US Hotels: Souring Year as Geopolitical Tensions Bite
US hotels face geopolitical crosswinds. US hoteliers are facing souring sentiments in the face of escalating geopolitical conflict, although impact thus far appears more sentiment-driven than fundame...
Chief Investment Office - Hong Kong version25 Mar 2026
  • Major US hoteliers have limited direct exposure to the Middle East; the region contributes 3-5% of total fee income and global room inventory
  • Second order impact from higher oil prices, including elevated travel and utility costs, warrants monitoring as it can dampen long-haul demand and add margin pressure to hotel operators
  • Luxury and higher chain-scale segments should remain relatively resilient compared to midscale and lower-tier segments given stronger pricing power and customer stickiness
  • We prefer Singapore players with undemanding valuations and exposure to resilient long stay lodging over US hotels
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US hotels face geopolitical crosswinds. US hoteliers are facing souring sentiments in the face of escalating geopolitical conflict, although impact thus far appears more sentiment-driven than fundamental. Latest RevPAR (revenue per available room) guidance for Marriott and Hilton remains unchanged at 1.5 - 2.5% and 1-2% respectively, and has yet to fully reflect travel caution to the Middle East region. That said, direct exposure to the region remains limited as the region contributes 3-5% of total fee income and global room inventory for both companies. However, we believe that the second order impact to the broader travel ecosystem warrants monitoring, including the effect of higher oil prices.

Second order impact to watch through higher air fares and lower willingness to travel. Higher oil prices are likely to feed through into elevated airfares and other travel costs, potentially dampening long-haul demand while adding to margin pressures for hotel operators. We also see lowered willingness to travel amongst consumers over safety concerns, especially to markets close to the centre of the political war, and potential cancellations or delays at conferences and events. Like prior periods of macro softness, midscale and lower-tier segments are likely to bear the brunt of any demand pullback, while luxury and higher chain-scale segments should remain relatively more resilient given stronger pricing power and customer stickiness.

Position for domestic travel, long-stay lodging to neutralise a weakened global travel outlook. The World Travel & Tourism Council (WTTC) estimates that the Middle East accounts for 5% of global international arrivals and 14% of global international transit traffic. Potential route disruptions and higher air fares could reduce global travel guidance this year, with domestic demand likely more resilient to fill the gap. Both Marriott and Hilton have meaningful global diversification, with fee-income led growth through higher room inventory. Within Asia, we see Singapore/Hong Kong benefitting as interim transit hubs in place of the Middle East. Potential demand spillover to these two markets will benefit S-REITs (c.60% exposure to Singapore). We prefer Singapore players with undemanding valuations and exposure to resilient long-stay lodging over US hotels.


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