Moody's Upgrades Argentina's Credit Rating Amid Economic Reforms 
Gold Prices Fall Amid Rate Jitters; Copper Steady as China Stimulus Eyed 
Mexico's Undervalued Equity Market Offers Long-Term Investment Potential 
Lithium Market Poised for Recovery Amid Supply Cuts and Rising Demand 
European Stocks Rally on Chinese Growth and Mining Merger Speculation 
Energy Sector Outlook 2025: AI's Role and Market Dynamics 
China's Refining Industry Faces Major Shakeup Amid Challenges 
US Gas Market Poised for Supercycle: Bernstein Analysts 
Urban studies: Doing research when every city is different 
Gold Prices Slide as Rate Cut Prospects Diminish; Copper Gains on China Stimulus Hopes 
Oil Prices Dip Slightly Amid Focus on Russian Sanctions and U.S. Inflation Data 
UBS Projects Mixed Market Outlook for 2025 Amid Trump Policy Uncertainty 
Moldova Criticizes Russia Amid Transdniestria Energy Crisis 
Geopolitical Shocks That Could Reshape Financial Markets in 2025 
Goldman Predicts 50% Odds of 10% U.S. Tariff on Copper by Q1 Close 
Stock Futures Dip as Investors Await Key Payrolls Data 
U.S. Treasury Yields Expected to Decline Amid Cooling Economic Pressures 
The outlook for the US lodging and cruise industry remains positive, Moody's Investors Service says in a new report. The year is off to a strong start, with occupancy rates at historical highs and oil prices falling, with earnings set to increase as a result.
"Lodging companies enjoyed a 3.7% rise in occupancy rates in the first two months of this year, compared with industry expectations for growth of less than 2%," says Senior Vice President, Margaret Taylor. "Occupancy rates continued to surpass historical levels in March, though we expect the rate of growth to slow over the coming 12 months."
Meanwhile, cruise companies stand to benefit from low oil prices. Fuel costs account for 10%-13% of total revenues for the big three cruise companies, Carnival Cruise Lines, Royal Caribbean Cruises and NCL Corp. All three hedge these costs, limiting the amount of earnings benefit from falling oil prices this year, but all will receive an earnings boost as hedges fall off.
Lodging and cruise companies will however come under pressure from the strengthening US dollar, since most have sizable businesses outside the US, Taylor says in the new report, "Earnings Growth Will Be Strong in 2015, Despite FX Headwind." While on a constant-currency basis revenue per available room (RevPAR) is expected to grow between 6% and 7% this year, once these earnings are translated into US dollars, growth is likely to be much lower.
The stronger US dollar won't affect EBITDA as much as RevPAR, as many of the costs are also in local currency. Indeed, following a strong earnings season, Moody's has revised its expectations for rated companies' 2015 adjusted EBITDA growth upward, to 8%-9% from 6%-8%. Last year adjusted EBITDA rose 11.3%.
"Although foreign exchange will be a modest drag on earnings in the year ahead, for lodging companies this will be more than offset by continued growth in occupancy and for cruise companies by low fuel prices due to falling oil prices," Taylor says.
Growth in occupancy will in turn drive an improvement in average daily room rates. Moody's has also revised its expectation for room rates upward, to 5%-6% from 4.0%-4.5%, given the stronger start to the year.
