With the COVID-19 pandemic still greatly hampering travel, performance metrics will hold little meaning in the upcoming fourth-quarter and full-year 2020 earnings season for hotel companies, analysts said.

Cash-burn rate remains the most meaningful metric for hotel-focused real estate investment trusts, while brands are expected to focus more on net unit growth.

Performance in “the quarter really doesn’t matter,” said Michael Bellisario, senior hotel research analyst and director at financial services firm Baird.

“Everyone is still very much focused on forward-thinking commentary," he said. "The fourth quarter is behind us and the first quarter [of 2021] will be tough. Everyone knows that. So the focus will be on the spring and summer and the realization of that pent-up demand, especially on the leisure side, that everyone is expecting.”

Rich Hightower, managing director of REITs and lodging research for Evercore ISI, said cash-burn rates will get a bit more focused this quarter because performance among REITs “sequentially got a little worse in December and January.”

“That’s going to be a consistent theme through most of the first quarter, as well,” he said. “There is some light at the end of the tunnel, though. In the back half of 2021, even if [a travel rebound] isn’t firm, things could look better if there are rooms on the books.”

C. Patrick Scholes, managing director of lodging and experiential leisure equity research for Truist Securities, said Pebblebrook Hotel Trust and Ryman Hospitality Properties have put out some early results that highlighted success in cost-cutting, but cautioned those efforts only go so far.

“We heard they both improve quarter over quarter in their level of cost savings, but there’s not a huge upside from that,” he said.

However, Hightower said that cash burn is definitely a metric investors should be mindful of as the pandemic continues beyond expectations.

"When you think about trading multiple [valuations], [they] don't mean a whole lot at current [earnings] or cash-flow levels," he said. "But you have to factor in interim cash burn still. That doesn't get factored in often, and it eats away at an enterprise as long as it continues."

Scholes agreed that defining when the rebound for the industry could come is continually the most important thing for the industry, but when that is expected seems to be continually changing.

“Those goal posts keep getting pushed out,” he said. “When is the realistic view of when things return? With leisure travel, a couple months ago, the thought was the bounce back would be in the spring break time ... February and March. Now the expectation is the summer. If you look at business travel, it had been sort of a May time frame, but now that is probably pushed back closer to Labor Day.”

Analysts cautioned not to expect a return to normalcy in earnings reporting until the latter half of 2021. Bellisario said it will be hard to get much clarity on the industry until then.

“It’s really hard to pick the winners and the losers, in terms of stocks or markets or specific assets, right now,” he said. “Your guess is as good as mine. But in a couple quarters later in the year when people are vaccinated and can travel, then we’ll be able to tell if New York or San Francisco are suffering or faring better than we thought or if that pent-up leisure demand isn’t as strong as we’d hoped.”

Bellisario said he’s keenly aware of the potential for transactions, both dispositions and acquisitions, which he described as “a big theme this earning season” with more focus and clarity around capital allocations.

“It’s more topical and there’s more clarity around that today,” he said. “That’s a big driver of sentiment and how people view who is better- or worse-positioned.”

One of the more recent hotel transactions is Pebblebrook’s planned $157.6 million sale of the 416-room Kimpton Sir Francis Drake in San Francisco, which Bellisario said might be indicative of that company’s perception of that market.

At the same time, Scholes said that deal, along with a couple of properties sold by Sunstone Hotel Investors, is too small of a sample size to infer much from.

“No one transaction is anywhere near transformative,” he said, noting the transactions pace has been much more significant in the timeshare segment than the hotel industry.

He said anyone hoping for a wave of deeply discounted REIT-quality assets hitting the market is likely to be disappointed.

“Banks have been incredibly lenient and continue to be with loan restructures and the like, and there’s a lot of private money on the sidelines that is not going to let any quality asset go for pennies on the dollar,” he said.

In terms of commentary from brands, Hightower said the most interesting thing to listen for will be how operations are faring globally in different regions where the pandemic is under control to different levels.

"The experience in China was pretty interesting as they started to recover a bit quicker, although we've seen some degradation since then as cases have increased," he said. "But you want to look at some other parts of the world that are a little ahead of the U.S. on the COVID curve."