Fitch Ratings-New York-10 February 2017: A healthy U.S. consumer bodes well in the near term for the U.S. lodging and leisure sectors, according to the first edition of Fitch Ratings' "All Inclusive: U.S. Lodging & Leisure Handbook."
"With consumer confidence, employment and household balance sheets at or near the strongest levels in 15 years, lodging and leisure sector fundamentals are on solid near-term footing," says Stephen Boyd, Senior Director, U.S. Corporates. "Longer term, consumer preferences for experiences rather than physical goods will benefit the sector, specifically hospitality and travel-oriented companies."
Personal income growth will be an important driver of discretionary spending, making it a key metric to watch.
Fitch expects U.S. lodging RevPAR will grow 1%-2% in 2017, driven mostly by leisure travel and group demand as corporate travel remains weak.
Solid leisure travel is also benefitting online travel agencies (OTAs), the cruise industry and theme park operators.
Timeshare companies will continue to face pressure from higher new-owner sales, which have lower margins and more financing.
A notable outlier is the U.S. golf industry where demand (i.e. rounds played) is in secular decline due to unfavorable demographics and competition from alternative leisure pursuits that are more affordable and less time consuming. Innovations such as TopGolf may not translate into long-term growth in traditional golf participation due to structurally different approaches to the game.
Fitch Ratings' "All Inclusive: U.S. Lodging & Leisure Handbook" is a comprehensive reference guide for lodging & leisure debt investors. It provides credit analysis for important sub-sectors including lodging, timeshare, travel services, cruise operators, theme parks, fitness, golf and recreational products, as well as full credit profiles for 29 lodging and leisure issuers.
Contact: Stephen Boyd, CFA Senior Director Corporate Finance +1 212 908-9153 Fitch Ratings 33 Whitehall Street New York, NY Colin Mansfield, CFA Associate Director +1-212-908-0899