Host Hotels & Resorts is due to report third-quarter results after the market closes, with analysts expecting a marked sequential decline following a strong summer quarter. The lodging real estate investment trust’s results are expected to test its ability to sustain pricing and demand as the hotel industry moves into the slower fall season.
Wall Street forecasts earnings of 9 cents per share on revenue of $1.35 billion for the quarter ended in September. That compares with 35 cents per share and $1.64 billion in revenue in the second quarter, reflecting the typical seasonal slowdown after the peak summer travel period.
Expectations have improved in recent weeks: earnings-per-share estimates rose 25.52% over the past 60 days, although they were unchanged over the past week. Analysts have a consensus buy rating and an average price target of $25.87, close to the share price of $25.78 cited ahead of the report. Wells Fargo recently raised its target to $27, while Baird, Barclays and Morgan Stanley also increased their targets in October.
Investors are expected to assess whether Host Hotels maintained pricing power across its luxury and upper-upscale properties during the shoulder season. Recent industry data cited in the report points to average daily rates in the premium hotel segment performing better than expected, supported by leisure travel and a gradual recovery in corporate travel.
Room revenue trends and the balance between business and leisure guests will also be in focus. Corporate travel is estimated to have recovered to around 85% to 90% of pre-pandemic levels. Meanwhile, rising wages, staffing constraints and higher interest rates are weighing on operators, making the company’s ability to protect margins another concern. Year-over-year revenue growth is expected to be modest, at 1.5%.
Host Hotels beat expectations in the second quarter, delivering a 6% earnings surprise and nearly 2% higher revenue than forecast. Management had also raised its full-year guidance for revenue per available room growth to as much as 4.5%; any changes to that outlook could influence the shares.
Sources: Investing.com News.