01:49 PM EDT, 04/05/2024 (MT Newswires) -- Lodging real estate investment trusts' first-quarter results likely benefited from strengths in the upper upscale chain and urban markets, as well as "specific market outperformance," Oppenheimer said Friday.

Lodging REITs own and manage hotels and resorts and rent space in those properties. Such companies' revenue per available room performance could top Wall Street's views for the March quarter, led by the upper upscale segment, Oppenheimer analysts Tyler Batory and Jonathan Jenkins said in a note, citing data from research firm STR.

Revenue per available room, or revPAR, is a metric that helps gauge top-line performance in a hotel or market segment.

Higher end chain scales likely led all performance metrics across the first quarter, with upper upscale revPAR seen increasing 3.5%. "Notably, these segments are where many lodging REITs have exposure," the analysts said. Lower-end chain scales likely continued to lag overall performance, with the economy segment projected to fall 6%, according to the note.

Overall industry revPAR is expected to have grown 0.8% year over year in the three-month period, led by a 2.4% gain in average daily rate. Occupancy likely fell 1.5%. "Seasonality appears consistent with prior years and shows no indication of a slowdown in RevPAR," Batory and Jenkins wrote.

In terms of markets, only urban and resort likely saw annual revPAR gains in the quarter, up 3.4% and 2.4%, respectively. Resort markets saw tailwinds from a strong February and strength in Las Vegas, according to the note.

Key REIT markets such as Washington DC, Boston, and New York City are expected to have led revPAR performance in the quarter, while leisure destinations likely underperformed. "This is due to continued recovery in business transient and strong demand for group events," the analysts said.

"These factors indicate that Street forecasts of low-single RevPAR growth in (first quarter) could be too conservative," Oppenheimer said.

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