GlobalData: Sentiment scores, deal activity on the rise

Hotel operators’ sentimental growth was reportedly influenced by improvements in occupancy rates. Photo credit: Getty Images / alvarez (hotel lobby)

According to a new report from data and analytics company GlobalData, the travel and tourism sector saw an uptick in Q3 2020 earnings transcript sentiment scores. Hotel operators’ sentimental growth was influenced by improvements in occupancy rates.

“There has been a surprisingly early sentiment rebound in the T&T sector, which has taken a hit due to the COVID-19 pandemic,” said Rinaldo Pereira, senior business fundamentals analyst at GlobalData. “Companies in this space have been supported by government relief packages, but questions arise on the T&T sector’s future stability despite as COVID-19 will likely cause disruptions well into 2021. T&T companies will need to enhance digital infrastructure further as the use of contactless services become the only option in the new normal.”

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Changing Sentiments

Hyatt Hotels Corp. drove T&T’s rebound with a sentiment growth of 60 percent in Q3 2020 (fiscal Q2 2020 earnings transcript) compared to its previous earnings transcript (Q1 2020). 

“Hyatt’s recovery in China boosted sentiments, with occupancy reaching 65 percent in the country during the quarter,” Pereira said. “The hotel chain’s net rooms grew by around 6 percent year on year as the company added 10 new hotels to its portfolio in Q2 2020. The management’s comments on being able to sustain business in upcoming quarters despite uncertainty also positively influenced sentiment score.”

Hilton was another gainer in the T&T sector despite financial downturns. Occupancy and revenue per available room recoveries in the U.S. and Asia-Pacific notably drove sentiments. “Hilton’s digital investments before the COVID situation helped the company, as contactless services can be managed seamlessly via its app,” Pereira said.

Wyndham Hotels & Resorts also saw sentiments grow despite facing profit and revenue slumps. “Wyndham’s improving occupancies, RevPAR rates and cost-saving initiatives supported the company during Q2 2020,” Pereira said. “Furthermore, despite the COVID-19 impact, Wyndham opened 62 new hotels during the quarter while generating a positive [earnings before interest, taxes, depreciation and amortization] due to cost-cutting.”

New Deals

GlobalData also reported that total of 115 deals were announced in the global travel and tourism sector during August 2020, which is an increase of 4.5 percent over the 110 deals announced during the previous month.

“August marks the third consecutive month of growth in deal activity for the sector,” said Aurojyoti Bose, lead analyst at GlobalData. “This also assumes more significance as the travel and tourism sector remains one of the worst hit industries due to the COVID-19 pandemic and has witnessed several months of decline in deal activity in 2020. However, with several countries attempting to revive the tourism sector, deal activity could improve in the second half of the year.”

The announcement of private equity, partnership and equity offering deals increased during the month, while the number of venture financing, mergers and acquisition and debt offering deals decreased.

Deal activity has also remained inconsistent across geographies since the COVID-19 outbreak. While deal activity increased in key markets such as the US and China during August compared to the previous month, Germany and Australia showcased decline and it remained at the same level in the U.K. and India.