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Analyst Breaks Down Leisure Industry's Near-Term Outlook, Hotel Pricing Power

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Analyst Breaks Down Leisure Industry's Near-Term Outlook, Hotel Pricing Power

Monday's encouraging vaccine update represents a "game-changing moment" for the leisure industry although the sector has to navigate through the challenging two or three quarters ahead, Raymond James analyst William Crow said on CNBC's "Worldwide Exchange."

Difficult Near-Term Picture: The COVID-19 pandemic will dominate the near-term outlook for the leisure industry as the exact timing of a COVID-19 vaccine is still unknown. In the meantime, it's also unclear if the industry will secure some form of financial aid from the government.

"We could use a bridge to get from here to say the third or fourth quarter of next year," Crow said.

Related Link: Pfizer Analysts Raise Odds Of Success For Coronavirus Vaccine Candidate To 100%

But even looking out towards the end of 2021, the business travel segment won't show any signs of a meaningful rebound to pre-pandemic levels until workers return to offices, the analyst said. Similar to group travel, this segment is looking week through at least the end of Spring next year.

On the other hand, the leisure traveling segment remains a "bright spot."

Encouragingly, the leisure sector as a whole is likely to see a rebound in the second half of 2021, and 2022 is looking "really good," he said.

Hotel Pricing Power: Hotels are unlikely to benefit from any form of pricing power "for a while" although companies deserve credit for keeping costs low, the analyst said. This should help EBITDA return back to 2019 levels before RevPar (revenue per available room) rebound.

Stock Picks: The analyst said he prefers Hilton Hotels Corporation (NYSE: HLT) because of its franchisee structure that makes it a fee-driven business model, Crow said.

Another stock pick is Ryman Hospitality Properties Inc (NYSE: RHP), a leisure company heavily correlated with group travel. The case for buying the stock is based on its long booking window that gives confidence "in what lays ahead" into 2022.

 

Related Articles (RHP + HLT)

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Posted-In: CNBC leisure Raymond James William CrowAnalyst Color Travel Analyst Ratings General Best of Benzinga

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