Excerpt from CoStar

The year didn’t get off to a great start for the hotel industry, but industry analysts expect to hear more optimism about the remainder of 2024 from executives of publicly traded hotel companies during the upcoming round of earnings calls.

CoStar had previously forecast that the first quarter of 2024 would be poor because of the tough comparisons to last year as well as the Easter calendar shift that depressed group demand, said Jan Freitag, national director of hospitality market analytics at CoStar.

“We knew it wasn’t going to be good, but I think it’s a little worse than the expectation was,” he said. “The expectation for the remainder of the year is that it’s going to be significantly better.”

Michael Bellisario, senior hotel research analyst and director at Baird, said his estimates for the quarter are coming in down, and that’s mostly for the first quarter. There was underlying weakness in the quarter beyond the Easter shift. The first three months of the year are not the most important compared to the second and third quarters, but the challenge for hotel companies, particularly the real estate investment trusts, is how they’re going to adjust their outlook.

Yes, there was bad weather in Phoenix, California and Florida during important spring break weeks, but that doesn’t explain weak performance in other markets, such as Seattle or Denver, Bellisario said.

“I think investors now think the cat’s a little bit out of the bag and that you’re starting to see estimates come down,” he said. “Management teams are signaling that. I don’t know how many companies are going to cut full-year guidance. I think they maybe decrease the high end and definitely talk more about the midpoint.”

There’s a lot of confidence in group demand, but a lot of that comes in the back half of the year where 80% of it isn’t actually booked yet, Bellisario said.

“In this business, you guide to and you budget to what you know and what you see, which is the last 60 days and the next 60 days,” he said. “The pickup is not quite what it has been, and the trailing has been weaker than you thought.”

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