In preparation for HOT FQ4 2013 earnings release tomorrow, we’ve put together the recent pertinent forward looking company commentary.
TRANSIENT
- Transient revenues have been growing at an 8% to 9% clip each quarter, powered by corporate and high-end leisure travel
GROUP
- Group pace remains in the mid single-digits expect rate increases in the mid-to-high single-digits for the next year from corporate rate negotiations now underway.
- Group revenue growth has been slower but steady at around 3% to 4%. Corporate groups generally smaller are the primary driver while larger groups, in particular, association and government business, have been slow to return.
NA
- North America should continue to perform at or above our 5% to 6% worldwide company-operated REVPAR outlook range in the fourth quarter. There could be some impact from the recent government shutdown.
- Assume that North American trends stay roughly where they are.
GOVERNMENT
- See some decline in government demand in the quarter, thanks to the U.S. sequester, but government demand is less than 2% of our North American business. Were relieved that the impasse was resolved and it should not meaningfully affect the fourth quarter. Post D.C. debacle, see positive signs in both transient and group demand.
EUROPE
- Europe is also showing very little new supply
- Had a good summer in Spain and Italy with mid single-digit growth and double-digit growth across most of Eastern Europe. Central Europe has been a soft spot. Expect these trends to continue into Q4.
CHINA/SOUTHEAST
- Assume that current trends will continue in China with REVPAR growth in the 2% range.
- It's true that the Chinese economy still seems to be decelerating, but to put that into perspective, occupancy in China was up 3% points across the same-store footprint that was 35% larger than last year.
- In the east and south where local economies are more diversified, growth has been better than in the north and west, which are more government dependent.
- Expect continued strength in Southeast Asia and REVPAR growth for the region in the upper half of our global REVPAR outlook range
MIDDLE EAST/AFRICA
- Do not expect the situation in Egypt or Syria to improve anytime soon, so this trend is likely to persist in the near term. Volatility is par for the course in some of these markets, with sharp recoveries once local conditions return to some normalcy. Are bullish about long-term potential in sub-Saharan Africa, which has many of the fastest-growing economies in the world today.
LATIN AMERICA
- Expect some pickup in REVPAR growth in Q4, mainly from Mexico.
- Brazil, however, has been slowing. Business in Brazil is further affected by major renovations currently underway.
- Argentina is finally growing REVPAR again.
RENOVATION
- Nearing the end of our work at the St. Regis New York and the Westin Maui; plan to have the Sheraton Rio ready in time for next summer's World Cup. Overall, expect to begin tapering our renovation CapEX in 2014.
COSTS
- Marketing and sales costs remain low
- Adjusted for these nonrecurring expenses, SG&A growth remained well under control at 2% to 3%.
SHARE BUYBACK/DIVIDEND
- (10/31/2013) Company’s share repurchase authorization has increased by an additional $250 million. As of October 30, 2013, the total amount available under the authorization is approximately $614 million.
- Bought over $250 million in stock, and will soon pay an annual cash dividend of $1.35 per share.
