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Lodging REITs Witness Robust Post-Pandemic Rebound in Demand
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The coronavirus outbreak has deeply affected the operations of the hotel and lodging industry. However, with the effect of the pandemic waning and widespread vaccination drives, this industry is on its pathway to recovery.
As a result, lodging real estate investment trusts (REITs) are experiencing a rise in demand for their properties, with leisure travel to drive-in destinations increasing. Also, business transient and group demand in the urban markets have been improving.
Notably, REITs like Host Hotels & Resorts, Inc. (HST - Free Report) , Pebblebrook Hotel Trust (PEB - Free Report) and Park Hotels & Resorts, Inc. (PK - Free Report) have started witnessing an improvement in their operating trend, with most metrics nearing or surpassing the pre-pandemic levels.
In the second quarter of 2022, Host Hotels’ all-owned-hotel revenue per available room (RevPAR) of $219.3 million almost doubled from the prior-year quarter’s $110.7 million. It was also the first time since the onset of the pandemic that the company’s quarterly RevPAR exceeded the 2019 levels.
HST’s all-owned-hotel average occupancy percentage in the second quarter remained strong at 73.9%, rising from the prior-year quarter’s 44.9%. Further, average occupancy was close to 81.8% recorded in second-quarter 2019.
Pebblebrook, too, has been benefiting from the recovery in travel demand. Per the company’s recent operating update, its estimated operating results for August, despite a normal back-to-school seasonality, were in line with its expectations owing to the recovery in business demand and strong rate premiums.
With many companies implementing a return-to-office policy, business transient and group demand have picked pace. Per PEB’s latest operating update, face-to-face meetings are receiving a boost, and companies are actively booking their business travel for the remainder of 2022. However, the demand for this segment is yet to reach the pre-pandemic levels.
As restrictions started declining across the United States, Park Hotels, too, started experiencing improvement in demand from mid-February 2022, with its urban hotels witnessing a return in business travel and group demand.
In June 2022, group bookings for PK’s properties for the remainder of 2022 and 2023 continued to gain, with the addition of around 100,000 room nights compared with May 2022.
Per Thomas J. Baltimore, Jr., chairman and CEO of PK, “Leisure demand remains strong in our Hawaii, Florida and Puerto Rico markets, while business transient and group demand continue to strengthen, helping to drive average rates at our urban hotels above 2019 levels by over 2% and group rates to 2019 levels during the second quarter.”
Further, we anticipate that the upcoming holiday season will be a catalyst for lodging REITs like HST, PEB and PK.
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Lodging REITs Witness Robust Post-Pandemic Rebound in Demand
The coronavirus outbreak has deeply affected the operations of the hotel and lodging industry. However, with the effect of the pandemic waning and widespread vaccination drives, this industry is on its pathway to recovery.
As a result, lodging real estate investment trusts (REITs) are experiencing a rise in demand for their properties, with leisure travel to drive-in destinations increasing. Also, business transient and group demand in the urban markets have been improving.
Notably, REITs like Host Hotels & Resorts, Inc. (HST - Free Report) , Pebblebrook Hotel Trust (PEB - Free Report) and Park Hotels & Resorts, Inc. (PK - Free Report) have started witnessing an improvement in their operating trend, with most metrics nearing or surpassing the pre-pandemic levels.
In the second quarter of 2022, Host Hotels’ all-owned-hotel revenue per available room (RevPAR) of $219.3 million almost doubled from the prior-year quarter’s $110.7 million. It was also the first time since the onset of the pandemic that the company’s quarterly RevPAR exceeded the 2019 levels.
HST’s all-owned-hotel average occupancy percentage in the second quarter remained strong at 73.9%, rising from the prior-year quarter’s 44.9%. Further, average occupancy was close to 81.8% recorded in second-quarter 2019.
Pebblebrook, too, has been benefiting from the recovery in travel demand. Per the company’s recent operating update, its estimated operating results for August, despite a normal back-to-school seasonality, were in line with its expectations owing to the recovery in business demand and strong rate premiums.
With many companies implementing a return-to-office policy, business transient and group demand have picked pace. Per PEB’s latest operating update, face-to-face meetings are receiving a boost, and companies are actively booking their business travel for the remainder of 2022. However, the demand for this segment is yet to reach the pre-pandemic levels.
As restrictions started declining across the United States, Park Hotels, too, started experiencing improvement in demand from mid-February 2022, with its urban hotels witnessing a return in business travel and group demand.
In June 2022, group bookings for PK’s properties for the remainder of 2022 and 2023 continued to gain, with the addition of around 100,000 room nights compared with May 2022.
Per Thomas J. Baltimore, Jr., chairman and CEO of PK, “Leisure demand remains strong in our Hawaii, Florida and Puerto Rico markets, while business transient and group demand continue to strengthen, helping to drive average rates at our urban hotels above 2019 levels by over 2% and group rates to 2019 levels during the second quarter.”
Further, we anticipate that the upcoming holiday season will be a catalyst for lodging REITs like HST, PEB and PK.