Truist previews lodging sector earnings, adjusts estimates

Investing.com -- Hotel stocks are positioned for strong third-quarter results driven by revenue per available room growth, with several real estate investment trusts expected to outperform conservative guidance, according to Truist analyst C. Patrick Scholes.

The lodging sector enters earnings season with analyst expectations materially above company forecasts, particularly for hotel REITs. Scholes maintains forecasts of 6-8% revenue per available room growth for mid and upper-end U.S. hotels in the fourth quarter, with limited-service properties expected to grow 2.5-4.5%. These projections exceed both company guidance and consensus estimates by 2-4 percentage points. For 2027, the analyst projects 2.5-4.5% revenue growth for mid and upper-end properties, with January potentially marking the strongest month of the cycle for upper-end hotels. Wyndham Hotels & Resorts kicks off third-quarter earnings on October 21st, followed by Hilton Worldwide on October 27th. Hotel REITs are seen as best positioned for outsized earnings beats given their greater exposure to outperforming domestic upper upscale and luxury segments combined with greater operating leverage versus hotel corporations and brands.

Amid the earnings preview, Scholes updated estimates for several stocks in the sector, as seen below:

1. Pebblebrook Hotel Trust (NYSE: PEB) - Truist raised third-quarter estimates to reflect higher revenue per available room assumptions, though the analyst notes estimates may still prove conservative. The firm holds its 2026 adjusted EBITDA forecast at $361 million and adjusted funds from operations per share at $1.89. The 2027 adjusted EBITDA estimate remains at $373 million with adjusted funds from operations per share at $1.91. Truist maintains a Buy rating with a $22 price target based on 13.75 times 2027 estimated EBITDA. The company reported July and August results tracking toward at least 6% revenue per available room growth, above quarterly guidance of 1-3%.

2. Park Hotels & Resorts Inc (NYSE: PK) - Truist adjusted estimates to reflect the company's room count and third-quarter expense profile. The 2026 adjusted EBITDA forecast moves to $635 million from $637 million, with adjusted funds from operations per share at $2.00 versus $2.01 previously. For 2027, adjusted EBITDA increases to $646 million from $642 million, with adjusted funds from operations per share at $1.80 compared to $1.78. The firm maintains a Hold rating with a $17 price target based on 11.5 times 2027 estimated EBITDA. The company reported revenue per available room up 8.9% in July, though August growth of 2.6% was negatively impacted by hurricanes in Hawaii.

3. RLJ Lodging Trust (NYSE: RLJ) - Truist made modest adjustments to 2026 estimates, raising third-quarter revenue per available room expectations while moderating flowthrough to EBITDA. The 2026 adjusted EBITDA estimate moves to $350 million from $352 million, with adjusted funds from operations per share at $1.47 versus $1.49 previously. For 2027, adjusted EBITDA decreases to $345 million from $348 million, with adjusted funds from operations per share at $1.32 compared to $1.34. The analyst maintains a Hold rating with an $11 price target based on 11.5 times 2027 estimated EBITDA.

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