Marriott, Hilton, Hyatt: What This Top Analyst Sees For 2024

03.01.2024 - 18:49 / skift.com / Marriott Bonvoy / Sean Oneill / Marriott International / David Katz

The 2024 prospects for Marriott, Hilton, Hyatt, and Wyndham look bright. That’s according to a report released on Tuesday by David Katz, a managing director at Jefferies Research.

Katz is one of the leading research analysts covering the major hotel groups. He offered an updated view of the underlying factors that may drive the performance of the major hotel companies this year.

Here are key takeaways from Jefferies’ 5,000-word report.

If interest rates fall (as many expect), that could favor hotel groups. As banks become willing to underwrite more loans and loan terms become more attractive, more business people will seek to do deals — expanding hotel group pipelines.

Yet Katz said a critical question is “whether revenue per available room growth can continue to exceed cost inflation, notably driven by labor, utilities, and other services.” The answer is hard to predict. Katz is cautiously forecasting modest growth in room rates in 2024, with overall average occupancy rates to edge back to pre-pandemic levels by 2025.

Barring a surprise, the U.S. economy will likely experience only a mild recession in 2024 or none at all, according to two-thirds of economists surveyed by Bloomberg. Jefferies has a similar forecast for Europe.

Katz argued that the travel lodging industry’s fundamentals are mixed.

On the positive side, demand for corporate events and other large groups appears set to remain a growth driver in 2024.

On the negative side, business travel is recovering more gradually than many expected, with large corporations likely to still lag behind 2019 levels this year. It’s also hard to see if vacationers will keep spending on travel to the same degree they did in the past two years. Plus, unfavorable exchange rates and visa policy snafus have dampened the recovery of international travel.

Marriott has a “strong growth outlook” in 2024, Katz said, referring to revenue and earnings.

The company’s management has guided investors to expect a two-year compound annual growth rate of revenue per available room in the range of 3% to 6% for 2024 to 2025 and a similar rate for its hotel development of at least 5% through 2025. Katz said those growth rates “reflect international markets that will outperform its more mature U.S. market.

In 2024, Marriott will begin a licensing partnership with MGM Resorts that should expand its group business. The deal will let Marriott Bonvoy loyalty members earn points when staying at 17 MGM resorts, which could make the loyalty program more popular and eventually encourage more hotel owners to flag their properties with Marriott’s brands. 

Hilton’s introduction of a few brands in recent years is a leading driver of growth for this hotelier, according to Katz. The