🎙️ This Week on Not Done: Stephen Grambling, Morgan Stanley
If you've ever wanted a Wall Street decoder ring for hotel stocks, this is the episode.
Stephen Grambling leads US Gaming, Lodging & Leisure at Morgan Stanley, covering 30+ public companies across 15 years and multiple cycles. He's a mechanical engineer turned sell-side analyst (we bonded over the Georgia Tech-to-hospitality pipeline) who got into investing after stumbling onto Warren Buffett's Graham-and-Doddsville coin-flipping speech in college. The framework he's used to call this industry up and down ever since? Unlevered free cash flow yield, ROIC, and where technology is about to bend the curve.
We got into it for 80 minutes. A few of the moments worth your commute:
The Q1 paradox. Over half his coverage beat Q1. REITs raised full-year guidance. And lodging stocks still underperformed the S&P. Stephen breaks down why — and why Morgan Stanley sits above consensus for the back half of 2026. (My take: easy comps + a muted guide = a lot of beats coming.)
The K-shaped economy isn't converging — it's compounding. $68 trillion of household net worth has accrued to high-end consumers. Gas is up 50%+ YoY, which is an 800 bps headwind for low-end households vs. ~200 bps for the rest. His provocative call: maybe we need to splinter luxury off into its own chain scale entirely.
AI in hospitality is underhyped. Stephen's word, not mine. We go deep on agentic AI disrupting Google's top-of-funnel monopoly (70% of travel still starts with a Google search), the OTA counter-argument from Lou Majewski at Airbnb, the "SaaS apocalypse" coming for the 4–5% of hotel revenue now going to tech vendors, and why productivity cycles historically expand corporate travel demand rather than killing it.
The owner trap nobody wants to name. 20-year franchise agreements. 7-year brand capex cycles. Lenders who only care up to 65% LTV. Owners underwriting 5-year holds on assets they end up holding for 20. Stephen and I land in the same place: free cash flow per key, net of true maintenance capex, is the metric the industry is under-reporting on.
The M&A parlor game. Wyndham/Choice. Hyatt + IHG. Hyatt + Hilton. He doesn't put anyone in play — but he repeats what Morgan Stanley's private equity panel was saying out loud last year. Worth the listen alone.
High-conviction longs: Hyatt, Ryman, Travel + Leisure. Favorite hotel he's paid for himself recently: Garza Blanca, Puerto Vallarta.
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What's Stephen Not Done with? Learning. Parenting. Travel.
Q1 2026 Public Travel Earnings: Beat the Print, Brace for Q2
Marriott expects Q2 Middle East RevPAR to be down ~50% year-over-year. Every public lodging company beat Q1. Eleven of fourteen brands and REITs raised full-year guidance.
Stephen Grambling's thesis from last week's episode played out almost perfectly: easier comps + muted guides = beats coming. But the Q1 print and the H2 narrative are now leaning on two assumptions that have to hold — that the Middle East stabilizes by Q3, and that the World Cup actually shows up.
Three editorial reads woven in below:
Hilton is making the most contrarian call in the sector. Nassetta openly named it a "C-shaped economy" — convergence, not divergence — citing tax refunds, the Big Beautiful Bill, deregulation, and AI-driven investment as drivers. I'm skeptical. One quarter of select-service snap-back doesn't unwind a decade of K-shape, and most of his cited drivers are one-time or front-loaded. Grambling's call will hold up. The Motley Fool
Marriott is now the lone World Cup hold-out. Either disciplined (Bonvoy is the official supporter with properties in all 16 host cities — they have proprietary pickup data) or stubborn. Given AHLA's May 4 survey says 80% of host-city hoteliers are tracking below projections, my base case is stubborn.
Marketplaces are pulling away from brands again. Airbnb grew revenue at ~4x the rate Hyatt grew RevPAR. Booking did $53.8B in gross bookings in one quarter — roughly 9x Marriott's annual gross fees.
Marketplaces (BKNG / EXPE / ABNB) Continue to DOMINATE
All three beat. All three are now baking ~100 bps of Middle East drag into Q2.
Booking (BKNG): Revenue +16% to $5.5B. Gross bookings $53.8B (+15%). Room nights +6% to 338M. Adj EBITDA +19%. Q2 guide implies sharp decel: room nights +2-4%, revenue +4-6%. Stock dropped after-hours despite the beat.
Expedia (EXPE): Revenue +15% to $3.4B. Adj EBITDA +83% to $542M — highest Q1 margin in 15 years. Adj EPS $1.96 vs. $1.39 expected = 41% beat. B2B is the engine: gross bookings +22%, revenue +25%.
Airbnb (ABNB): Revenue +18% to $2.7B. GBV +19% to $29.2B. Nights +9% to 156M (would have been 10% ex-war). Raised FY revenue growth to low-to-mid teens; ≥35% adj EBITDA margin. First-time bookers grew at the highest rate since 2022, led by Brazil, Japan, India.
Brands - Solid but Not the Growth of the OTAs
Brand | Q1 RevPAR | FY Guide Action | What to Know |
|---|---|---|---|
Hyatt (H) | +5.4% | Raised to 2-4% (from 1-3%) | Luxury led; Greater China +12%, APAC ex-China +11% |
Accor (AC.PA) | +5.1% LFL | Maintained | UAE -9%; L&L division RevPAR +6% |
IHG | +4.4% global | Maintained ("confident in consensus") | Re-accelerating in Greater China (+5.7%) |
Marriott (MAR) | +4.2% global | Raised to 2-3% (from 1.5-2.5%) | Select service snap from -1% Q4 to +3.5% |
Hilton (HLT) | +3.6% | Raised to 2-3% (from implied 1-2%) | Beat EPS, missed revenue; "C-shape" call |
Wyndham (WH) | -1% global (US flat) | Raised range to -1% / +1% | Biggest beat vs. own Q1 guide (-2 to -3%) |
Choice (CHH) | -0.8% global | Maintained | Lapping 410 bps hurricane benefit; ex-hurricane US +1.8% |
"If there's any sign of weakness in terms of the high-end customer, we have not seen it." — Mark Hoplamazian, Hyatt CEO Hotel Dive
My read: Hyatt is the cleanest beat in the brands. Luxury is doing exactly what Grambling said it would, and the geographic diversification (China re-accelerating, APAC ex-China at +11%) is paying off. Wyndham deserves credit for crushing its own guide — but the absolute number is still negative globally. Choice's full-year reaffirmation in the face of a 410 bps hurricane drag is actually a quiet bullish signal if you believe Pacious's "inflection point" call on conversions. The strangest number in the table: Marriott's select-service swing from -1% Q4 to +3.5% Q1 — that's a 450 bps quarter-over-quarter delta. Either Nassetta's C-shape is real or Q4 was the aberration. Q2 will tell us.
Lodging Public REITs
Every public lodging REIT raised guidance.
REIT | Q1 RevPAR | FY Guide Action | What to Know |
|---|---|---|---|
Sunstone (SHO) | +14.6% (+5.7% ex-Andaz Miami Beach) | Raised to 5.0-7.5% | Andaz ramp adds 890 bps; wine country combined +34% |
Pebblebrook (PEB) | +11.8% same-property | Raised by 75 bps | LA +31.5%; DC -24.1% (gov't); margin +327 bps |
Park (PK) | +5.5% (ex-Royal Palm) | Raised midpoint 50 bps to 0.5-2.5% | Resorts +7.6%; lowest sector guide |
RLJ | +4.8% | Raised to 1.5-3.5% | Northern CA +27%; Jan -1.9% → Mar +8.9% |
Host (HST) | +4.4% comp / +4.6% total | Raised to 3.0-4.5% | $0.72 special dividend (Four Seasons Houston sale) |
Ryman (RHP) | +2.1% same-store | Raised midpoint | Record Q1 revenue $664.6M |
Apple Hospitality (APLE) | +2.2% comparable | Raised (now > 2025 vs. prior in-line) | April preliminary >4% |
"We haven't seen RevPAR and total RevPAR growth at these levels since the third quarter of 2014." — Jon Bortz, Pebblebrook CEO AOL
My read: The REITs tell the more interesting story relative to the C-corps. When you own the asset and RevPAR outperforms, you capture the operating leverage — Pebblebrook's 327 bps of margin expansion and Sunstone's 28.6% AFFO growth are what that looks like in practice. Three caveats: (1) Sunstone and Pebblebrook had unique comp benefits (Andaz ramp, LA fire recovery, San Francisco AI inflow) — don't extrapolate. (2) Park's full-year RevPAR guide of 0.5-2.5% is the lowest in the room; that's a real outlier when everyone else is at 3%+ — worth a closer look at their urban concentration. (3) Brand stocks underperformed the S&P in Q1 despite the same beats. Either the market is pricing the Middle East drag harder on the brands than on the REITs, or it believes the asset-light story is finally mispriced.
The World Cup Reality Check
Marriott vs. everyone else. Pick a side.
The hold-out: Capuano: "Despite what you're hearing and reading in the press, we continue to feel confident in our 30 to 35 basis point impact globally from World Cup. We did extensive research before we guided that number." Host's raised guidance also leans on World Cup as part of the "special events" tailwind. Yahoo FinanceStocktitan
The data on the ground: CoStar / Tourism Economics cut expected FY US RevPAR contribution to 0.4%, down from 0.6% in February. AHLA's May 4 survey: 80% of host-city hoteliers say bookings tracking below projections; FIFA block cancellations, international travel barriers, and rising costs are the cited drivers. Hotel ManagementEuronews
The benchmark: 1994 US World Cup drove ~11.9% June/July RevPAR lift in host cities; 2026 currently projected at 1.7%. CRE Daily
The ground truth: Some host-city game-day occupancy reportedly as low as 15%. CRE Daily
My read: Marriott has proprietary booking data the rest of us don't see, but every third-party data set is moving the number down, and FIFA itself is releasing blocked rooms back to market. My take is that World Cup 2026 WILL UNDERPERFORM.
I’ll be at NYU on June 1 & 2 and Ryan Meliker joins the show as the first repeat guest next week. ….Stay tuned for Our Takes on Q2 & Beyond.
Cheers, Sloan