Hope for 2022 Hotel Demand To Dominate Third Quarter Earnings Narrative

Third quarter performance for major hotel brands and real estate investment trusts is expected to follow a somewhat predictable pattern: Especially strong leisure demand fueled strong numbers in July and August before a seasonal drop-off of demand in September.

But analysts who cover the hotel industry believe those demand patterns, and indeed performance during the fourth quarter, aren't going to be what investors are interested in or what management teams are focused on during the upcoming third quarter earnings season. Instead, earnings calls are likely to be dominated by optimistic commentary for the trajectory of demand in 2022.

"Management teams are not focused too much on fundamentals, and investors aren't either," said Michael Bellisario, senior research analyst and director at Baird. "Mainly, we're through the worst of the [COVID-19] delta variant, and it was pretty scary for about 30 days with slowdowns and cancellations, but now you can expect upbeat commentary about business travel recovering gradually, bookings improving and group bookings on the books for next year looking strong."