Investor sentiment is cautious heading into Q4 earnings, with concerns that hotel operators and lodging real estate investment trusts, or REITs, will struggle to hit full-year targets unless there is a sharp rebound in revenue per available room, or RevPAR, BofA Securities said.

In Q3, RevPAR in the US declined by 1.4% year-over-year, and C-corporations are underperforming expectations by about 30 basis points compared to Wall Street estimates, the analysts said, adding that they now expect RevPAR growth of only 0.5% to 1.5% in 2026. This includes a 25 basis point benefit from the FIFA World Cup, which is expected to boost demand.

The analysts said that every 1% change in RevPAR typically translates to a 1.1% to 1.5% change in earnings per share for hotel C-corporations. As a result, they have lowered their price objective for Wyndham Hotels (WH) to $95 from $105.

Despite a more optimistic outlook from airlines on corporate and high-end leisure demand, supported by recent Delta Air Lines (DAL) earnings, "we think investor sentiment on Lodging is cautious heading into earnings due to a combination of a soft exit trajectory out of Q3 and the large (+4.2%) Q4 acceleration needed to maintain full year outlooks," the analysts said, adding that if RevPAR remains flat in H2 2025, they estimate earnings could fall 3% below consensus for Marriott (MAR) and 4% below consensus for Hilton (HLT) in 2026.

Looking ahead to Q4, Hilton and Wyndham appear to face the greatest challenge in terms of needing to accelerate performance to hit targets. Hyatt, on the other hand, appears least likely to face a RevPAR downgrade, the analysts said, adding that while some investors are concerned by the weak RevPAR trends, the analysts estimate the downside to full-year 2025 earnings is relatively limited due to minimal operating leverage.

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