Upbeat Expectations for 2023

The DJIA rose 30 points while Nasdaq was up 86, the S&P 500 rose 13 points and the 10-year treasury yield was down .01 to 3.41%. Lodging stocks were mixed. VCSA was up 6%, SOND was up 5% while AINC was down -5%.

Truist reported on a call they held with the CEO of hotelAVE. The takeaways included that they saw leisure demand start to slow in May while group and corporate recovery is now benefiting from urban and convention hotels. For next year, hotelAVE is expecting group and corporate growth to exceed 2019 levels with corporate at 85% of 2019 levels. Group demand could grow 18% year over year and corporate at 15%. They are expecting a leisure decline of about -5% year over year. ADR will continue to grow with group up 5% and corporate up 10%, making up for an expected flat leisure ADR. As for supply growth, hotelAVE does not see much of it through 2027. There are 20% fewer rooms under construction as of June 2022 versus June 2021 and 11% fewer rooms in the planning stage. 1.2% CAGR is the growth they expect over the next 5 years, well below the 1.8% long term average CAGR. Upscale and Midscale are forecasted to represent higher growth rates of 2.8% and 2.3% in 2023 and 2.8% and 2.6% in 2024.

JP Morgan reported on meetings held with Wyndham Hotels’ CEO and SVP, IR. JPM said the meetings were generally upbeat, reflective of strong demand and pricing trends as well as steady new development and conversion signings. JPM said the new Project Echo extended stay brand, tuck-in franchise acquisitions and continued execution on improving retention should allow WH to accelerate its footprint growth over the next few years. With WH’s 99%