Periodic/Sector reports
Hotel: Bullish On The Brilliant Outlook
OVERWEIGHT (Maintained)
Analyst
Analyst
Nonpawit Vathanadachakul
Highlights
- All flights have resumed, while fuel prices have stabilised following a period of volatility, supporting the return of long-haul tourists to Thailand.
- Based on arrival figures for Jul-Aug 26, we note a return in tourists, especially those from Europe and the US. All operators are expected to record robust yoy RevPAR growth, ranging from the mid-single digits to the mid-teens.
- Maintain OVERWEIGHT. For the hotel sector, our top picks are CENTEL, AWC and ERW. For the aviation sector, our top pick is AOT.
Analysis
- What’s new? The situation in the Middle East has calmed down but is not over yet. This has resulted in jet fuel prices stabilising following the volatility seen in 2Q26, albeit at still-elevated levels. Airlines’ 3Q26 earnings are expected to improve qoq, as fuel costs, a major cost component, are likely to decline qoq. Hence, airfares have normalised, with airline earnings expected to be driven by passenger volume. Although airline earnings should remain under pressure from high fuel prices, the volume-driven method is beneficial to hotel and airport business. We note that long-haul tourists are returning, with Jul-Aug 26 arrival figures showing yoy growth for both tourists from Europe and the US.
- Our take. Currently, US and Iran are more engaged with economic sanctions and the situation has remained quite stable for months. Assuming that there is no further conflict escalation that hampers travel, we expect the tourism business to be strong in 2H26 and even 1Q27. 3Q is usually a quarter that tourist arrivals pick up, which should result in a clear qoq improvement in 3Q26. This will be supported by large events such as GasTech, a major global event, in Sep 26, which will attract around 50,000 participants from 150 countries. The normalisation of airfares also serves as a key supporting factor for hotel earnings, as airfare prices started to decline in Jul 26. The return of tourists due to cheaper airfare is positive for both the hotel and airport businesses. Hotel forward bookings are also reflecting a strong RevPar growth.
- All hotel operators saw upwards momentum in RevPar in Jul 26. In addition, forward bookings in Aug-Sep 26 are also showing strong growth yoy. The key contributing regions should be Bangkok, upcountry and the Maldives. Hotel operators are expected to record robust yoy RevPAR growth, ranging from the mid-single digits to the mid-teens. Most hotel operators are not concerned about rising costs as fuel prices have stabilised. Moreover, most of them will receive an earnings boost from lower cost of debt. Hence, we expect most operators to report yoy growth in 3Q26 earnings. Assuming the war ends soon, we expect the tourism sector's earnings outlook to remain robust from now till end-1Q27.
Highlights
- All flights have resumed, while fuel prices have stabilised following a period of volatility, supporting the return of long-haul tourists to Thailand.
- Based on arrival figures for Jul-Aug 26, we note a return in tourists, especially those from Europe and the US. All operators are expected to record robust yoy RevPAR growth, ranging from the mid-single digits to the mid-teens.
- Maintain OVERWEIGHT. For the hotel sector, our top picks are CENTEL, AWC and ERW. For the aviation sector, our top pick is AOT.
Analysis
- What’s new? The situation in the Middle East has calmed down but is not over yet. This has resulted in jet fuel prices stabilising following the volatility seen in 2Q26, albeit at still-elevated levels. Airlines’ 3Q26 earnings are expected to improve qoq, as fuel costs, a major cost component, are likely to decline qoq. Hence, airfares have normalised, with airline earnings expected to be driven by passenger volume. Although airline earnings should remain under pressure from high fuel prices, the volume-driven method is beneficial to hotel and airport business. We note that long-haul tourists are returning, with Jul-Aug 26 arrival figures showing yoy growth for both tourists from Europe and the US.
- Our take. Currently, US and Iran are more engaged with economic sanctions and the situation has remained quite stable for months. Assuming that there is no further conflict escalation that hampers travel, we expect the tourism business to be strong in 2H26 and even 1Q27. 3Q is usually a quarter that tourist arrivals pick up, which should result in a clear qoq improvement in 3Q26. This will be supported by large events such as GasTech, a major global event, in Sep 26, which will attract around 50,000 participants from 150 countries. The normalisation of airfares also serves as a key supporting factor for hotel earnings, as airfare prices started to decline in Jul 26. The return of tourists due to cheaper airfare is positive for both the hotel and airport businesses. Hotel forward bookings are also reflecting a strong RevPar growth.
- All hotel operators saw upwards momentum in RevPar in Jul 26. In addition, forward bookings in Aug-Sep 26 are also showing strong growth yoy. The key contributing regions should be Bangkok, upcountry and the Maldives. Hotel operators are expected to record robust yoy RevPAR growth, ranging from the mid-single digits to the mid-teens. Most hotel operators are not concerned about rising costs as fuel prices have stabilised. Moreover, most of them will receive an earnings boost from lower cost of debt. Hence, we expect most operators to report yoy growth in 3Q26 earnings. Assuming the war ends soon, we expect the tourism sector's earnings outlook to remain robust from now till end-1Q27.
OVERWEIGHT (Maintained)
Analyst
Analyst
Nonpawit Vathanadachakul
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This report is provided subject to, and must be read together with, the full Disclosures / Disclaimers available at this link, which are incorporated by reference into this report. In particular, this report is intended for general circulation and informational purposes only and does not constitute personal investment advice or a recommendation to buy or sell any investment product or security. You should independently evaluate the information and, where necessary, seek advice from a qualified financial adviser regarding the suitability of any investment. Analyst certifications required under applicable regulations, including SEC Regulation AC (where relevant), are included in this report. By accessing, receiving or using this report, you acknowledge that you have read, understood and agreed to be bound by the Disclosures / Disclaimers, as may be amended, supplemented or updated from time to time.
