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A sequential rather than YoY look at RevPAR suggested it was only a matter of time before RevPAR disappointed.

MAR announced today that worldwide Q1 RevPAR would fall at the bottom of the 7-9% guidance range due to only 5-6% RevPAR in North America.  MAR had previously guided to 6-8% for North America.  Although not cited by the company, weather probably played a part.  However, as we wrote about in "DISAPPOINTING JAN REVPAR" (02/28/11), we were already worried about Q1 RevPAR given that Q4 dollar RevPAR suggested close to a 10% YoY increase in the upper upscale segment.

We already thought the hotel companies would have to bring down full year RevPAR guidance.  Q2/Q3 is particularly troublesome given the big spike in seasonally adjusted RevPAR in April-July of 2010 which we attribute to pent up business travel demand.  As the following chart shows, RevPAR could actually go negative in June and/or July.  This is not a macroeconomic call.  It is a math call.  Year over year comparisons are not relevant due to the extreme volatility experienced in the sector for three years.

MAR DELIVERS AN EARLY BLOW TO THE HOTEL BULLS - UUP

Despite the recent fall in lodging stock prices, valuations suggest investors still believe there is upside to estimates.  However, the math suggests otherwise.  At best, we think the lodgers may hit the bottom end of their guidance ranges due to margin control.  More likely, Q2 and Q3 estimates need to be reduced.  The Q1 conference calls in late April should be telling.