Rauch, CHA May 24, 2016 2:50 PM Reply

    I completely agree that we will see a solid Q2 begin to materialize, followed by a strong second half of the year driven by low gas prices, strong corporate balance sheets and election year economics. RevPar will grow close to 5%.

Comments that include blatant advertisements or links to products or company websites will be removed to avoid instances of spam. Also, comments that include profanity, lewdness, personal attacks, solicitations or advertising, or other similarly inappropriate or offensive comments or material will be removed from the site. You are fully responsible for the content you post. The opinions expressed in comments do not necessarily reflect the opinions of Hotel News Now or its parent company, STR and its affiliated companies. Please report any violations to our editorial staff.