Zacks Industry Outlook Highlights: Expedia, Priceline Group, Starwood Hotels & Resorts Worldwide, Marriott International and Hilton Worldwide Holdings
For Immediate Release
Chicago, IL – November 25, 2015 – Today, Zacks Equity Research discusses the Hotels, including Expedia Inc. (EXPE), Priceline Group Inc. (PCLN), Starwood Hotels & Resorts Worldwide Inc. (HOT), Marriott International, Inc. (MAR) and Hilton Worldwide Holdings Inc. ( HLT).
Industry: Hotels
Link: https://www.zacks.com/commentary/63183/hotel-industry-stock-outlook---nov-2015
U.S. Hotel Industry Recovers in Tune with Economic Growth
The U.S. hotel industry’s strength has remained intact so far in 2015, reflecting a steady rise in business and leisure travel on the back of an improving economy. Favorable supply and demand balances, strong investor appetite thanks to higher transaction volumes and solid lodging fundamentals spread cheer across the industry. Moreover, hoteliers have moved from owning real estate to franchising their brand and services to better counter economic volatility.
Despite pockets of geopolitical instability and economic slowdown, this optimism should remain in place for the rest of this year and continue into 2016.
Does this mean that the hotel industry is lying on a bed of roses? Well, not really.
Hoteliers are scrambling for profits while trying to capitalize on growing tourism numbers. Higher costs and expenses incurred by leading hoteliers for renovation as well as digital and marketing initiatives to boost traffic are denting profits. Further, online travel agents like Expedia Inc. (EXPE) and The Priceline Group Inc. ( PCLN) are limiting the pricing power of these brands.
Another major threat is home-sharing companies like Airbnb, Inc. which offers a digital service allowing tourists to book homes at holiday destinations. With low overhead costs and light regulations compared with hotel companies, these firms have made steady inroads into the industry and are grabbing market share away from giants like Starwood Hotels & Resorts Worldwide Inc. (HOT), Marriott International, Inc. (MAR) and Hilton Worldwide Holdings Inc. ( HLT).
In fact, Marriott’s recent deal to acquire Starwood Hotels for $12.2 billion is being viewed as a move to combat the rising threat from online travel agents and home-sharing companies.
Statistics underscore the intense competition in the hotel industry. A recent report by PricewaterhouseCoopers (PwC) shows that the lodging sector did not witness significant average daily rate (ADR) growth in the past few months.
As a result of persistent pricing challenges, PwC slightly lowered the 2015 outlook for hotels to 6.5% revenue per available room (RevPAR) growth, due to lower-than-expected increase in ADR. However, overall the demand conditions in the U.S. remained strong, contributing to the increasing occupancy levels this year.
Notwithstanding the common macroeconomic hurdles, the lodging sector is expected to deliver growth in 2016, thanks to the improving U.S. business and solid international travel and tourism volumes.
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EXPEDIA INC (EXPE): Free Stock Analysis Report
PRICELINE.COM (PCLN): Free Stock Analysis Report
STARWOOD HOTELS (HOT): Free Stock Analysis Report
MARRIOTT INTL-A (MAR): Free Stock Analysis Report
HILTON WW HLDG (HLT): Free Stock Analysis Report
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