ABNB - Hotel REITs: Unfazed By Omicron

• It's been a 'Tale of Two Americas' of late for the hotel industry. Several markets and categories continue to report severely depressed demand while others are seeing record-high occupancy rates.
• In a twist of fate, after posting dramatic gains during the vaccine development stages, hotel REITs have been the weakest-performing property sector since vaccines became widely available in late April.
• Sunbelt and leisure-focused markets have substantially outperformed Coastal business-heavy markets. The Top-10 markets have all been in the Southern U.S. while the Bottom-10 markets have all been in the North.
• Encouragingly, recent TSA travel has indicated that the Omicron effect is surprisingly muted as the domestic travel comeback has continued its recovery this holiday season after a brief pullback.
• Earlier this year, we stated that the "risks remain skewed to the downside" for hotel REITs, but we've upgraded our sector call to neutral and we see several catalysts for 2022 including the restoration of dividends across most of the sector.

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