• It's Here!

    Etf Pro

    Get the big financial market moves right, bullish or bearish with Hedgeye’s ETF Pro.

  • It's Here


    Identify global risks and opportunities with essential macro intel using Hedgeye’s Market Edges.

In preparation for HOT's Q3 earnings release tomorrow, we’ve put together the pertinent forward looking commentary from HOT’s Q2 earnings release/call and subsequent conferences.



  • “We are in the middle of a very sharp recovery from what is being described as the worst downturn in our industry since the Great Depression.”
  • “We are in the end primarily a business-to-business enterprise. 75% of our business comes from corporations. As long as the expectations for corporate profits is good, we expect that corporate travel will stay good.”
  • “If you look at where occupancies are today, they’re approaching where they were at peak levels. I think in the second quarter, for example, the occupancies in our owned hotels were within 150 basis points of absolute peak levels.”
  • “We now expect rate to be the driver of RevPAR as we go forward, that’s not atypical in the cycle. This year will be 70, 80% of our RevPAR growth coming from occupancy as we get into next year. That may shift more towards rate.”





  • “For the first time in two years, total group business on the books is in positive territory.”
  • “New leads were up 20% and rates for 2010 bookings were up 16%.”
  • “North American properties saw occupancy above 71% in the quarter, with midweek levels in June for New York, Boston and Chicago over 90%. So it’s not a surprise that ADRs [average daily rates] are up roughly 5% in North America for June and July. And in London, June midweek occupancies were 98%, with Paris and Rome at 92%.”
  • “Asia continued its sharp recovery track…China once again led the charge with growth of 46%. Rate was up 7% and occupancy was up 10 points. RevPAR growth was around 14% in India, Australia and the rest of Asia, more than offsetting weakness in Thailand,  which was down 6% due to the political crisis. Even Japan, which has been sluggish to date, was up in the double digits driven by occupancy gains. This recovery trend continues into July but comparisons get a lot tougher. Between Q2 and Q3 2009, RevPAR at company-operated hotels in Asia improved by 800 basis points, and by another 1200 basis points between Q3 and Q4. So despite the strong demand trends, on a year-over-year basis the rate of growth will slow down.”
  • “RevPAR growth accelerated during the quarter from 12.6% in April to 14.6% in June as rate turned positive in May and was up 5% in June.”
  • “The tone of business remains strong in North America as we enter Q3. Short-term booking trends as well as conversations with customers about future plans remain positive. In the year, net group production is running at three times last year’s depressed levels.”

 Guidance/Forward looking commentary

  • “Over time, the real driver of cost is head count, which is flat in the quarter and will remain flat through 2011.”
  • “While Q3 business demand is strong, it is important to point out again that comparisons get a lot tougher. In 2009, RevPAR at company-operated hotels improved 700 basis points between Q2 and Q3, and by over a thousand basis points between Q3 and Q4. As such, year-over-year RevPAR revenue growth will be lower in Q3 and Q4 than it was in Q2, even as absolute levels of RevPAR continue to rise.”
  • “The trajectory of recovery is slower in Europe than in the U.S., and the weaker euro adds an additional headwind to reported numbers. As we enter Q3, we expect some benefit from the weaker euro at our owned hotels in Italy. However, the timing of Ramadan will hurt business originating from the Middle East. The euro was at 142 in Q3 last year, versus 125 to 130 today, further impacting numbers as reported in dollars.”
  • “As we enter Q3 conditions will remain challenged in the Gulf, stronger in Egypt and the rest of Africa, but Ramadan will affect August.”
  • “In Latin America, strong growth in the south and Mexico – Mexican H1N1 impact last year resulted in RevPAR up 30%. Argentina grew 44% and Brazil 32%. In Mexico business travel is recovering, but results have been hit by drug-related crime concerns. These trends remain intact as we enter Q3. This quarter we will lack the significant impact from H1N1 we saw in South America last year.”
  • “We expect the margin improvement trend to continue into the back half, with operating margins increasing 100 to 150 basis points worldwide.”
  • “SG&A will be up again in the 10 to 12% range. We made deep and what we believe are sustainable cuts in SG&A last year, and we remain determined to maintain them.”
  • “In our vacation ownership business, which is our most consumer-dependent enterprise, the tone of business is best described as sluggish. Customer propensity to tour is lower, close rates are stable, and pricing is lower due to our reductions as well as mix…With consumer confidence declining, we do not expect these trends to improve in the second half.
  • “We expect 8 to 10% local currency RevPAR growth in Q3 at company-operated hotels. Exchange rates will be a headwind, reducing dollar-reported RevPAR growth to 5 to 7%. The FX impact will remain a headwind in Q4 too. For the full year, we are raising constant-dollar RevPAR growth to 7 to 9%, 200 basis points above our prior expectations, and 6 to 8% as reported in dollars. Our full-year EBITDA expectations have also increased to a range of 815 to 845 million.”
  • “We are working on the securitization of vacation ownership receivables, market conditions are favorable, and assuming they stay that way, we should get a deal done in Q3.”
  • Q: “If I look at your guidance for the second half of the year it seems to imply RevPAR growth up in the 7% range for the fourth quarter, but EBITDA growth of kind of up 1 to 3 or 4%. Am I missing something on that?”
    • A: “There’s some comparison issues relative to last year, as you said, asset sale differences. Second, it doesn’t underestimate the impact of a significant move in FX YoY, compared to last year. We also have the SG&A incentive comp deltas from last year that we’ve talked to you about. So you put those together and it does explain a big chunk of that.”