Positive performance in March, which accelerated into April, at several publicly traded hotel companies and hospitality real estate investment trusts is giving executives new confidence that strong tailwinds will be present through the remainder of the year.

As a result, some companies have updated or reinstated full-year 2022 outlook. During the past two-plus years of the pandemic, several companies suspended or withdrew quarterly or full-year guidance due to economic uncertainty and travel restrictions. Executives at some companies said they are still not in a position to give specific guidance.

Speaking during first quarter 2022 earnings calls, hotel executives noted they are particularly encouraged that increasing business travel, more citywide events and the return of corporate group functions in tandem with strong leisure demand will support sustained growth.

“Our franchisees are feeling that the summer of 2022 could replace the summer of 2021 as the best ever, and that's certainly what they saw in the first quarter. Three quarters of them had a higher occupancy than they did back in 2021. …

"We have been crisscrossing the country, talking to our franchisees, and met with thousands of them. We always start with a show of hands for how many in the audience believe they had a better 2021 than they did back in 2019 and most of the hands are up in the air. And I asked them to keep their hands up if they feel that 2022 is going to be better than 2021, and most of those hands remain in the air. So, with all of the surveys out there pointing to that continued trend of travel, domestic drive-to, we believe we will continue to outperform and give our franchisees the opportunity to continue to drive rate. And we think, as we get into the summer, that's really going to resonate with our small business owners.”

“We're updating our full-year 2022 outlook to adjust for the sale of our two owned hotels. As a reminder, the post-exit results for the [CorePoint Lodging] management business were already excluded from our February outlook, so there are no adjustments needed for that transaction. We now expect fee-related and other revenues of $1.28 billion to $1.31 billion, down $60 million from February's outlook, reflecting the removal of the two owned hotels post-sale date. Adjusted net income actually increases by $9 million to $317 million to $329 million due to the removal of related depreciation expense. Adjusted diluted [earnings per share] is then projected to increase $0.11 per share at $3.39 to $3.51, based on the diluted share count of 93.6 million which, as usual, excludes any potential share repurchases. And we expect capital expenditures of $40 million, a reduction of $5 million as we no longer need to maintain these two hotels. There are no changes to our prior outlook for adjusted [earnings before interest, tax, depreciation and amortization], global net room growth, global [revenue per available room], or free cash flow conversion rate."

"Looking ahead, we remain confident that each of the demand segments will strengthen throughout the year. Our confidence is bolstered by the robust demand trends we saw in March, which have accelerated into April. We expect demand trends to remain healthy during the second quarter given that business transient is expected to continue to benefit from pent-up demand as employees return to offices. In April, we have already seen a pickup in volume from national accounts, continued improvement in our transient pace and expansion of the booking window. Our in-the-year-for-the-year bookings so far this year are 123% of the total in-the-year group revenues we picked up last year, which is robust, with half of these bookings falling into the second quarter. ...

"Urban leisure, which was muted last year, should continue to see greater strength as we move into summer with urban attractions fully reopen. And finally, any uptick in international demand trends should benefit our urban and gateway markets, such as Northern California, New York and Florida. Based on the improving trajectory of these segments, we expect the recovery to continue to gain momentum throughout the year, with particular strength in our urban markets."

"We have now exceeded our 2019 RevPAR levels for 11 consecutive months, and we expect our momentum to continue into the second quarter. Our April RevPAR results exceeded 2019 levels by approximately 16%. We remain very optimistic about our growth prospects because of the long-term investments we have made and will continue to make in our business. These investments are designed to capitalize on the consumer trends that have accelerated during the past two years and are expected to continue — trends that favor leisure travel, limited-service hotels and longer length of stay, all of which are key strengths of our business. We believe that remote work — which affords Americans greater flexibility as to when, where and for how long they travel — will continue to fuel the strong performance of our brands. We expect these trends to continue to be strong tailwinds for our company's long-term growth.”

“As we look to the balance of the second quarter, we are very encouraged by the latest forward booking trends, with May pacing over 6% ahead of where April was trending 30 days ago and June trending slightly up from May. Continued improvement in weekday demand, a strong Memorial Day weekend and continued leisure strength in the early part of the summer season are expected to result in May and June recapture rates in line or better than the 90% recapture we experienced in April, despite getting into more difficult year-over-year summer time comparables."

"As for our outlook for the remainder of 2022, we remain confident in the broader industry recovery and the performance of our portfolio specifically.

"While we are still not in a position to give specific operational guidance, first quarter performance exceeded our internal forecast. Preliminary results for April RevPAR are positive to 2019 and average daily booking trends are ahead of pre-pandemic booking levels. Although external economic and pandemic-related factors continue to add a layer of uncertainty, with the ongoing strength in leisure demand and increase in business transient demand and a demonstrated ability to achieve meaningful rate growth as occupancies improve, we believe our portfolio could continue to reach and potentially exceed 2019 RevPAR levels if current trends continue. As we move into the second quarter, we are optimistic, without encumbering our balance sheet, we have transacted in ways that have optimized our portfolio for the future.

"We have a proven ability to drive strong operating results throughout economic cycles. And with current trends showing continued strength in leisure and improvement in business transient demand, we are confident in our ability to drive shareholder returns."

"Leisure demand continues to be very robust, and we again saw tremendous strength in average rates at our oceanfront resort properties with both rate and RevPAR meaningfully higher than pre-pandemic levels. Based on the strength of demand in March, which accelerated into April, we are more encouraged about the outlook for 2022. Our preliminary April results reflect comparable portfolio occupancy of 76% at an average rate of nearly $300. This equates to a RevPAR for the month of $225, down just 3% from 2019.

"When we add in the two recent Wine Country acquisitions, our total portfolio [average daily rate] and RevPAR increased to $320 and $241, respectively. These are meaningfully improved results from where we were at the start of the year. We expect that continued healthy leisure demand during the spring and summer vacation seasons, increasing amounts of business travel, strong citywide calendars and the return of corporate group functions will support sustained growth as the year progresses. Our recent booking trends are indicative of this as our group room nights for the second quarter through the fourth quarter of 2022 are pacing at approximately 80% of pre-pandemic levels at an average rate that is 4% higher than 2019."

"While we currently expect that the remaining quarters of the year will be more profitable than the first quarter, the changing operating environment remains too uncertain to provide guidance at this time."

“As we look ahead to the rest of 2022, we are very pleased with the positive momentum in demand we are seeing across customer segments in the vast majority of markets around the world. With the recent widespread easing of travel restrictions in many regions, employees returning to the office in greater numbers, increasingly positive travel sentiment, and our teams’ focus on driving ADR, we are even more optimistic than we were a quarter ago that we will see meaningful additional global RevPAR recovery this year, assuming no major change in the global economic environment or the behavior of the virus.

“There is still too much volatility given uncertainty around travel restrictions in countries like China and a high reliance on cross-border guests across our international markets to give global RevPAR or specific earnings guidance. But we do have more visibility in our largest market, the U.S. and Canada, which is almost entirely dependent on domestic travelers.

“In the U.S. and Canada, occupancy and ADR continued to improve in April, and we estimate that RevPAR fully recovered to 2019 levels for the month. We are extremely pleased to reach this milestone roughly two years after the pandemic began. While demand still varies considerably across hotel types and markets, given current booking and ADR trends, we expect RevPAR in the U.S. and Canada to be roughly flat to 2019 in the remaining quarters of 2022. Internationally, we expect continued RevPAR recovery across markets that have not yet fully recovered, though the levels of progress will vary widely across regions.”

“We continue to expect our convention room nights to reach 90% of 2019 levels in the back half of 2022. Importantly, we are seeing increased spend levels for our groups year to date, including catering and banquets, and to spotlight our international leisure trends, we're beginning to see positive indicators of the return of international flight capacity. In fact, by this summer, the [Los Vegas Convention and Visitors Authority] expects international flight capacity to return to 80% of pre-pandemic levels. To further highlight events in Las Vegas ... we also have big sporting events coming with the NCAA Men's Basketball Regionals on tap for March of next year, along with the first-of-a-kind Formula 1 Race in the Las Vegas Strip in November 2023. And, of course, we will host the Super Bowl in February 2024. All of these big events show the incredible progress the city has made as an entertainment and sports destination.”

“We do currently expect total hotel revenues to meet or exceed 2019 levels for the full year 2022 and for hotel adjusted EBITDA to exceed 2019 levels for the next 12-month period. Our resorts continue to push ahead at an accelerating pace while group and business transient demand at urban hotels is kicking in to provide a double benefit and recovery trajectory. Ultimately, we continue to believe that we will stabilize at higher portfolio profit margins based on the implementation of best practices from this downturn, the benefit from recent brand to independent management conversions at another 20% of the portfolio and the boost from [return on investment].”

“We are still unable to provide full-year operational guidance given the continued volatility surrounding COVID. That said, we believe sequential quarterly RevPAR improvements will continue as declines to 2019 diminished throughout the year. We expect second quarter RevPAR to be between $195 and $205 or down 8% to down 3% relative to 2019. This RevPAR range implies an adjusted EBITDAre range of $375 million to $410 million for the second quarter.

“We expect sustained strength in leisure as well as business transient and group demand to continue accelerating in our urban markets as companies get back on the road and groups get back to meeting in person. We have seen a recovery in international travel, particularly from Canada, Germany and the U.K. New York remains the top destination market followed by San Francisco and Seattle, and we expect sequential improvements in international demand over the course of this year. Given the cadence of the lodging recovery, it is difficult to provide an accurate forecast for the year.

“While we expect sequential RevPAR improvements relative to 2019, seasonality and changing market and business mix are expected to lead to lower RevPAR and margins for the second half of the year relative to the second quarter. For reference, the third quarter has typically been our weakest quarter of the year. And as is historically the case, we would expect third quarter RevPAR and margins to be below that of the second quarter.”

“As the year goes on, we expect the largest part of RevPAR growth to come from rate growth. We obviously expect to see occupancy growth as well. But I think net-net, it will be majority driven by rate.

“In terms of the segments, leisure broadly remains quite strong. ... Consumers still have $2.5 trillion of excess savings that they accumulated during the pandemic in their pockets. While people have been out traveling a lot more than they had maybe a year ago, there's still a lot of people that haven't and a lot of people that really want to get out and have experiences. … People have a lot of money in their bank accounts. And I think [they] now feel quite safe broadly, certainly here in the U.S., not everywhere in the world.

“So we expect to see very strong leisure continue. We think we'll probably have the biggest leisure summer we've ever had, only to surpass last summer, which was the biggest leisure summer we had ever seen. ... And then as we get into the fall and as people ... are back more in the office, which we certainly are seeing now and expect to see more of ... we're seeing a very nice uptick in return to business transient and return on the group side.”

“While COVID led to an unprecedented uncertainty over the last two years, I'm thrilled to announce that we've decided to reinstate earnings guidance for the second quarter based upon the broad-based recovery taking shape within our markets. especially across our urban portfolio of hotels. Accordingly, we are establishing [second quarter] RevPAR guidance of $160 to $164 or 15% below 2019 levels at the midpoint. With adjusted EBITDA guidance for the second quarter between $160 million and $180 million or 18% below 2019 pro forma adjusted EBITDA at the midpoint.”

Editor’s note: Chris Nassetta serves on the board of directors of CoStar Group, Hotel News Now’s parent company.

Return to the Hotel News Now homepage.