S&P Global - Hotels Gaming Leisure Credit Outlook 2024

The credit outlook for the hotels, gaming, and leisure sector in 2024 is expected to be influenced by various factors. One key factor is the resilience of leisure spending, which may be tested as consumers seek bargains due to high prices and rates, leading to moderation in travel and leisure spending growth. The cruise and Macao gaming industries are also expected to play a significant role. The Macao gaming market is predicted to remain strong, with China's reopening serving as a boost. Similarly, the cruise industry is seeing strong forward bookings for 2024 at higher prices, indicating the industry's ability to absorb higher capacity. In terms of risks, one concern is the potential for leveraging mergers and acquisitions (M&A) or other transactions exceeding leverage cushions. While many companies have recovered from the pandemic, leveraging transactions in a slowing economy could negatively impact ratings. Additionally, high prices and rates may weaken demand, particularly for big-ticket discretionary items like timeshare and recreational vehicles. The report's key assumptions for 2024 include a potential slowdown in the U.S. economy affecting Vegas and regional gaming revenue, inflation impacting costs in the EMEA gaming sector, slower growth in U.S. hotel sector revenue per available room (RevPAR), plateauing European lodging rates, and timeshare operators investing in pursuing new owners. Overall, while there are positive factors such as the recovery of certain sectors and strong demand in specific areas, there are also risks to be mindful of, including potential challenges in the leisure spending market and the impact of high prices and rates on demand.