U.S. hotels spin travel demand into gold as airlines struggle

Host Hotels & Resorts

05/08/2022 23:08

By Gigi Zamora
    Aug 5 (Reuters) - Staff shortages, airport chaos and higher
fuel costs have caused earnings at U.S. airlines like JetBlue
Airways to land below analysts' expectations while hotel chains
including Marriott International are reporting double-digit
profit growth. 
    Despite cutbacks in other categories due to recession
worries, consumers eager to travel after the pandemic continue
to book flights and hotels. Hotels have been able to turn this
demand into increased profitability far more effectively than
airlines. 
    David Tarsh, spokesperson for travel data analytics company
Forward Keys, said the problems faced by airlines and airports
are harder to resolve than those in the lodging industry. 
    "In the case of labor in hospitality, your shortage is
probably more with less-skilled workers than in the case of the
aviation industry," he said. "If you're short of cabin crew and
you're short of security people in the airport, you can't just
increase wages and suddenly fill these roles. People also need
to be trained."
    U.S. carriers are struggling to offset higher costs such as
fuel even as booming travel demand has given them strong pricing
power. 
    JetBlue Airways Corp  JBLU.O  on Tuesday reported a
quarterly adjusted loss of 47 cents per share compared to 
analysts’ predictions of an 11-cent loss.  urn:newsml:reuters.com:*:nL4N2ZE2UV
    United Airlines Holdings Inc  UAL.O , American Airlines
Group Inc  AAL.O  and Delta Air Lines Inc  DAL  last month
reported quarterly profits below analysts' expectations. 
    Meanwhile, hotel bookings are surging. Marriott
International Inc  MAR.O  on Tuesday topped Wall Street
estimates for quarterly revenue and profits, helped by higher
occupancy levels and room rates as travelers booked more group
travel and longer stays.  urn:newsml:reuters.com:*:nL1N2ZE10D
    Last month, Hilton Worldwide Holdings  HLT.N  saw profit
rise above pre-pandemic levels. On Wednesday, MGM Resorts
International  MGM.N  reported profit 25% higher than in the
second quarter of 2019 and said staff shortage problems seemed
to be easing. 
    “Generally speaking, we're in decent shape. We are not
running around with our hair on fire, if you will, anymore,”
said MGM Resorts CEO Bill Hornbuckle in Wednesday's earnings
call.
    Host Hotels & Resorts Inc  HST.O , which operates hotels
under the Four Seasons, Grand Hyatt and Ritz Carlton brands,
reported profits of 36 cents per share, higher than analysts'
predictions. 
    "We're up into the double digits in terms of total revenue
(growth) for Thanksgiving. And actually, for Christmas, we are
seeing a solid pickup as well,” said Host CEO Jim Risoleo on a
call for analysts on Thursday.

 (Reporting by Gigi Zamora; Editing by Anna Driver and Cynthia
Osterman)
 ((Gigi.Zamora@thomsonreuters.com;))