Although the pandemic has forced changes in consumer behavior and spending on travel and tourism, the US hospitality industry continues to demonstrate resilience. Increased consumer confidence due to lenient restrictions and ramping up vaccinations has paved the way for higher than expected room blocks. Additionally, as hoteliers focus on cost reduction and productivity improvement initiatives, break-even occupancy levels are falling across the globe.
Improve Trends Elevate Spirits
According to the STR report, the hotel occupancy rate in the United States (September 12-18, 2021) improved on a week-to-week basis, mainly due to an increase in the group’s weekly demand. Occupancy rates for the week ending September 18 were 63% compared to 60% the week before. Although an improvement in group demand created a downward effect on the Average Daily Rate (ADR) mainly due to falling room prices, ADR improved week over week . ADR for the week stood at $ 131.04 from $ 130.82 the week before. During this period, the RevPAR of US hotels stood at $ 82.5 from $ 78.46 the week before.
Although the recovery rate continues to be very uneven and highly dependent on the success of the vaccination rollout, companies are seeing a rapid return of guests to areas where the rules have been relaxed and where people think they are. can travel safely. Of the top 25 markets tracked by STR, New Orleans saw the highest occupancy and RevPAR growth of 7.3% and 18.2% from September 12-18, 2021 from 2019 levels. Miami has recorded the highest ADR growth of 22.5% (to $ 166.04) from 2019 levels.
What future for the industry?
As regions prepare for the recovery and owners focus on growth opportunities, the focus on development activities is gaining momentum. Hotel owners continue to focus on maintaining a balance between maximizing hotel profitability and guest satisfaction. To this end, hoteliers continued to evolve their respective contactless experiences and take advantage of technologies such as mobile and online check-in as well as the mobile key. In addition, they have increased the use of these digital tools to strengthen infrastructure, grow online package sales, enable self-service reservations, deliver real-time offers, and improve the overall customer experience.
The ease of international travel is likely to act as a tailwind. By a Reuters report, the White House issued a statement, in which it lifted restrictions on vaccinated international travelers. This includes travelers from France, Germany, Italy, Spain, Switzerland and Greece as well as Great Britain, Ireland, China, India, South Africa, Iran and Brazil.
As we continue to monitor variant strains closely, optimism for the continued global recovery remains intact thanks to increased air traffic. While the trends for temporary leisure passengers are encouraging, we are fully aware that temporary demands from groups and businesses need to improve significantly to achieve full revenue per available room (or RevPAR) recovery.
3 hotel actions to watch
Given the context, now is the time to look at some hotel companies with strong fundamentals that stand to benefit. Here, we’ve highlighted three stocks that have not only outperformed the industry over the past year, but also offer strong prospects. You can see The full list of today’s Zacks # 1 Rank (Strong Buy) stocks here.
Image source: Zacks Investment Research
Marriott International, Inc. (MAR – Free Report) operates, franchises and licenses hotels, residences and timeshares worldwide. Shares of this company Zacks Rank # 3 (Hold) have jumped 65.9% in the past year from the industry rally of 45.1%. The company benefited from the focus on expansion initiatives, digital innovation and loyalty programs. It is also seeing improved occupancy rates and new bookings in mainland China, as businesses pick up. The company plans to strengthen its presence outside the United States, particularly in Asia, Latin America, the Middle East and Africa. Zacks’ consensus estimate for 2021 earnings has been revised upwards to 55.4% in the past 90 days. The consensus mark for its 2021 results indicates an improvement of 1,583.3% year-over-year.
Choice Hotels International, Inc. (CHH – Free Report), a hotel company, owns and franchises hotels around the world. The shares of this company Zacks Rank # 3 have gained 50.6% in the past year. The company benefits from continuous expansion strategies through acquisitions and franchise agreements. The Ascend portfolio of Choice Hotels is doing strong business. Going forward, it is likely to benefit from expansion strategies, mid-range brand enhancement as well as transformation and advancement of comfort brands. Zacks’ consensus estimate for its 2021 earnings has been revised up 15.1% over the past 90 days. The consensus mark for its 2021 results shows a 71.6% year-over-year increase.
Playa Hotels & Resorts NV (PLYA – Free Report), along with its subsidiaries, owns, develops and operates resorts in prime beachfront locations in Mexico and the Caribbean. The shares of this company Zacks Rank # 3 have gained 104.3% in the past year. The focus on direct booking channels has allowed the company to increase occupancy faster than many third-party competitors. Going forward, the company is optimistic about accelerating air transport activities, especially for Europeans and Canadians. This, along with pent-up demand and improved bid execution, is likely to add to the bright spots. Zacks’ consensus estimate for 2021 earnings has been revised up 66.3% in the past 90 days. The consensus mark for its 2021 results indicates an increase of 59.6% over one year.