• It's Here!

    Etf Pro

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

  • It's Coming...

    MARKET EDGES

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

Takeaway: We think Q1 is shaping up better for the lodging sector than guidance

In an effort to evaluate performance and as a follow up to our YouTube, we compare how the quarter measured up to previous management commentary and guidance

OVERALL

  • IN-LINE - Quarter was in-line and guidance was roughly in-line although the midpoint was a little below Q1 and 2013 consensus, respectively.  However, we think management is being conservative and our research shows stronger Q1 RevPAR.

MAR 4Q REPORT CARD - mar2

4Q NORTH AMERICAN REVPAR

  • SAME:  4Q REVPAR in North America came in at 5.9%, in-line with its 5-7% guidance range.
  • PREVIOUSLY: "We expect REVPAR to remain strong in North America even as we shift from a leisure-heavy quarter to one more driven by business travel. Our fourth quarter guidance reflects 5% to 7% growth in system-wide REVPAR in North America. While our group booking pace is up nearly 9%, the fourth quarter includes a U.S. Presidential Election Week and a midweek Halloween, both of which will likely temper last-minute business-related demand in the quarter."

GOVERNMENT BUSINESS 

  • SAME:  Government has been much more cautious on travel and F&B spending.  If sequestration goes through, cuts will be more severe.
  • PREVIOUSLY: "Better understood as the continued government pressure to cut cost by focusing on travel, the GSA recently announced flat government per diems for 2013. Fortunately, at many full-service hotels in the United States, business is strong enough that we will probably replace this government business with other customers paying higher rates." 

DC MARKET

  • WORSE:  Inauguration impact on January REVPAR was less than one point of REVPAR.
  • PREVIOUSLY: "In Washington, we expect occupancy rates to increase in 2013 as the politicians and lobbyists get back to the city. We estimate that the inauguration alone should increase annual REVPAR growth in the Downtown D.C. market by 150 to 200 basis points. With this strong Downtown performance, we expect REVPAR for Greater D.C. to grow at a mid single-digit rate in 2013. You may recall that roughly 5% of our North American room distribution is in the D.C. area."

GROUP BOOKINGS IN NA

  • WORSE:  2013 Group bookings in North America are up 6% with room rates up 4%.   70% of 2013 group nights have been booked (unchanged YoY) for the MAR brand.
  • PREVIOUSLY: "Our group booking pace for the North American company-operated Marriott brand for 2013 is up over 7%, with nearly 4% improvement in room rates over a strong 2012. Meeting planners and transient guests are booking earlier, and some customers are requesting multiple-year contracts. Given this climate, we are targeting corporate negotiated rates to increase at a high single-digit rate in 2013. In short, we expect North America to be steady as she goes. North America represents about 75% of our annual fee revenue."

EUROPEAN OUTLOOK

  • SAME: Expects flattish REVPAR in Europe in 1Q 2013 and for 2013.
  • PREVIOUSLY: "In Europe, the big 2013 story will likely continue to be the economy as many countries struggle with sovereign debt burdens, austerity programs, and modest economic growth. We will also face tough comparisons to many 2012 special events including the Olympics, the Euro Cup Championship, and a record-breaking 2012 fair schedule in Germany. Given all this, we are expecting flattish constant dollar REVPAR performance in our European hotels in 2013."

ASIA OUTLOOK

  • SAME:  Expects 1Q REVPAR to increase at a mid-single digit growth, which will strengthen a few points as the year progresses.  New supply will continue to pressure REVPAR growth.
  • PREVIOUSLY: "In Asia, in addition to more moderate GDP growth, 2013 REVPAR should reflect significant supply growth in a few markets and slower inbound traffic from Europe. Overall... we expect REVPAR in the Asia Pacific region will increase at a mid to high single-digit rate on a constant dollar basis in 2013."

CARIBBEAN AND LATIN AMERICA OUTLOOK

  • BETTER: Expects 1Q REVPAR to increase at a mid-single-digit rate, improving to high single-digit rate for FY 2013
  • PREVIOUSLY: "In 2013, the Caribbean and Latin American market should benefit from economic growth throughout the region, stronger leisure business in the Caribbean, and a newly renovated hotel for us in São Paulo. Here, we are targeting constant dollar REVPAR growth in the region will increase at a mid single-digit rate."

INCENTIVE FEE GROWTH IN 4Q

  • BETTER:  Worldwide incentive fees were up 22%.  North America incentive fees rose 32% largely due to strong results from Boston and New York.  Full-service fees are particularly robust.  
  • PREVIOUSLY: "When you look at fourth quarter, I suspect we'll see incentive fee growth at lower rates than we've experienced in Q3, and that's fundamentally can be driven by that 3%-ish REVPAR expectation for international hotels in Q4."

SHARE REPURCHASE

  • SLIGHTLY BETTER:  MAR repurchased 31.2 million shares of the company's common stock for $1.2 billion plus dividends 
  • PREVIOUSLY: "We expect to return roughly $1.1 billion in share repurchases and dividends in 2012."