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Hotel Industry Headed for Worst Crisis on Coronavirus Fears
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Coronavirus-led crisis has rattled the global stock markets and in turn the world economy. Although, China —the origin of coronavirus pandemic —is gradually normalizing, the rest of the world is still in distress. The outbreak has been wreaking havoc on several industries including Transportation, Leisure, Hotels & Motels, Restaurants, Auto, Pharma, Electronics, Technology, Cosmetics and Apparel.
The hotel industry, especially, has been bearing the brunt of the crisis as traveling has virtually come to a standstill globally. Notably, the travel industry is suffering its worst crisis in more than 18 years. Not only are people avoiding vacations but conferences are also being canceled.
Hotel RevPAR & Demand Falls Sharply
The forecast for 2020 have been revised sharply downward for 2020 owing to the coronavirus-induced panic. Per a STR (formerly known as Smith Travel Research) report, revenue per available room (RevPAR) for 2020 are estimated to witness a steep decrease of 50.6%, while average daily rate (ADR) is anticipated to decline 13.9%. Prior to the coronavirus pandemic, STR had projected flat RevPAR for 2020 —the lowest prediction since recession of 2009.
Moreover, hotel demand for 2020 is projected to decline 51.2%, while supply is likely to decrease 14.9%. Meanwhile, occupancy rate for 2020 is also estimated to drop 42.6%.
For the week of 17-23 March 2019, occupancy decreased 56.4%, while ADR and RevPAR were down 30.2% and 69.5%. With the crisis escalating in the United States, we expect these metrics to decline further in the coming weeks.
Hotels Stocks Witness Steep Declines in Market Cap
Shares of major hoteliers like Hilton Worldwide Holdings Inc. (HLT - Free Report) , Hyatt Hotels Corporation (H - Free Report) , Marriott International, Inc. (MAR - Free Report) , Wyndham Hotels & Resorts, Inc. (WH - Free Report) and Marriott Vacations Worldwide Corporation (VAC - Free Report) have tanked 38.1%, 45.9%, 49.7%, 49.1% and 55.8%, respectively, in the past three months.
Notably, with the coronavirus pandemic showing no signs of letting up, most companies across the world have been scrambling to take measures to tackle the crisis. The companies are focusing on cost cutting measures to tackle the crisis. Despite the best efforts by policymakers, it is getting increasingly difficult for companies to stay afloat amid such trying times.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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Hotel Industry Headed for Worst Crisis on Coronavirus Fears
Coronavirus-led crisis has rattled the global stock markets and in turn the world economy. Although, China —the origin of coronavirus pandemic —is gradually normalizing, the rest of the world is still in distress. The outbreak has been wreaking havoc on several industries including Transportation, Leisure, Hotels & Motels, Restaurants, Auto, Pharma, Electronics, Technology, Cosmetics and Apparel.
The hotel industry, especially, has been bearing the brunt of the crisis as traveling has virtually come to a standstill globally. Notably, the travel industry is suffering its worst crisis in more than 18 years. Not only are people avoiding vacations but conferences are also being canceled.
Hotel RevPAR & Demand Falls Sharply
The forecast for 2020 have been revised sharply downward for 2020 owing to the coronavirus-induced panic. Per a STR (formerly known as Smith Travel Research) report, revenue per available room (RevPAR) for 2020 are estimated to witness a steep decrease of 50.6%, while average daily rate (ADR) is anticipated to decline 13.9%. Prior to the coronavirus pandemic, STR had projected flat RevPAR for 2020 —the lowest prediction since recession of 2009.
Moreover, hotel demand for 2020 is projected to decline 51.2%, while supply is likely to decrease 14.9%. Meanwhile, occupancy rate for 2020 is also estimated to drop 42.6%.
For the week of 17-23 March 2019, occupancy decreased 56.4%, while ADR and RevPAR were down 30.2% and 69.5%. With the crisis escalating in the United States, we expect these metrics to decline further in the coming weeks.
Hotels Stocks Witness Steep Declines in Market Cap
Shares of major hoteliers like Hilton Worldwide Holdings Inc. (HLT - Free Report) , Hyatt Hotels Corporation (H - Free Report) , Marriott International, Inc. (MAR - Free Report) , Wyndham Hotels & Resorts, Inc. (WH - Free Report) and Marriott Vacations Worldwide Corporation (VAC - Free Report) have tanked 38.1%, 45.9%, 49.7%, 49.1% and 55.8%, respectively, in the past three months.
Notably, with the coronavirus pandemic showing no signs of letting up, most companies across the world have been scrambling to take measures to tackle the crisis. The companies are focusing on cost cutting measures to tackle the crisis. Despite the best efforts by policymakers, it is getting increasingly difficult for companies to stay afloat amid such trying times.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2020 today >>