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Below is a complimentary excerpt from a institutional research note from our Gaming, Lodging, and Leisure (GLL) analysts Todd Jordan and Sean Jenkins. If you are an institutional investor interested in accessing our research email sales@hedgeye.com |
Over the last month or so, and particularly this week, we have been hitting on the theme of business vs leisure travel, and the fact that the only credible recovery case in the lodging industry, is for leisure travel.
We wouldn’t necessarily justify the leisure travel improvement as outright bullish, but the delta between leisure and business, has been consistently bullish (widening) since RevPAR data started to turn higher.
The below chart is another example of this phenomenon, showing the 4-wk moving average of RevPAR growth for Top 25 markets we deemed to be “leisure” and “business.”
The spread between those leisure markets and their growth (equal weight for all segments), has blown out from where it was just a month ago, as the leisure season has kicked into gear, but the business travel activity has failed to get moving.
We expect this spread to continue to widen, and it will be trend that the likes of the Full Service REITs and the C-Corps w/ business travel exposure (MAR, HLT, H) will be the ones feeling the pain. We remain largely negative on the lodging complex with few exceptions, but reiterate our short calls on MAR, PK, and XHR.
FYI, “leisure” markets = markets in the Top 25 where the midweek (Mon-Thurs) Average Daily Rates sell at a discount to the weekend (Fri-Sat) on a TTM basis; “business” markets = the inverse.
