Hotel REITs: Airbnb's WeWork Problem



  • Hotel industry performance, inexorably linked to key economic indicators like job growth and corporate profitability, has softened over the last quarter amid signs of a clear slowdown in global growth.
  • Industry forecasts for the rest of 2019 have been revised meaningfully lower by all of the leading research providers. RevPAR is now expected to grow just 1% this year.
  • Guidance cuts were the name of the game for Hotel REITs in 2Q with more than half the companies in our coverage lowering full-year RevPAR and FFO expectations.
  • Hiding in the shadows of the recent WeWork drama has been a similar venture-capital-backed "real estate technology" company, Airbnb, which shares more than a few parallels to WeWork.
  • The dire projections of Airbnb crushing the traditional hotel industry have not come to fruition and we foresee Airbnb facing similar scrutiny as WeWork if it proceeded with IPO plans.
  • This idea was discussed in more depth with members of my private investing community, iREIT on Alpha. Get started today »

REIT Rankings: Hotels

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Hotel & Lodging REIT Sector Overview

Within the Hoya Capital Hotel REIT Index, we track the 15 largest hotel REITs, which account for roughly $50 billion in market value: Host Hotels & Resorts (HST), Park Hotels & Resorts (PK), Ryman Hospitality Properties (RHP), Hospitality Properties Trust (HPT), Apple Hospitality REIT (APLE), Pebblebrook Hotel Trust (PEB), RLJ Lodging Trust (RLJ), Xenia Hotels & Resorts (XHR), Sunstone Hotel Investors (SHO), DiamondRock Hospitality Company (DRH), Summit Hotel Properties (INN), Chatham Lodging Trust (CLDT), CorePoint Lodging (CPLG), Hersha Hospitality (HT), and Ashford Hospitality Trust (AHT).

hotel REITs

Hotel REITs comprise roughly 5% of the broad-based REIT ETFs (VNQ and IYR). In the US, there are roughly 5 million hotel rooms across 50,000 individual hotel properties. The hotel ownership business is a highly fragmented industry with hotel REITs owning less than 5% of all hotel assets across the United States. Hotel occupancy tends to peak in August and bottom in January with guests paying an average daily rate of roughly $125 per night. Properties are typically segmented into "full-service" or "select service" categories and in general, public REITs portfolios tend to be concentrated in the higher-quality end of the spectrum and own primarily full-service hotels in coastal urban markets or resorts. As a result, hotel REITs are more

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Readers should understand that investing involves risk and loss of principal is possible. Investments in real estate companies and/or housing industry companies involve unique risks, as do investments in ETFs. The information presented does not reflect the performance of any fund or other account managed or serviced by Hoya Capital. An investor cannot invest directly in an index and index performance does not reflect the deduction of any fees, expenses or taxes.

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Disclosure: I am/we are long VNQ, HST, SHO, PK. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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