INTERCONTINENTAL HOTEL GROUP was one of the first major hotel companies to report its third quarter earnings, and the news was not all good. As more earnings calls are planned for the coming weeks, some analysts are expecting an even more subdued end to 2019.
IHG reported a 0.8 percent drop in RevPAR for the third quarter, blaming the trade war between the U.S. and China as at least one reason, along with the political unrest in Hong Kong. Nevertheless, the company grew 4.7 percent to more than 860,000 rooms and expects to top 5 percent growth by year’s end.
“Our continued strategic focus on driving net rooms growth enabled us to deliver a 4.7 percent increase in net system size despite a strong comparable,” IHG CEO Keith Barr said in the Oct. 18 earnings call. “This will accelerate in the coming quarter and we are on track to deliver industry leading net system growth over the medium term.”
Barr also said the company received its first franchise applications for its new midscale Atwell Suites brand. It opened 13,000 rooms and signed another 25,000 during the quarter.
Hilton Worldwide Holdings is expected to announce its third quarter earnings today, while Marriott International will announce its on Nov. 4. Hersha Hospitality Trust will announce its third quarter earnings in a call Nov. 5 hosted by brothers CEO Jay Shah and President and COO Neil Shah.
Bank of America Merrill Lynch predicted RevPAR for the U.S. overall to rise 0.7 percent in the third quarter, compared to the 1.1 percent rise seen in the second quarter and the 1.5 percent rise in the first quarter.
“We expect a measured tone this earnings season and still see risk of guidance cuts despite 9 out of 14 having already done so last quarter,” BAML analyst Shaun Kelly said.
The firm was expecting Hilton to announce a preliminary 2020 outlook of an up to 2 percent rise in RevPAR and 6 percent net unit growth. “While fourth quarter guidance may be tepid, we still think it’s enough to hold its 2019 full year guide of up 1-2 percent,” Kelly said.
STR reported a 0.1 percent slide in occupancy for U.S. hotels in the third quarter with 70.9 percent average. At the same time, ADR rose 0.8 percent to $133.25 and RevPAR rose 0.7 percent to $94.42.