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Airbnb Usage Up 50% According To Survey; Hotel Outlook Lowered

Jim Swanson

An updated analysis indicates that Airbnb could be “a bigger threat to hotels” than had been earlier anticipated, Morgan Stanley’s Thomas Allen said in a report. The forward estimates have been reduced by 1–3 percent, resulting in an average 7 percent downside to the group.

The latest survey indicates that Airbnb's penetration and its cannibalization of traditional hotels has been greater than was estimated in 2015, analyst Allen mentioned. He added that Airbnb could have a 90bps impact on RevPAR growth in 2016, and this impact seems to be growing.

The U.S. RevPAR growth estimates for 2017 and 2018 have been reduced to 0.5 percent and (1.7) percent, respectively, “with EBITDA declining commensurate with each companies' operating leverage,” Allen commented. He also said Airbnb would likely be “one of a number of structural risks” facing the U.S. Lodging industry, which could result in decelerating RevPAR growth, even if the economy improves moderately.

Price Target Reductions

The analyst reduced the price targets for the following Lodging companies:

  • Choice Hotels International Inc (NYSE: CHH): Equal-Weight rating; price target from $48 to $47.
  • Hilton Worldwide Holdings Inc (NYSE: HLT): Overweight; from $25 to $24.
  • Hyatt Hotels Corporation (NYSE: H): Underweight; from $47 to $46.
  • La Quinta Holdings Inc (NYSE: LQ): Equal Weight; from $11 to $10.
  • Marriott International Inc (NASDAQ: MAR): Overweight; from $76 to $74.

The price targets for the following Lodging REITs have been lowered:

  • Host Hotels and Resorts Inc (NYSE: HST): Equal Weight; from $15 to $14.
  • LaSalle Hotel Properties (NYSE: LHO): Equal Weight; from $22 to $21.
  • Xenia Hotels & Resorts Inc (NYSE: XHR): Equal Weight; from $14 to $13.

Allen reiterated an Equal-Weight rating and price target of $15 for Extended Stay America Inc (NYSE: STAY).

Latest Ratings for HLT

Date Firm Action From To
Sep 2016 Bernstein Initiates Coverage on Market Perform
Aug 2016 Citigroup Maintains Buy
Jul 2016 Deutsche Bank Maintains Buy

View More Analyst Ratings for HLT
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