Wrapping up Q2 earnings, we look at the numbers and key takeaways for the hotels, resorts and cruise lines stocks, including Soho House (NYSE:SHCO) and its peers.
Hotels, resorts, and cruise line companies often sell experiences rather than tangible products, and in the last decade-plus, consumers have slowly shifted from buying "things" (wasteful) to buying "experiences" (memorable). In addition, the internet has introduced new ways of approaching leisure and lodging such as booking homes and longer-term accommodations. Traditional hotel, resorts, and cruise line companies must innovate to stay relevant in a market rife with innovation.
The 15 hotels, resorts and cruise lines stocks we track reported a mixed Q2. As a group, revenues along with next quarter’s revenue guidance were in line with analysts’ consensus estimates.
Big picture, the Federal Reserve has a dual mandate of inflation and employment. The former had been running hot throughout 2021 and 2022 but cooled towards the central bank's 2% target as of late. This prompted the Fed to cut its policy rate by 50bps (half a percent) in September 2024. Given recent employment data that suggests the US economy could be wobbling, the markets will be assessing whether this rate and future cuts (the Fed signaled more to come in 2024 and 2025) are the right moves at the right time or whether they're too little, too late for a macro that has already cooled.
Thankfully, hotels, resorts and cruise lines stocks have been resilient with share prices up 5.6% on average since the latest earnings results.
Soho House (NYSE:SHCO)
Boasting fancy locations in hubs such as NYC and Miami, Soho House (NYSE:SHCO) is a global hospitality brand offering exclusive private member clubs, hotels, and restaurants.Soho House reported revenues of $305.1 million, up 5.6% year on year. This print was in line with analysts’ expectations, but overall, it was a softer quarter for the company with a miss of analysts’ members estimates.
"Our second quarter results reflect the strong appeal of Soho House globally, with Soho House membership growing 16% year-on-year and our waitlist increasing to approximately 111,000. We opened Soho House Sao Paulo with great feedback from members, and have continued to see significant demand for other recent openings including Mexico City and Portland. These positive membership trends have led us to raise our outlook for membership for the full year,” said Andrew Carnie, CEO of Soho House & Co.
Interestingly, the stock is up 4.3% since reporting and currently trades at $5.06.
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Best Q2: Carnival (NYSE:CCL)
Boasting outrageous amenities like a planetarium on board its ships, Carnival (NYSE:CCL) is one of the world's largest leisure travel companies and a prominent player in the cruise industry.Carnival reported revenues of $7.90 billion, up 15.2% year on year, in line with analysts’ expectations. The business had a satisfactory quarter with optimistic earnings guidance for the full year.
Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 3.1% since reporting. It currently trades at $17.97.
Weakest Q2: Hilton Grand Vacations (NYSE:HGV)
Spun off from Hilton Worldwide in 2017, Hilton Grand Vacations (NYSE:HGV) is a global timeshare company that provides travel experiences for its customers through its timeshare resorts and club membership programs.Hilton Grand Vacations reported revenues of $1.24 billion, up 22.6% year on year, falling short of analysts’ expectations by 7.7%. It was a disappointing quarter as it posted a miss of analysts’ earnings estimates.
Hilton Grand Vacations delivered the fastest revenue growth but had the weakest performance against analyst estimates in the group. As expected, the stock is down 6% since the results and currently trades at $36.29.
Hilton (NYSE:HLT)
Founded in 1919, Hilton Worldwide (NYSE:HLT) is a global hospitality company with a portfolio of hotel brands.Hilton reported revenues of $2.95 billion, up 10.9% year on year. This number was in line with analysts’ expectations. Zooming out, it was a mixed quarter as it also produced a decent beat of analysts’ operating margin estimates but underwhelming earnings guidance for the full year.
The stock is up 12.3% since reporting and currently trades at $232.50.
Sabre (NASDAQ:SABR)
Originally a division of American Airlines (NASDAQ:AAL), Sabre (NASDAQ:SABR) is a technology provider for the global travel and tourism industry.Sabre reported revenues of $767.2 million, up 4% year on year. This number topped analysts’ expectations by 1.5%. Overall, it was a strong quarter as it also logged a decent beat of analysts’ operating margin and earnings estimates.
Sabre achieved the highest full-year guidance raise among its peers. The stock is down 2.6% since reporting and currently trades at $3.35.
This content was originally published on Stock Story
