Article Summary: This roundup of quotables from second-quarter earnings calls for public companies focuses on why guidance was or was not changed for full-year 2019.
This roundup of quotables from second-quarter earnings calls for public companies focuses on why guidance was or was not changed for full-year 2019.
Primary Category: Earnings Recaps
REPORT FROM THE U.S.—Some public companies changed guidance based on economic headwinds while others were happy with second-quarter results and maintained or raised guidance.
In this roundup of commentary from second-quarter earnings calls, hotel executives discussed performance results for the quarter as well as outlooks for full-year 2019.
Tom Baltimore Jr., president and CEO, Parks Hotels & Resorts
“Park is well-positioned for relative outperformance. Our transient trends across the U.S. have been choppy, (but) Park’s proactive efforts to group up our portfolio should help us continue to post sector-leading growth over the next two quarters.
“The (revenue-per-available-room) growth over the back half of the year is expected to average around 3%. (The third quarter) is projected to be the stronger of the two remaining quarters of 2019. … San Francisco should remain one of our top markets along with Key West and Waikoloa. And finally, we expect healthy margin expansion in the second half of the year as we continue to focus on our asset-management initiatives and take advantage of proactively grouping up the portfolio.
“Despite our relative strong positioning, global macro concerns have weighed heavily on fundamentals across the industry with annual RevPAR growth forecast contracting across several of our key markets, primarily in the business transient segment. With this as the backdrop, we are readjusting our full-year RevPAR estimates down by 75 basis points at the midpoint to 2% to 3.5%. For margins, we’re lowering our guidance to a new range of flat to plus 50 basis points or down by 25 basis points at the midpoint partially due to increased property insurance premiums.”
Joan Bottarini, CFO, Hyatt Hotels Corporation
“Given some of the pressure we are seeing on RevPAR in certain areas such as our select business in the U.S. and overall demand in Greater China, we are reducing the top end of our RevPAR guidance range and now expect RevPAR growth in the range of 1% to 2% for the full year. With respect to adjusted (earnings before interest, taxes, depreciation and amortization), we are reducing our full-year 2019 guidance to a range of $755 million to $775 million. This represents a reduction in the midpoint of our guidance range of approximately $25 million.
“About two thirds of the reduction relates to our Miraval operations, stemming primarily from construction-related delays and challenges at both the Austin and Lenox properties.”
Arne Sorenson, president and CEO, Marriott International
“I think the Q2 numbers for the quarter we've reported came in a bit light compared to what we anticipated certainly for a midpoint a quarter ago. But I would attribute 100% of that or a very, very, very heavy majority of that to economic conditions, demand conditions, particularly not to anything that's (Starwood) integration-related. And similarly, when we look at Q3 and Q4, we've obviously never given anybody guidance on Q3 or Q4 specifically until this quarter because we've only got two quarters left; basically both quarters come out with specific guidance.
“But I think the adjustments that we've made in EBITDA and EPS for the balance of the year are very much driven by the economic environment, lower RevPAR expectations being by far the most significant piece of that. It does have an IMF flavor in some markets because of the U.S. RevPAR coming down a little bit. And it's got an FX piece that is a little bit worse too. But I think they are not in any material respects related to our continuing integration efforts or internal story.”
Brian Nicholson, CFO, Extended Stay America
“We expect comparable systemwide RevPAR growth of negative 1% to positive 0.5% and adjusted EBITDA between $550 million and $565 million, reflecting the lower-than-expected industry and chain-scale RevPARs in 2019. The lower end of our RevPAR guide assumes that the weakness we have seen the last two months continues through the end of 2019, while the top end assumes the pace of revenue growth the industry saw in the previous 12 months. The adjusted EBITDA total includes lost contribution of approximately $21 million from assets sold in 2018.”
Chris Nassetta, president and CEO, Hilton
“Turning to our outlook, forecast for GDP, non-residential fixed investment and corporate profit growth remain positive, but incrementally a bit lower than previous estimates. Consistent with these trends, we are modestly adjusting our full-year RevPAR guidance to 1% to 2%.”
“Even slightly lower top-line growth forecast, we are increasing our adjusted EBITDA guidance for the year given the significant contribution of net unit growth and strength in other areas of the business.”
Julie Shiflett, EVP and CFO, RLH Corporation
“We are revising our outlook on some of our ranges for 2019 and would like to provide some color around certain items.”
“In the first half of the year, we signed 96 franchise license agreements and we raised our expectations for new agreements to a range of 175 to 210 franchise agreements for 2019. Our selling general and administrative and other expenses guidance has been revised to a range of $27.5 million to $29.5 million, which includes estimated stock compensation of $2.8 to $3.2 million. Adjusted EBITDA guidance continues to be in the range of $20.5 million to $22.5 million, which includes the addback of stock-based compensation. We are keeping our adjusted EBITDA guidance the same as the decline in SG&A expense is anticipated to be offset by the performance of our owned hotels.”
Dominic Dragisich, CFO, Choice Hotels International
“Based on our second-quarter results and our Comfort transformation progress, we are maintaining our guidance for full-year 2019 domestic RevPAR growth and expected to range between flat and 1%.
“The combination of strong revenue growth and disciplined cost management resulted in a 7% increase in our adjusted diluted earnings per share, exceeding our expectations. Our adjusted diluted earnings per share performance exceeded the top end of our guidance by $0.04 per share. Based on these strong results and our forecast for the remainder of the year, we are again increasing our outlook for full year adjusted EBITDA and adjusted diluted earnings per share.
“… We expect our full-year 2019 adjusted EBITDA to range between $358 million and $363 million, representing an increase of $2 million at the midpoint versus our previous guidance.”
James Risoleo, president and CEO, Host Hotels & Resorts
“Overall, as we look to the second half of the year and amid the growing uncertainty of a trade deal with China being concluded in the near-term, we do not see any near-term catalyst to induce business-transient demand.
“As a result, we are revising our full-year guidance to reflect a slightly softer operating environment. Our outlook for the full year for comparable constant-dollar RevPAR growth is now flat to down 1%. Based on our continued margin outperformance in the second quarter and our confidence that the increases are sustainable through the remainder of the year, we are increasing our margin guidance. We now expect comparable EBITDA margin to be down 25 basis points at the low end and up 25 basis points on the high end of our guidance.”
Sean Mahoney, CFO, RLJ Lodging Trust
“Although our second quarter was in line with expectations, we have seen some softening in July and acknowledge that forward-looking data points indicate that there is incremental risk to lodging fundamentals for the second half of the year.
“We have incorporated the following assumptions into our 2019 outlook. Recent trends in business sentiment will continue through the end of the year. Northern California will continue to outperform. Third-quarter growth is expected to moderate, but pick up again in the fourth quarter, which is a function of the timing of citywides and a favorable comp due to last year's strike in San Francisco.
“Louisville will also continue to outperform driven by the continuation of post-renovation ramp-up and strong group production at the Louisville Marriott. And the fourth quarter will be impacted by softer citywides in Washington D.C., Chicago, Houston and San Diego.
“We are pleased that, despite recent industry trends, our dispositions enhanced our growth profile and allowed us to maintain our prior RevPAR growth outlook. Our revised outlook assumes no additional acquisitions, dispositions, refinancings or share repurchases.
“For 2019, we now expect RevPAR growth to range between flat and up 2%; hotel EBITDA margins in the range of 31.6% to 32.2%; consolidated hotel EBITDA to range between $449 million to $474 million; adjusted EBITDA to range between $455 million and $480 million; and adjusted FFO per share to be between $1.98 and $2.10, which incorporates shares repurchased to date, but no additional repurchases.”
Wyndham Hotels & Resorts
David Wyshner, CFO
“We are reaffirming our 2019 full-year outlook for room's growth. We have updated our outlook for organic RevPAR growth to approximately 1% to reflect recent trends. We have revised our forecast for revenues, almost entirely due to lower cost reimbursement revenues that have no impact on earnings. We updated our outlook for adjusted EBITDA slightly to reflect the significant progress we have made in integrating La Quinta and favorable results at our own hotel in Puerto Rico, as well as a modestly softer RevPAR environment we had anticipated. And we lowered our effective tax rate by 1 percentage point.”
Geoff Ballotti, president and CEO
“In terms of the change that we're seeing versus the prior guidance, the biggest issue has been in the U.S. That's where we're seeing softness. The international regions have been performing well. So that's, I would say, not a driver of it. And that's true pretty much across the range of international regions. The softness again is driven by the U.S. The other piece that's interesting and worth noting is that we actually expect international RevPAR in constant currency to be up a bit more than 1%.
“And we expect U.S. RevPAR probably to be up a little bit more as we look at our point estimates. And the reason we ended up at approximately 1% overall is that the mix shift where we have faster international growth, but lower average RevPAR.”
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Headline: Hotel executives discuss their changing 2019 outlook
Article Date: 8/14/2019
Article Time: 7:58:00 AM