Morgan Stanley Flags Headwinds for Hotel Companies

25.08.2023 - 13:20 / skift.com / North America / Sean Oneill / Morgan Stanley

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Pebblebrook Hotel Trust, a real estate investment trust,released its monthly update and it was something of a warning. The company, which operates many hotels in North America, said weekend leisure travel has been weaker than expected, partly because of cooler weather in Southern California and the Pacific Northwest along with some tightening of the belts on demand for suites/premium rooms. The company expected its second-quarter revenue to fall slightly below its outlook. As for what to think, CEO Jon Bortz has bought 43,000 more shares on the open market since June 20.

Analysts for investment bank Morgan Stanley chopped their price targets on several lodging companies. They cut Pebblebrook Hotel Trust’s from $13 to $12 and their advice on larger peer Host Hotels from “equal weight” to “underweight.”

For the large hotel groups, the investment bank believes most of the companies’ results are trending below 2Q consensus but that international trends should act as an offset for several of them. It lowered its target on Hilton to $163, from $166, cut Hyatt’s from $142 to $136, cut Choice Hotels from $134 to $127, and cut Wyndham from $92 to $80.

The Wall Street Journal said Ty Warner and Four Seasons are getting closer to resolving their differences and the Four Seasons in Midtown Manhattan may actually reopen soon. Due to the pandemic and contract dispute, the hotel has been closed for three years.

Four Seasons and Ty Warner’s negotiations could also affect what happens at the Plaza Hotel, a few blocks away. Four Seasons and Raffles Hotels & Resorts brands are said to be the finalists to take over management of the Plaza. If the Four Seasons Midtown reopens, then Raffles is expected to get the win at the Plaza. For more, read “Two of New York’s Most Famous Hotels Plan Their Postpandemic Comebacks.”

Meanwhile, in New York City’s Times Square, Tempo by Hilton will debut with the opening of the 661-room Tempo by Hilton Times Square New York City. The property will occupy 36 floors of the soon-to-be-opened 46-story, mixed-use TSX Broadway building. There will be 31 Ball Drop rooms, guest rooms that offer up-close-and-personal views of the Times Square Ball. Relatedly, The 45 Times Square Hotel announced its June 2023 opening in the heart of Manhattan, New York. Ferrado Hotels own the property. The 139-room hotel will be converted into Palladium’s Only YOU Hotels.

Accor, the giant operator of 46 hotel brands including Novotel and ibis, plans to open more than 1,200 hotels in the next five years, increasing