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A Review of Q4 2016 Earnings

Posted by Lodging Staff on March 01, 2017

After a successful strong Q4, Wyndham is confident about its growth in 2017. Choice Hotels is focusing its attention on upscale brands and growth across Europe. And despite a slow Q4, Marriott has a strong pipeline for this year. For a roundup of all Q4 earnings reports from the industry’s biggest companies, click here.

Analysts at Lodging Econometrics (LE) report that at year-end 2016, Marriott had the largest pipeline in the country of any franchise company with 1,301 projects/167,641 rooms. Since its acquisition of Starwood Hotels & Resorts, Marriott has added 10 full-service brands boosting its U.S. portfolio to 25 brands and increasing its total pipeline room count by 35 percent. Their largest brand in the pipeline is Fairfield Inn which has 297 projects/28,284 rooms.

Of the total pipeline, Marriott has the most projects of any franchise company under construction with 471 projects/65,924 rooms, representing over 30 percent of all projects under construction in the U.S. Additionally, they have the most projects scheduled to start construction in the next 12 months with 705 projects/85,902 rooms. Marriott also has 125 projects/167,641 rooms in early planning.

In the 4th quarter, Marriott had 86 projects start construction and announced 197 new projects into the pipeline. Both are the highest of any other franchise company. For new hotel openings, both Marriott and Hilton opened 79 new hotels each, also at a high.

The fate of the EB-5 financing and immigration program is up in the air due to changing immigration laws, leaving many hotel developers in limbo. The program allows developers to raise capital from foreign investors who in turn can receive U.S. immigration status. For more on the future of the program, click here.

Christopher Columbus Landing Resort, a 140-acre complex on Puerto Rico’s northwest coast of Playuela, is stirring concern in the in community, with some fearing that the project will overtake an untouched beach. Proponents say the project would bring 700 jobs to the area. To read more, click here.

While the Zika virus still lingers, tourists seem less concerned about its reach. Last year, Costa Rica experienced a severe drop in honeymoon business because of the concerns surrounding the virus, but this year is experiencing a boom. Read more here.

According to Lodging Econometrics (LE), following New York City, Houston has the second largest pipeline in the country with 169 projects/18,373 rooms. With its pipeline continuing to grow, Houston is likely to top its previous peak of 171 total projects reached in 2008.

Of all markets, Houston has the most projects scheduled to start construction in the next 12 months with 91 projects/9,792 rooms, 54 percent of its total pipeline. Houston also has the most projects in early planning with 37 projects/3,748 rooms. The remaining 41 projects/4,833 rooms are presently Under Construction.

With the economic impact of low oil prices, Iranian oil coming online and a decline in demand from China, drilling for oil in Texas has plummeted. As a result, Houston’s economy has been rocked. Some economic improvement is expected in 2017 as a bottoming is thought to have occurred. Consequently, in the last 2 years, occupancy has declined from 71.7 percent to a reported 62.3 percent. ADR fell 3.6 percent in 2016. RevPar declined both years and registered a whooping 12.4 percent year-over-year decline in 2016. New supply growth rose 5.7%. Demand growth fell 3.9 percent while supply growth grew 5.7 percent. Houston has the largest demand/supply imbalance of all the top 25 markets. With a steady stream of new supply forecasted to come online, operating metrics are expected to continue their fall for the next two years.

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