Public hotel companies are looking at a very different first-quarter earnings season compared to a year ago.
While the beginning of 2025 saw some shocks to domestic activity, like the announcement of U.S. tariffs and federal government cuts from the Department of Government Efficiency, the first quarter of 2026 performed according to expectations, if not better, without any major domestic impacts.
"I don't see it as any real acceleration of demand, so to speak, in the quarter, because what was on the books for the companies was always very good," said C. Patrick Scholes, managing director of lodging and leisure equity research at Truist Securities. "It was more of the opposite of what happened a year ago, where, at least domestically, there were no negative surprises that led to cancellations or deceleration in demand."
Scholes added that while the war in Iran has been a shock to the market as a whole, the effects on travel and hotels — such as the rising gas prices — haven't been too significant yet.
But there are early rumblings of the negative effects. France-based Accor reported last week in its earnings call with analysts that revenue per available room fell 9% in the United Arab Emirates in the first quarter. The UAE makes up 27% of Accor's hotel room count in its Middle East and Africa region.
Still, Michael Bellisario, senior research analyst at Baird, said he expects this round of earnings to be positive overall. This is especially true after how U.S. hotels performed in March, which he described as "off-the-charts good," pointing to favorable calendar shifts, domestic re-bookings from travelers avoiding Mexico's unrest and other factors.
"The trend is your friend," Bellisario said. "Things are better. A lot of things added up in the wrong direction last year, and a lot of things have added up in the right direction this year so far. And I think that the focus will be on how much more optimistic and bullish are the management teams."
What happened in Mexico in February, including a raid by the Mexican Army Special Forces to target drug cartel violence, will disproportionately affect Hyatt Hotels Corp., so that's one call Scholes and Bellisario agreed will be one to listen to.
Hyatt has 10% exposure to Mexico while the other brands have around 3%, Scholes said.
Additionally, the Hyatt resorts that closed in Jamaica in 2025 after Hurricane Melissa have not yet reopened, and that will affect the company's full-year guidance, Bellisario added.
From a market perspective, Boston and New York City are outperforming, as is San Francisco, thanks to hosting this year's Super Bowl. Meanwhile, Washington, D.C., is struggling but should come back with America 250 programming. Hawaii has been affected by recent storms and flooding.
In general, earnings calls from the public hotel companies will reflect increased guidance pretty much across the board, but Scholes added that he doesn't expect outlook increases to be much — if any — more than the improvement on first-quarter results.
Hotel executives are "very pleased about what has happened, but [will have] guarded optimism about the rest of the year," Scholes said.
Run rate is something Bellisario said he hopes to hear about, because whether the U.S. hotel industry can maintain its momentum will be the biggest factor to the rest of the year's expectations.
"I don't think there will be too many pressure points, other than trying to dissect how sustainable the recent strength has been," he said. "How long does it continue? And sort of, what is the true adjusted [rate] for calendar shifts and certain other items? What is the true underlying growth rate for the industry right now?"