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Reflecting On Hotels, Resorts and Cruise Lines Stocks’ Q1 Earnings: Target Hospitality (NASDAQ:TH)


Radek Strnad /
2024/05/24 6:56 am EDT

As the Q1 earnings season wraps, let's dig into this quarter's best and worst performers in the hotels, resorts and cruise lines industry, including Target Hospitality (NASDAQ:TH) 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 Q1; on average, revenues beat analyst consensus estimates by 1.4%. while next quarter's revenue guidance was 0.8% below consensus. Valuation multiples for many growth stocks have not yet reverted to their early 2021 highs, but the market was optimistic at the end of 2023 due to cooling inflation. The start of 2024 has been a different story as mixed signals have led to market volatility, and while some of the hotels, resorts and cruise lines stocks have fared somewhat better than others, they collectively declined, with share prices falling 3.4% on average since the previous earnings results.

Target Hospitality (NASDAQ:TH)

Essentially a builder of mini communities, Target Hospitality (NASDAQ:TH) is a provider of specialty workforce lodging accommodations and services.

Target Hospitality reported revenues of $106.7 million, down 27.8% year on year, topping analysts' expectations by 4.6%. It was a very strong quarter for the company, with an impressive beat of analysts' revenue and earnings estimates.

"Our first quarter results reflect the strength of our operating platform and network capabilities, which consistently support strong financial performance. We continue to focus on maximizing operational efficiencies, while simultaneously providing world-class solutions to our customers," stated Brad Archer, President and Chief Executive Officer.

Target Hospitality Total Revenue

Target Hospitality scored the highest full-year guidance raise but had the slowest revenue growth of the whole group. The stock is up 1.4% since the results and currently trades at $11.26.

Read why we think that Target Hospitality is one of the best hotels, resorts and cruise lines stocks, our full report is free.

Best Q1: Playa Hotels & Resorts (NASDAQ:PLYA)

Sporting a roster of beachfront properties, Playa Hotels & Resorts (NASDAQ:PLYA) is an owner, operator, and developer of all-inclusive resorts in prime vacation destinations.

Playa Hotels & Resorts reported revenues of $300.6 million, up 9.8% year on year, outperforming analysts' expectations by 6.3%. It was an exceptional quarter for the company, with an impressive beat of analysts' revenue estimates. That outperformance was driven by a beat in its net package RevPAR ($427 compared to estimates of $400) and a strong Mexican Peso, which appreciated relative to the U.S. Dollar.

Playa Hotels & Resorts Total Revenue

Playa Hotels & Resorts achieved the biggest analyst estimates beat among its peers. The stock is down 12.1% since the results and currently trades at $8.3.

Is now the time to buy Playa Hotels & Resorts? Access our full analysis of the earnings results here, it's free.

Weakest Q1: Choice Hotels (NYSE:CHH)

With almost 100% of its properties under franchise agreements, Choice Hotels (NYSE:CHH) is a hotel franchisor known for its diverse brand portfolio including Comfort Inn, Quality Inn, and Clarion.

Choice Hotels reported revenues of $331.9 million, down 0.3% year on year, falling short of analysts' expectations by 3.2%. It was a weak quarter for the company, with a miss of analysts' revenue estimates.

Choice Hotels had the weakest performance against analyst estimates in the group. The stock is down 5.8% since the results and currently trades at $115.08.

Read our full analysis of Choice Hotels's results here.

Marriott (NASDAQ:MAR)

Founded by J. Willard Marriott in 1927, Marriott International (NASDAQ:MAR) is a global hospitality company with a portfolio of over 7,000 properties and 30 brands, spanning 130+ countries and territories.

Marriott reported revenues of $5.98 billion, up 6.4% year on year, in line with analysts' expectations. It was a slower quarter for the company, with a miss of analysts' earnings estimates. EPS guidance missed expectations as well, although one positive is that full year gross fee revenue was raised from previous and full year EPS guidance slightly exceeded Wall Street's estimates.

The stock is down 1.6% since the results and currently trades at $232.15.

Read our full, actionable report on Marriott here, it's free.

Royal Caribbean (NYSE:RCL)

Established in 1968, Royal Caribbean Cruises (NYSE:RCL) is a global cruise vacation company renowned for its innovative and exciting cruise experiences.

Royal Caribbean reported revenues of $3.73 billion, up 29.2% year on year, surpassing analysts' expectations by 1.1%. It was an impressive quarter for the company, with optimistic earnings guidance for the next quarter.

Royal Caribbean achieved the fastest revenue growth among its peers. The stock is up 7.5% since the results and currently trades at $147.06.

Read our full, actionable report on Royal Caribbean here, it's free.

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