The lodging industry's inherent volatility is a key risk, affected by economic conditions (recession, inflation, interest rates), geopolitical events, natural disasters, and labor shortages. Competition, acquisition/development risks, renovation challenges, and dependence on a single manager also pose risks. Financial covenants tied to debt agreements limit flexibility. Hurricane damage and litigation are also potential downside risks.
Financial Upside
Acquisitions of new hotels (1 Hotel Central Park, Ritz-Carlton O'ahu, Turtle Bay) and strong group business are positive factors. Elevated average room rates, though moderating, are a plus. Continued growth in food and beverage revenues and ancillary spend are also positive. Strong performance in some markets (New Orleans, Miami) and the resumption of operations at The Ritz-Carlton, Naples, are contributing factors.
