The coronavirus pandemic has been wreaking havoc on the economy. Due to the impacts of the outbreak, the global stock markets are also hitting an all-time low. The NYSE and the S&P 500 have recorded declines of 27.7% and 23.1%, respectively, on a year-to-date basis.
Notably, the pandemic has taken a toll on several industries, including Transportation, Hotels & Motels, Restaurants, Leisure, Auto, Pharma, Electronics, Technology, Cosmetics, and Apparel. The hotel industry primarily has been bearing the brunt of the outbreak as traveling has come to a standstill. Notably, the travel industry is suffering the most in more than 18 years, with lockdowns imposed by the governments in several countries. Hotels across the United States are witnessing unprecedented booking cancellations and closures, with meetings and conferences getting called off, as business travelers are grounded and leisure travelers cannot go for outings.
What Does Hotel RevPAR Suggest?
Per a revised STR report published on Mar 30, the U.S. hotel industry is projected to witness a year-over-year decline of 50.6% in revenue per available room (RevPAR) for 2020 on the impacts of the coronavirus-led crisis. Notably, for the year, the average daily rate (ADR) is expected to decline 13.9%. It is worth noting here that prior to the pandemic, RevPAR for 2020 was projected to be flat — the lowest prediction since the recession of 2009.
Moreover, hotel demand is estimated to fall 51.2% for 2020, while supply is expected to decline 14.9%. Also, occupancy rate is estimated to drop 42.6%.
Notably, for the week between Mar 22 and Mar 28, 2020, occupancy rate recorded a year-over-year decline of 67.5% to 22.6%. In addition, ADR decreased 39.4% to $79.92 and RevPAR fell 80.3% to $18.05. The metrics are likely to decline further in the coming weeks, with the crisis escalating in the United States.
Hotels Stocks Witness Lackluster Price Performance
The aforementioned challenges have already started to get reflected in the price performance of several Zacks Hotels and Motels industry participants. Year to date, shares of the major hoteliers, including Marriot Vacations Worldwide Corporation VAC, Marriott International, Inc. MAR, Wyndham Hotels & Resorts, Inc. WH, Hyatt Hotels Corporation H, and Hilton Worldwide Holdings Inc. HLT, have declined 61.2%, 58.4%, 56.8%, 55.2%, and 47.8%, respectively.
Notably, Marriot Vacations, Hyatt Hotels and Hilton Worldwide currently carry a Zacks Rank #3 (Hold) each, whereas Wyndham Hotels & Resorts has a Zacks Rank #4 (Sell) and Marriott International carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Marriot Vacations already closed its theme parks and ski resorts. Notably, the company decided to close its North America vacation ownership resorts for the next 30 days, effective Mar 25, 2020. Also, in February, Wyndham Hotels & Resorts temporarily shut 1,000 hotels in China, which represents nearly 75% of its operations in the country. In addition, Hilton Worldwide closed roughly 150 hotels in China. Apart from this, several companies, including Marriot Vacations, Hyatt Hotels and Hilton Worldwide Holdings, have withdrawn their previous 2020 guidance on end-market uncertainties, owing to the coronavirus outbreak.
In an effort to tackle the crisis, most companies across the world have already been taking several measures, including cost-reduction plans. However, despite their best efforts, businesses are projected to experience longer and steeper downturns, as drugs and vaccines for coronavirus might take several months to be commercialized.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Marriott International, Inc. (MAR): Free Stock Analysis Report
Hyatt Hotels Corporation (H): Free Stock Analysis Report
Marriot Vacations Worldwide Corporation (VAC): Free Stock Analysis Report
Hilton Worldwide Holdings Inc. (HLT): Free Stock Analysis Report
Wyndham Hotels & Resorts Inc. (WH): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.