Hotel Companies Face A Calm Earnings Season With Minimal Alarms

Industry analysts anticipate few surprises as publicly traded hotel companies prepare to release their fourth-quarter and full-year 2024 earnings reports.

Michael Bellisario, senior hotel research analyst and director at Baird, said hotel brand companies are expected to highlight steady progress in net unit growth, development pipelines, and continued improvement in revenue per available room (RevPAR) as they look ahead to 2025.

"Overall, the fundamentals look solid," Bellisario noted. "There’s not much to criticise when it comes to the core performance of hotel brands at the moment."

C. Patrick Scholes, managing director of lodging and equity research at Truist Securities, added that strong fourth-quarter results are likely, thanks to demand driven by hurricane-related displacement and a holiday calendar that favoured business and group travel.

However, the outlook isn't as bright for real estate investment trusts (REITs). Bellisario pointed out that REITs are more likely to strike a cautious tone, with profit margins under pressure as costs continue to outpace revenues.

Looking ahead to 2025, Scholes expects performance to mirror that of 2024, with RevPAR and net unit growth both projected to land in the single-digit range.

Still, the industry faces ongoing challenges. Labour and insurance costs remain persistent headwinds, and added geopolitical and regulatory uncertainties, particularly surrounding the new presidential administration, could further complicate the year’s forecast.

Geopolitical unpredictability continues to cloud the travel and hospitality sector’s outlook for 2025, with shifting international dynamics making it difficult to forecast trends with confidence.

“The geopolitical wild cards change by the hour. It's hard to know,” said C. Patrick Scholes, managing director at Truist Securities. “This could be a straightforward year or a really exciting year. We're not quite sure yet.”

Recent developments underscore that uncertainty. President Donald Trump announced 25% tariffs on imports from Canada and Mexico, but implementation has been delayed by 30 days following talks with leaders from both countries. Before the delay, Canadian Prime Minister Justin Trudeau urged citizens to avoid U.S. travel for leisure. Meanwhile, a 10% tariff on Chinese imports took effect on February 4, and Trump floated the idea of targeting the European Union next.

“In general, uncertainty doesn't help anyone, especially when it comes to people's willingness to travel,” Scholes said.

This sentiment extends beyond traditional hotels. Providers of extended stay and furnished accommodation, such as Corporate Keys, which offers serviced apartments tailored for business travellers and relocating professionals, are also watching market signals closely. While these properties often benefit from longer average stays and corporate contracts, macroeconomic and geopolitical shifts can still influence international demand and booking confidence.

Companies to Watch This Earnings Season

Hilton will kick off this quarter’s earnings reports with its investor call on Thursday. Scholes noted that the company showed “subdued optimism” at last week’s Americas Lodging Investment Summit in Los Angeles, making its upcoming call one to watch.

“If you're Hilton, 2024 was a great year, so there's plenty of reason to stay optimistic heading into 2025,” Scholes said. “But is there any major new catalyst? Probably not.”

Hyatt Hotels Corp. is also under the spotlight as it continues acquisition talks with Playa Hotels & Resorts. The companies recently extended their exclusivity agreement through February 10, hinting that a deal may be imminent. A potential acquisition could bring Playa’s portfolio in Mexico and the Caribbean under Hyatt’s umbrella.

“Hyatt is the most uncertain player right now,” said Michael Bellisario, senior analyst at Baird. “This would be a $2.5 to $3 billion transaction for a $15 billion company. That’s significant. There’s a lot of real estate involved, and a lot of unanswered questions—about contract structure, brand overlap, and overall value.”

Among REITs, Host Hotels & Resorts and Park Hotels & Resorts are drawing interest as they’re expected to provide updates on the recovery of Maui and the broader Hawaiian market.

Choice and Wyndham: A Year Later

It’s been nearly a year since Choice Hotels International ended its hostile takeover attempt of Wyndham Hotels & Resorts—a contentious saga that spanned several months. Both Bellisario and Scholes agree that the likelihood of renewed talks between the two companies is now slim.

While regulatory barriers might be less of a concern under the current administration, Wyndham’s stock price has surged, making an acquisition much less feasible.

“The severely undervalued Wyndham shares are not severely undervalued anymore,” Scholes said. “It’s a lot harder to make the numbers work.”

Choice’s prior offer valued Wyndham at roughly $90 per share, combining $49.50 in cash and 0.324 shares of Choice stock per Wyndham share. Today, Wyndham trades at over $106.

“The deal would now be significantly more expensive and less accretive,” Bellisario said. “The math doesn’t add up, and it looks like Choice has shifted its focus elsewhere.”