Fitch: Most rated lodging companies keep stable outlooks - EXCLUSIVE

Germany’s relative underperformance is primarily linked to the timing of its trade-fair calendar rather than to a broad-based structural weakening in hotel demand. Several major fairs are held on biennial or triennial cycles, meaning there will inevitably be years when demand is lower in key gateway cities. We would expect performance to improve as the calendar becomes more favourable, although the pace of recovery will also depend on the wider corporate travel and consumer-demand environment.

This was said by the source at Fitch Ratings in an exclusive interview with CE Report.

The source explained that Fitch Ratings views the effects of geopolitical disruption, airlift constraints and itinerary changes as temporary, based on the expectation that the conflict will not be prolonged and that its most intense phase has passed.

"To assess whether pressures are becoming more persistent, we would monitor booking volumes and pricing trends, cancellation rates, occupancy and load factors, as well as the ability of operators to redeploy capacity and adjust itineraries without materially affecting yields. Cruise demand remains supported by its attractive value proposition relative to land-based holidays and by the continued broadening of the sector’s offering, and we do not currently expect structural changes to demand,” the source said.

Under Fitch’s base case, the source added, most rated lodging companies retain Stable Outlooks and adequate rating headroom.

"A broader deterioration in credit profiles would be most likely if consumer sentiment weakened materially, reducing travel demand and limiting operators’ ability to pass higher costs through to customers. This could pressure occupancy, pricing and profitability margins. A sustained shift in consumer spending away from travel and experiences towards goods could have a similar effect, particularly if it coincided with weaker economic growth or continued cost inflation,” the source concluded.

Photo: Facebook/fitchratings

This interview was prepared by Julian Müller