2Q26 Preview: Beats to continue in 2H even after the World Cup drums subside

研报英文原文证据摘录

2Q26 Preview: Beats to continue in 2H even after the World Cup drums subside

IdeaM

Set-up, Stock Ideas & Revisions

Set-up – Early cycle mentality pushing valuations ahead of revision cycle: Our lodging

coverage outperformed the S&P 500 (+11% vs. +7%) over the past 90 days as

fundamental strength in 1Q continued into 2Q. Performance broadened out, favoring

higher operating leverage names with REITs and Timeshare outperforming. The higher-end

c-corps also outperformed the lower end, consistent with RevPAR trends over the quarter.

Investor sentiment has improved for the space, yet valuation now appears to embed

sustained LSD/MSD RevPAR for c-corps and REITs with the exception of CHH/WH where

valuation is depressed and our inbounds skew more negative.

Latest trends/indicators – High-frequency and 2-year stack solid, forward indicators on

underlying demand more mixed: RevPAR accelerated from 1Q to 2Q as the industry

began lapping 'Liberation Day' and as the World Cup bolstered June. Luxury RevPAR (+10%

YoY) outperformed the US industry (+5.5%) and economy RevPAR (+1.2%), but all chain

scales accelerated sequentially. UK+Europe RevPAR saw more modest acceleration (even

as Europeans likely came to the US for the World Cup) around 2-2.5%. By contrast, China

softened to flattish, ending the quarter negative on a monthly frequency after registering

+5% in 1Q. DAL (see MS Airlines Analyst Ravi Shanker's note 2Q26 Results) management

called out: 1) premium revenue +17%; 2) HSD forward cash sales; and 3) corporate sales

grew double-digits % across all sectors. In terms of forward indicators, the Small Business

Optimism Index has been choppy, but the MS non-PMI leading indicator has been

encouraging, pointing to continued strength in corporate earnings and RevPAR.