NEW YORK: The buzzword from travel companies for 2024 is “normal”.
After the pandemic slammed the brakes on the tourism industry, and the subsequent years were the era of “revenge travel”, hotel operators Hilton Worldwide and Marriott International and online travel agency Expedia expect demand to grow more slowly this year.
They, along with other travel companies, are forecasting full-year 2024 profits short of the consensus from Wall Street analysts.
That has been a disappointment to investors, as people had been making more room in their spending budgets for vacations and hotel stays.
“We expect travel demand to remain relatively healthy, but we expect growth rates across the world to decelerate,” Expedia chief executive officer Peter Kern told investors on a call.
Marriott told investors that it expects 2024 revenue per available room, a closely watched industry metric for hotels’ top-line performance, to increase between 3% and 5% this year, after nearly 15% growth in 2023.
Similarly, Hilton expects full-year room revenue to rise between 2% and 4% in 2024, down from a 12.6% increase in 2023.
“The rebound impact from the pandemic has waned,” Marriott’s chief executive officer Anthony Capuano told investors on a call.
So far this year, Marriott and Hilton shares have risen 3.4% and 3.3%, respectively, after gains of 51.46% and 44.10% in 2023.
The US hotel industry notched new records for the average daily room rate and revenue per available room, according to commercial real estate analytics firm CoStar, but that may not be repeated this year.
Average US revenue per available room in 2023 was US$97.97, up 4.9% from 2022. Average daily rates rose 4.3% to US$155.62, according to CoStar.
Despite expectations for travel costs to rise 3.5% year-on-year (y-o-y) in 2024, travellers have an average of about 4.9 trips planned per person, a 2% rise above 2019 levels, according to a survey of over 500 US travellers by Jefferies.
Short-term rental company Airbnb forecast first-quarter revenue above Wall Street estimates on Tuesday, as it expects a boost from strong cross-border travel.
However, the company expects the growth rate of nights booked in the quarter to moderate compared with the fourth quarter of 2023. Average daily rates for the quarter are expected to be flat or slightly up y-o-y, the company said.
One laggard for hospitality companies has been China, but the hotel giants were more optimistic about that country’s growth for the coming year as well as rebounding group and business travel.
“For the hotel industry, 2024 will be the first normal year we’ve seen since 2019,” said Patrick Scholes, Truist equity analyst. “The last market still needing to catch up is China.”
Hilton forecast 2024 adjusted profit between US$6.80 and US$6.94 per share, below the analyst consensus for US$7.07, while Marriott’s range was US$9.18 to US$9.52 per share, versus expectations for US$9.69 per share, LSEG data showed.
Airfares are also expected to soften, analysts said, as excess domestic capacity has weakened the pricing power of air carriers.
In January, domestic airfare averaged US$273 per round-trip ticket, up 1.8% from 2023 but down 2.2% from 2019, according to data from travel booking app Hopper. — Reuters