Analysts say there shouldn't be many surprises when publicly traded hotel companies report their fourth quarter and full-year 2024 earnings.
Michael Bellisario, senior hotel research analyst and director at Baird, said hotel brand companies will focus on net unit growth, development pipelines and improvements in revenue per available room for the year ahead.
"Fundamentals are generally pretty good," Bellisario said. "Fundamentally, there's not a ton to poke holes in right now for the hotel brands."
C. Patrick Scholes, managing director of lodging and equity research at Truist Securities, said hurricane-related demand along with a favorable Christmas and New Year's Day schedule for business and group travel will likely lead to positive results from the fourth quarter 2024.
Real estate investment trusts, on the other hand, will likely be more pessimistic, citing tough margins as profits lag behind expenses, Bellisario said.
As hotel brands and REITs look ahead to 2025, Scholes said it should be a similar outlook compared to 2024's performance, with RevPAR growth in the single digits and net unit growth in the mid-single digits.
Factors such as labor and insurance costs will continue to pose headwinds for companies, though, and increasing uncertainties stemming from the new presidential administration will add another layer to this year's outlook.
"The geopolitical wild cards change by the hour. It's hard to know," Scholes said. "This could be a really [straightforward] year or really exciting year. We're not quite sure yet."
U.S. President Donald Trump announced 25% tariffs on imports from Canada and Mexico but has since postponed enacting them for 30 days after discussion with the countries' leaders. Canada's Prime Minister Justin Trudeau encouraged Canadians to not travel to the U.S. for vacation prior to the postponement of the tariff. A 10% tax on imports from China went into effect on Feb. 4, and Trump has threatened to impose tariffs on the European Union.
"I don't think in general uncertainty helps anybody, as far as it relates to propensity to travel," Scholes said.
Companies to watch
Hilton kicks off this quarter's earnings season with its call to investors on Thursday. Scholes said executives from the company had a "subdued optimism" at the Americas Lodging Investment Summit last week in Los Angeles, so investors will be all-ears during its call.
2025 "initially should look a lot like '24. Well, if you're Hilton, '24 was a great year, so that's great, and they have every reason to be excited and optimistic," Scholes said. "But is there any new catalyst at the moment above and beyond '24? Probably not."
Hyatt Hotels Corp.'s recent acquisition talks with Playa Hotels & Resorts makes it a company to watch, Bellisario said. The two companies recently extended their exclusivity agreement until Feb. 10, which could potentially lead to Hyatt acquiring Playa's portfolio in Mexico and the Caribbean.
"Hyatt is the [brand] that is the most uncertain, because they have this Playa situation ongoing, which is meaningful. It's a $2.5 billion to $3 billion transaction, and it's a $15 billion company. It's not insignificant," he said. "There's a lot of real estate, and there's a lot of questions about how, why, where, when, contract structure. What do you do with all the Hilton, IHG, Wyndham, Marriott contracts? Where's the value?"
Host Hotels & Resorts and Park Hotels & Resorts will provide an update on the recovery trajectory of Maui — and Hawaii, broadly — in their calls, making them among the top REITs of intrigue this earnings season, Bellisario said.
Choice, Wyndham one year later
It's been nearly a year since Choice Hotels International abandoned its hostile takeover bid of Wyndham Hotels & Resorts. It ended what was a yearlong saga between the two hotel brands as Choice pushed for an acquisition despite pushback from Wyndham executives.
As it stands today, the likelihood of conversations between the two picking back up are slim, both Scholes and Bellisario said. While antitrust concerns wouldn't likely be as big of an issue this time around because of the new presidential administration's stance, Wyndham's stock price has risen significantly since Choice's negotiations.
"The severely undervalued Wyndham shares are not severely undervalued anymore," Scholes said. "It makes it much more difficult to make that undervalued offer because the stock is ... clearly not what it was."
Choice's offer for Wyndham was for $49.50 in cash and 0.324 shares of Choice common stock for each share of Wyndham stock, a combined value of $90. As of press time, Wyndham is currently trading at $106.22.
"The deal, if Choice were to buy Wyndham, would be more expensive, therefore it would be less accretive," Bellisario said. "The math just doesn't pencil, and they at least appear on the surface to have moved on to focus on other things."