The onset of coronavirus had wreaked havoc on most businesses across the world, but none felt the jitters harder than the global leisure & hospitality industry, with some of its biggest names failing to make it to the top 500 in Forbes’ 2021 ranking of world’s largest public companies.
According to a US Joint Economic Committee report, the leisure & hospitality industry had experienced steady growth from 12.9 million workers in 2010 to 16.9 million at the beginning of 2020. But Covid-19 pandemic disrupted this trend when in April 2020 employment had dropped sharply, reaching levels that had not been seen since the 1980s.
The impact of Covid-19 on leisure & hospitality businesses can be gauged from the fact that the industry made up 40pc of all job losses at the height of the pandemic (February 2020 to April 2020), according to the report.
In 2021, however, the downtrend slowly started shifting mainly due to an overall drop in Covid fatalities which led to ease in travel restrictions across the world, resulting in leisure & hospitality companies seeing considerable improvements in their financials. Although Delta and Omicron variants slowed the recovery in some regions earlier this year, recent leisure spending trends show that it won’t take long for leisure businesses, particularly those operating in the US and Europe, to regain their pre-pandemic market share.
As per Deloitte’s Consumer Tracker, total net leisure spending jumped three percentage points in the first quarter of 2022 compared to -10pc in Q4 2021. This uptick was in part driven by school half-term breaks but also by the loosening, or even the entire removal, of Covid-19 entry requirements in many popular international destinations.
With further ease in restrictions in the offing, analysts predict air travel to soar and demand for both hotels and private rentals to remain strong moving forward.
Credit: Park Hotels & Resorts
According to the US Travel Association’s June report, travel spending ($100 billion) was 3pc more in April 2022 as compared to 2019 pre-pandemic levels. However, overseas visitation was still 43pc below 2019 levels, albeit European markets vastly improved and were down just 34pc of 2019 levels.
As businesses operating in western markets are cautiously making their way back to pre-pandemic levels, the same cannot be said about leisure businesses operating in Asian markets, which remain down largely due to restrictions in individual countries.
An Asian Development Bank (ADP) report published in March 2022 concluded that popular tourist hubs like Hong Kong and Macau – latter being home to some of the biggest casinos owned by US companies, may continue with the downtrend amidst Covid restrictions in vogue in China.
Despite recent travel trends showing improvements in leisure activities across the world, it is safe to say that the industry’s revival, at least in Asia, would still rely heavily on potential lockdowns and restrictions.
With that said, let’s take a peek at the world’s top 10 leisure companies in the world in 2022, see how they fared amidst post-pandemic relaxations, and evaluate their operational preparedness to cope with any potential challenges in the near future.
Top 10 Leisure Companies in the World
10. InterContinental Hotels Group PLC (NYSE:IHG)
Market Cap: $9.95 Billion
British hospitality giant InterContinental Hotels Group PLC operates mainstream, upscale and luxury hotels under various brands across the world.
Like many on this list, IHG cashed in on the reopening of the U.S. and European markets this year, witnessing a steady growth in performance and posting a positive outlook for the future.
The group in its first quarter 2022 results reported a 61pc year-on-year jump in revenue per available room (RevPAR), attaining 82pc of 2019 level.
Among its segments, the group’s Q1 RevPAR for ‘The Americas’ was up 58pc vs 2021 (down 8pc vs 2019) with close to 60pc occupancy rate, while Q1 RevPAR for ‘EMEAA Region’ was up 122pc vs 2021 (down 33pc vs 2019) with occupancy approaching 50pc.
Trading in Greater China, however, continued to be impacted by restrictions put in place to control rising Covid cases. The company’s Q1 RevPAR for ‘Greater China’ segment remained 7pc down as compared to 2021 (-42pc vs 2019) with occupancy at 36pc.
Keith Barr, Chief Executive Officer at IHG Hotels & Resorts, noted that higher occupancy levels (in the US & Europe) was indicative of increased pricing power. In March, IHG hotels in the U.S. achieved leisure rates up by more than 10pc on 2019 levels while rate across the whole of the U.S. business was 4pc ahead.
Citing growth in corporate bookings and a surge in leisure activities as reasons, the company sees further progress in both occupancy and rate in the coming quarters.
Headquartered in Buckinghamshire, England, InterContinental Hotels Group PLC owns and operates a portfolio of hotel businesses across The Americas; Europe, Middle East Asia and Africa (EMEAA), and Greater China. Its hotel brands include Six Senses, Regent, InterContinental, Vignette, Kimpton, Hotel Indigo, EVEN Hotels, HUALUXE, Crowne Plaza, voco, Holiday Inn, Holiday Inn Express, Holiday Inn Club Vacations, avid, Staybridge Suites, Atwell Suites, and Candlewood Suites. IHG currently company operates approximately 6,028 (884,820 rooms) open hotels in more than 100 countries.
9. Carnival Corp. (NYSE:CCL)
Market Cap: $10.41 Billion
Leading the cruise industry resurgence post travel relaxations, US-based Carnival Corporation seems most eager to get back to 2019 levels, with the company’s biggest brand, Carnival Cruise Line, becoming the industry’s first since Covid to sail its entire fleet in May 2022.
In its recently announced financial statement for Q2 2022, the company reported nearly 50pc increase in revenue growth compared to first quarter 2022, reflecting continued sequential improvement.
For the cruise segments, revenue per passenger cruise days (PCD) for Q2 2022 decreased slightly compared to a strong 2019, whereas onboard and other revenue per PCD for the second quarter of 2022 increased significantly compared to 2019.
CCL’s occupancy in the second quarter of 2022 was recorded at 69pc, an increase from 54pc in the prior quarter.
Total customer deposits increased $1.4 billion to $5.1 billion as of May 31, 2022, from $3.7 billion as of February 28, 2022. Cash from operations turned positive in April and was positive for the second quarter of 2022.
As of June 24, 2022, 91pc of the company’s capacity is in guest cruise operation as part of its ongoing return to service.
Carnival Corporation owns and operates cruise ships offering cruises to all major vacation destinations including North America, United Kingdom, Germany, Southern Europe, South America, and Asia Pacific. Its portfolio features Carnival Cruise Line, Princess Cruises, Holland America Line, Seabourn, P&O Cruises (Australia), Costa Cruises, AIDA Cruises, P&O Cruises (United Kingdom) and Cunard. The company, through a subsidiary, also owns and operates hotels and lodges.
8. Host Hotels & Resorts Inc (NASDAQ:HST)
Market cap: $11.39 Billion
A prominent name in global hospitality industry and REIT, Host Hotels & Resorts Inc. has made giant strides in 2022 after what can be termed as tumultuous couple of years for the company.
For the quarter ending March 31, 2022, HST posted earnings per share of $0.16, topping the consensus estimate of $0.02 by $0.14. Revenue clocked in at $1.07 billion for the quarter (+169pc year-on-year), compared to analyst estimates of $949.39 million. During the same period last year, the company had earned $0.01 earnings per share.
According to HST, improvements were primarily driven by leisure travel, with strong rates at resort properties leading to average room rates of $305.63 for the quarter.
Meanwhile, subsequent to quarter end, the group sold two of its hotels – Sheraton Boston Hotel for $233 million and Sheraton New York Times Square Hotel for $373 million, bringing the company’s total dispositions to $1.4 billion since the beginning of 2021. President and Chief Executive Officer James F. Risoleo termed the development an important step in elevating the company’s EBITDA growth profile.
Host Hotels & Resorts is the largest lodging real estate investment trust and one of the largest owners of luxury and upper-upscale hotels. The company currently owns 73 properties in the United States and five properties internationally, totaling approximately 42,300 rooms. It also holds non-controlling interests in seven domestic and one international joint ventures.
The company’s hotels operate in urban and resort markets either as luxury properties under such brand names as Fairmont, Grand Hyatt, JW Marriott, Ritz-Carlton, St. Regis, and The Luxury Collection, or as upper upscale properties under such brand names as Embassy Suites, Hilton, Hyatt, Marriott, Marriott Marquis, Autograph Collection, Pullman, Swissotel, Hotel Van Zandt and Westin.
7. Huazhu Group Ltd (NASDAQ:HTHT)
Market Cap: $12.58 Billion
Unlike some of its rivals in the West, China-based hotel operator and franchisor Huazhu Group Limited has been encountering tremendous challenges at the hands of corona-induced lockdowns across prominent Chinese markets including Shanghai.
According to the company’s unaudited Q1 2022 financials, net loss attributable to Huazhu Group Limited clocked in at RMB630 million ($99 million), compared with RMB248 million for the first quarter of 2021 and RMB459 million in the previous quarter.
The company’s EBITDA for the first quarter of 2022 was negative RMB301 million ($48 million), compared with RMB70 million for the first quarter of 2021 and RMB46 million in the previous quarter.
During the first quarter of 2022, the company’s Legacy-Huazhu business opened 302 hotels, including three leased hotels and 299 manachised hotels and franchised hotels, and closed a total of 140 hotels, including 12 leased hotels and 128 manachised and franchise hotels.
In the second quarter of 2022, Huazhu Group expects revenue to decline 2pc to 6pc compared to the second quarter of 2021 due to the impact of Covid restrictions in China.
Huazhu Group’s business includes leased and owned, manachised and franchised models. Under the lease and ownership model, Huazhu directly operates hotels typically located on leased or owned properties. Under the manachise model, the company manages manachised hotels through the on-site hotel managers that Huazhu appoints, and Huazhu collects fees from franchisees. Under the franchise model, the company provides training, reservations and support services to the franchised hotels, and collects fees from franchisees but does not appoint on-site hotel managers.
As of March 31, 2022, Huazhu Group has a total of 7,988 hotels or 764,859 hotel rooms in operation under many brands, including HanTing Hotel, Ni Hao Hotel, JI Hotel, Crystal Orange Hotel, Joya Hotel and others.
6. MGM Resorts International (NYSE:MGM)
Market Cap: $12.78 Billion
World’s premier gaming company and a name synonymous with luxury entertainment, MGM Resorts International (MGM) owns and operates integrated casino, hotel, and entertainment resorts across the US and in Macau.
Like other US-based leisure & hospitality provides, MGM off late has also witnessed a significant improvement in its books, posting its fourth straight quarter of revenue growth earlier this year after five consecutive quarters of Covid-induced declines.
The company’s Q1 FY2022 earnings surpassed consensus estimates, with consolidated net revenues clocking in at $2.9 billion (+73pc) compared to $1.6 billion in the prior year quarter.
MGM reported positive adjusted earnings per share for the third straight quarter after six consecutive quarters of adjusted losses per share. Analysts had expected the company to report an adjusted LPS for the quarter.
Chief Executive Officer and President Bill Hornbuckle attributed the strong first quarter performance in domestic operations driven by weekend demand and a better mix of business. He sees a robust demand for MGM’s gaming entertainment offerings with the backdrop of increased sports and entertainment programming in the Las Vegas market.
MGM began operations in 1987 as MGM Grand, Inc. and became MGM Mirage in 2000, following the acquisition of Mirage Resorts. With the company’s non-gaming (lodging, food, retail) revenue outpacing gaming receipts, the company over the years shifted its focus from owning and operating resorts and casinos to developing and building real estate in the leisure and gaming industry. In 2010, shareholders voted for MGM Mirage to change its name to “MGM Resorts International”.
The company operates through segments including Las Vegas Strip Resorts, Regional Operations and MGM China. Las Vegas Strip Resorts segment consists of Aria, Bellagio, MGM Grand Las Vegas, Mandalay Bay, The Mirage, Luxor, New York-New York, Excalibur and Park MGM. Regional Operations segment consists of MGM Grand Detroit in Michigan; Beau Rivage in Mississippi; Gold Strike Tunica in Mississippi; Borgata in Atlantic City; MGM National Harbor in Maryland; MGM Springfield in Massachusetts; Empire City in Yonkers, New York, and MGM Northfield Park in Northfield Park, Ohio. MGM China consists of MGM Macau and MGM Cotai.
5. Galaxy Entertainment Group Ltd (HKSE:0027)
Market Cap: $25.88 Billion
Making the list at number 5 is Hong Kong-based Galaxy Entertainment Group Limited (GEG), renowned for its management of casino games and provision of hospitality and related services in Macau.
Founded by Che Woo Lui in 1955, GEG’s exponential growth over the years came mainly on Macau and Beijing authorities’ resolve to diversify the former’s economy by encouraging casinos to supplement gambling with other attractions, such as shopping, restaurants, and entertainment.
The company’s market cap had peaked in 2020 but witnessed a 33pc plunge the following year amidst Covid outbreak. And not much has changed since, with Macau gaming industry still under the Covid cloud.
According to financials issued on May 12, 2022, the group posted a net revenue of $4.1 billion, down 20pc year-on-year and down 14pc quarter-on-quarter. Likewise, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) clocked in at $575 million, down 33pc YoY and down 45pc QoQ.
Going forward in the medium to long term, GEG said it remains confident in the future of Macau. However, the company acknowledges that further potential outbreaks of Covid-19 may impact its future financial performance.
Galaxy International, through its subsidiaries, is engaged in operation in casino games of chance or games of other forms, provision of hospitality and related services in Macau, and the manufacture, sale and distribution of construction materials.
The company’s Galaxy Macau includes approximately 3,600 rooms, suites and villas across five hotels, including The Ritz-Carlton, Macau; Banyan Tree Macau; JW Marriott Hotel Macau; Hotel Okura Macau, and Galaxy Hotel.
It also operates three City Club casinos: Waldo Casino, President Casino and Rio Casino.
4. Las Vegas Sands Corp. (NYSE:LVS)
Market Cap: $26.95 Billion
Founded by Sheldon G. Adelson in August 2004, Las Vegas Sands Corporation has quickly stamped its authority as a global leader in developing and operating international, world-class integrated resorts.
With properties featuring accommodations, gaming, entertainment & retail, convention & exhibition facilities, and celebrity chef restaurants, this Nevada-based industry leader currently stands as the largest casino company in the world.
Like Galaxy Entertainment, LVS has also been incurring losses on the back of reduced confidence in the recovery of Macau’s gaming industry due to strict governmental Covid-19 policies, continued weak visitation, and recently reduced economic forecast for China.
Citing reasons mentioned above, Fitch Ratings in its recent report downgraded the Issuer Default Ratings (IDRs) of Las Vegas Sands Corp., Sands China, Ltd, and Marina Bay Sands Pte. Ltd (collectively LVS) to ‘BB+’ from ‘BBB-‘.
As per its Q1 2022 financial results, the company reported a net revenue of $943 million, compared to $1.20 billion in the previous quarter. Operating loss was $302 million, compared to $96 million in the prior year quarter. Net loss from continuing operations was $478 million, compared to $280 million in the first quarter of 2021.
Moving forward, chairman and chief executive officer Robert G. Goldstein sees greater volumes of visitors eventually travelling to Macao and Singapore, and that they anticipate more guests back to LVS properties.
The principal operating and developmental activities of LVS occur in three geographic areas: Macao, Singapore, and the United States. In Macao, its segments include The Venetian Macao; The Parisian Macao; The Londoner Macao; The Plaza Macao and Four Seasons Macao; and Sands Macao. In Singapore, its segment is Marina Bay Sands. In the United States, its segment is the Las Vegas Operating Properties.
3. Hilton Worldwide Holdings Inc. (NYSE:HLT)
Market Cap: $31.44 Billion
Headquartered in Virginia, U.S., Hilton’s portfolio includes 6,215 properties across 118 countries and territories, including 690 that are managed and 5,405 that are franchised.
In line with other hospitality industry giants post-Covid, HWH continued with the growth momentum this year, as net income clocked in at $211 million for the first quarter of 2022, with a full-year projection of over $1 billion. Adjusted EBITDA for the first quarter of 2022 was recorded at $448 million.
The company’s system-wide comparable RevPAR increased 80.5pc in Q1 2022 compared to the same period in 2021, while fee revenues increased 79pc compared to the same period in 2021. However, when compared with pre-pandemic results, system-wide comparable RevPAR for the three months ended March 31, 2022, was down 17pc compared to the three months ended March 31, 2019.
During the first quarter of 2022, Hilton opened 76 new hotels contributing to 13,200 additional rooms and achieved net unit growth of 7,800 rooms.
Dedicated to fulfilling its commitment to hospitality, Hilton has welcomed more than 3 billion guests in its more than 100-year history, earning a top spot on Fortune’s 100 Best Companies to Work For list. The company has also been recognized as a global leader on the Dow Jones Sustainability Indices for five consecutive years.
Hilton has 18 brands across different market segments, including Conrad Hotels & Resorts, Canopy by Hilton, Curio Collection by Hilton, Hilton Hotels & Resorts, DoubleTree by Hilton, Embassy Suites Hotels, Hilton Garden Inn, Hampton by Hilton, LXR Hotels and Resorts by Hilton and Waldorf Astoria Hotels & Resorts.
2. Oriental Land Co. Ltd. (TYO:4661)
Market cap: $45.5 Billion
Another industry giant showing signs of recovery post Covid relaxations is the Japanese A-lister and one of the most valuable companies in the world, Oriental Land Company (TYO: 4661).
According to Oriental’s consolidated results for the fiscal year ending March 31, 2022, the company’s net sales rose 61pc year-on-year to ¥275.73 billion ($2.04 billion) as against ¥170.58 billion in April-March FY2021. It further reported a net income of ¥8.07 billion, a surge of 114.89pc over last year. This growth, although significant compared to FY21 (-$54 billion yen), was still far from the heights reached in FY19, when the same stood at ¥80.28 billion.
Oriental Land (OLCLY) foresees its net sales and profits to increase in the fiscal year ending March 31, 2023, owing primarily to an increase in theme park attendance on the back of improvements in the external environment. It also projects net sales, operating profit, ordinary profit, and profit attributable to owners of parent for FY23 to clock in at ¥407,922 million (up 47.9pc YoY), ¥50,251 million (up 549.8pc YoY), ¥50,601 million (up 348.7pc YoY), and ¥35,244 million (up 336.8pc YoY), respectively.
Founded by Chiharu Kawasaki and Hideo Edo in 1960, The Oriental Land Company engages in the operation and management of leisure facilities across three segments: Theme Parks, Hotels and Others. The Theme Parks segment operates Tokyo Disneyland and Tokyo DisneySea theme parks. The Hotels segment manages Tokyo Disneyland Hotel, Disney Ambassador Hotel, Tokyo DisneySea Hotel MiraCosta, and Palm & Fountain Terrace Hotel. The Others segment includes land development operations.
1. Marriott International Inc. (NYSE:MAR)
Market Cap: $45.55 billion
Marriott International operates a hospitality portfolio consisting of over 8,000 properties throughout its 30 industry-leading brands spanning across 139 countries and territories, making it the world’s 306th most valuable company by market cap as of June 2022.
Since the torrid 2020 when Covid had brought the hotel industry to a virtual halt, Marriott has witnessed a resurgence of sorts, and with air travel restrictions gradually fading away, the uptrend seems likely to persist for this global industry giant.
For the first fiscal quarter, Marriott saw its 2022 comparable systemwide RevPAR surge 96.5pc YoY worldwide. In the U.S. and Canada, this figure currently sits at 99.1pc.
Moreover, the company is also looking at earnings of $1.14 per share for the quarter, which is way above its loss of $0.03 in the same quarter last year.
On Marriott’s performance in the first quarter, CEO Anthony Capuano noted that the company saw “largest surge in global demand since the pandemic began”. Looking forward, Capuano expects robust demand trends to persist with cross-border travel gaining momentum.
Founded in 1993, Marriott International, Inc. operates in two business segments: United States and Canada (U.S. & Canada) and International. MI’s luxury hotel brands include JW Marriott, The Ritz-Carlton, and St. Regis, W Hotels, The Luxury Collection, EDITION, and Bulgari, while its Premium hotel brands include Marriott Hotels, Sheraton, Delta Hotels, Marriott Executive Apartments, Marriott Vacation Club, Westin, Renaissance, Le Meridien, Autograph Collection, Gaylord Hotels, Tribute Portfolio, and Design Hotels.
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