Wolfe Research says generally cautious on Lodging amid macro concerns

As previously reported, Wolfe Research initiated coverage of the Lodging subsector at Market Weight, stating that macro concerns are a challenge for the group, though the analyst also sees some “opportunities”, rating Host Hotels and Resorts (HST), Park Hotels & Resorts (PK), and Ryman Hospitality Properties (RHP) at Outperform with respective $22, $16, and $98 price targets. Among the positives, the analyst points to occupancy improvement relative to pre-pandemic levels, a favorable supply environment, and relatively strong balance sheets. Wolfe also adds however that a number of operators have yet to return to pre-pandemic occupancy levels, and while the full rebound in occupancy may not occur due to a realization during the pandemic that the business can be more profitable at a structurally lower occupancy level, with a reduction in labor, and a higher rate, there can still be incremental occupancy gains. The firm rates Apple Hospitality REIT(APLE), Pebblebrook Hotel Trust (PEB), and Sunstone Hotel Investors (SHO) at Peer Perform.