With strong second quarter numbers a foregone conclusion, the market is waiting to see just how much publicly traded hotel companies are willing to translate that performance into forward-looking optimism.
C. Patrick Scholes, managing director of lodging and leisure equity research for Truist Securities, said the market will be keenly tuned into how hotel companies adjust their full-year outlook in response to a stronger-than-expected first half of 2026.
"You could see some upsides to stocks just depending on how bullish the companies want to be," he said.
But Scholes isn't sure hotel companies are likely to be overly optimistic for the rest of the year, particularly after registering only minor increases after a surprisingly strong first quarter.
U.S. hotel performance, particularly around the World Cup, has been a strong driver for hotel companies in the second quarter. Scholes said if there's a negative to be found in the quarter, it's comparatively weaker hotel performance internationally.
"China has definitely slowed in the last couple of months, and companies have varying degrees of China exposure," he said. "It's definitely for Wyndham an Achilles' heel ... Wyndham has about 15% exposure to China."
But ultimately the domestic strength of hotel companies' portfolios and demand will be the primary topic of conversation during earnings calls, said Michael Bellisario, senior research analyst and managing director at Baird.
"China has been a little softer, and I'm guessing that will be discussed a bit, but at the end of the day, the hotel brands are two-third-plus U.S. businesses, and the U.S. has been great," he said.
REIT rebound
The common theme for publicly traded hotel companies in recent years is brands outperforming while real estate investment trusts have lagged, but this quarter is expected to be something of a turnaround for the real estate investment trusts, analysts said.
Bellisario said the last few years have conditioned some investors to be skeptical of hotels REITs even as fundamentals have improved.
"There hasn't been a good normal year [for REITs] since 2017 or 2018," he said. "Investor interest in the space is still low to medium."
But Scholes pointed out public hotel REITs are perfectly poised to enjoy the moment as their portfolios are almost exclusively domestic and are in the right segments to succeed.
"There's a very favorable tailwind right now, a very favorable setup," he said. "They tend to be situated towards the upper end of the travel spectrum."
But Bellisario noted it will be interesting to see if the REITs can continue improving stock prices and engage in what has historically been the traditional behavior of hotel REITs: issuing stock to fund purchasing hotels.
"It's about when does the capital allocation change," he said. "When does Host [Hotels & Resorts] issue equity and go buy because the marking is saying 'Hey, you can go do that'? When does Apple Hospitality REIT do that? Apple's stock right now is $17.02. They last issued stock in December 2023 in the low $17s."
In recent years, hotel REITs have largely been sellers in the market, so returning to buying could mark a major shift in the transactions market across the hotel industry.
World Cup
After a period of hemming and hawing over just how impactful the 2026 FIFA World Cup would be on hotel performance, it seems that early returns are showing the optimists winning the day.
"When it comes to the tournament, I was definitely one of the bulls out there," Scholes said. "In our research, the World Cup looked strong all along."
The strength of the event has varied market to market and hotel performance has been largely driven by rate growth, but there are also knock-on effects that get underestimated in macroanalysis, Scholes added.
"It wasn't an A-plus-plus, but I'd say at the end of the day it was an A-minus for hotels," he said.
Bellisario said he's skeptical public markets will be weighing that World Cup win too heavily, though.
"You're going to hear fantastic stats for second-quarter growth, July growth, and the debate in the market is 'OK, great. We see that in the data, but it's done,'" he said.