Citadel Securities on Lodging, Gaming, and Leisure: RevPAR Deceleration Taking Hold
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Rating Summary:
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Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
Rating Summary:
18 Buy, 17 Hold, 2 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Citadel Securities on Lodging, Gaming, and Leisure: RevPARtee: STR Lodging Data W/E 8/6/11; 4.8% - RevPAR Deceleration Taking Hold
Citadel analyst said, "As we have been writing in our weekly RevPAR report over the last several weeks, it has been our view that RevPAR growth would begin to decelerate in 2H11. This is a function of two things: 1) Increasingly tougher YoY comps as we move into 2H11 (a quick look at any RevPAR graph would highlight this, see Exhibits 2-5); and 2) sharply reduced GDP growth in 1H11, coupled with the recent sell-off in the equity markets, is likely to further degrade consumer confidence - and thereby potentially undermining room demand. We have long been skeptical of the high single-digit RevPAR forecasts bandied about over the past several quarters by companies, analysts and industry pundits. Rather, we have taken a more conservative outlook using ~5% YoY RevPAR forecasts in our models through 2013 - with few exceptions."
"Just because RevPAR growth may decelerate below some overly-optimistic
prognostications, it doesn't necessarily mean that investors should sell all lodging stocks. In fact, with many lodging stocks now trading at less than 10x 2012 estimates, against the backdrop of nearly 0% short-term interest rates, we think there are many attractive names to pursue. We particularly like Hyatt (NYSE: H), Hospitality Properties Trust (NYSE: HPT), Ashford Hospitality Trust (NYSE: AHT) and Sunstone Hotel Investors (NYSE: SHO) at current levels."
Citadel analyst said, "As we have been writing in our weekly RevPAR report over the last several weeks, it has been our view that RevPAR growth would begin to decelerate in 2H11. This is a function of two things: 1) Increasingly tougher YoY comps as we move into 2H11 (a quick look at any RevPAR graph would highlight this, see Exhibits 2-5); and 2) sharply reduced GDP growth in 1H11, coupled with the recent sell-off in the equity markets, is likely to further degrade consumer confidence - and thereby potentially undermining room demand. We have long been skeptical of the high single-digit RevPAR forecasts bandied about over the past several quarters by companies, analysts and industry pundits. Rather, we have taken a more conservative outlook using ~5% YoY RevPAR forecasts in our models through 2013 - with few exceptions."
"Just because RevPAR growth may decelerate below some overly-optimistic
prognostications, it doesn't necessarily mean that investors should sell all lodging stocks. In fact, with many lodging stocks now trading at less than 10x 2012 estimates, against the backdrop of nearly 0% short-term interest rates, we think there are many attractive names to pursue. We particularly like Hyatt (NYSE: H), Hospitality Properties Trust (NYSE: HPT), Ashford Hospitality Trust (NYSE: AHT) and Sunstone Hotel Investors (NYSE: SHO) at current levels."
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