Business travel slowed in the second quarter amid concern over trade between the U.S. and China, draining hotels' revenues in major markets including New York and San Francisco, Host Hotels & Resorts Inc. executives said.
Host lowered its full-year 2019 constant-dollar guidance for revenue per available room to no growth or a decline of up to 1%. President and CEO Jim Risoleo noted that growth in full-year non-residential fixed investment, a key indicator for travel spending, has declined by 40 basis points since the first quarter, citing a global economic slowdown and uncertainty over trade negotiations.
"Overall, as we look to the second half of the year, and amid the growing uncertainty of a trade deal with China being concluded in the near term, we do not see any near-term catalyst to induce business transient demand," he said.
Group booking revenues across Host's portfolio fell by 4.7% for the quarter.
The company's New York properties, which were also hurt by renovations and high levels of new construction in the market, were among the weaker performers in Host's portfolio, posting a RevPAR decline of 9.8%. RevPAR fell by 11.2% in Seattle and by 10.6% at the company's Orlando World Center Marriott.
Risoleo noted that about 29,000 new hotel rooms were expected to come online in 2019, while a new competing 1,300-room hotel opened in downtown Seattle. Moreover, he said, both the New York and Seattle markets are driven by international inbound travel, and Host has seen a decline in international inbound travel, especially from Canada and Mexico.