An aerial view shows destroyed homes and buildings that burned to the ground in western Maui.
Patrick T. Fallon/AFP/Getty Images
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The unprecedented wildfires in Maui have already claimed at least 55 lives and continue to burn throughout the island. They have already devastated popular tourist areas like Lahaina, and experts predict it will take years to rebuild the historic town after more than a thousand buildings were destroyed.
The full extent of the human and environmental toll of the disaster will take time to assess, but it seems likely there will be disruption to tourism, which accounts for the majority of Maui’s economy. Hawaii’s state government is currently allowing essential travel only to Maui. Of course, the fires could put off wary travelers even after restrictions lift, both to that island and the state as a whole.
BMO Capital Markets analyst Ari Klein notes that the disaster’s financial impact won’t be known for some time, but takes a look at lodging real estate investment trust, or REIT, companies that operate in Hawaii.
Host Hotels & Resorts
(ticker: HST) has four hotels in the state, with three on Maui. Hawaii is the company’s largest individual market, accounting for 11% of 2022 earnings before interest, taxes, depreciation, and amortization, or Ebitda—or $170.5 million, with Maui making up more than 90% of that figure.
The company’s Hyatt Regency, which delivered $82.7 million in Ebitda last year—the second highest of any hotel in Host’s portfolio, Klein notes—is in hard-hit Lahaina. The hotel’s website says it is closed to new guests through Aug. 17, and it “has implemented emergency preparedness procedures in an effort to ensure the safety and security of our guests and colleagues.”
Among Host’s other Maui properties, Klein writes that The Fairmont Kea Lani and Andaz Maui at Wailea Resort (which generated $39 million $36.5 million in Ebitda last year, respectively) are still open, “but given the visitor restrictions to Maui and airline cancellations, we expect near-term disruption at a minimum.”
Host Hotels & Resorts fell 2.2% to $16.29 on Friday. The broader market was lower on Friday as well, with the
S&P 500
and
Nasdaq Composite
both closing down less than 1%. Klein kept his Outperform rating and $21 price target on the shares.
Park Hotels & Resorts
(PK) gets more than a quarter of its Ebitda from Hawaii, but doesn’t have any exposure to Maui. That said, its Hilton Waikoloa Village, which delivered $54 million in Ebitda in 2022, is on the Big Island, which is also dealing with wildfires. However, these fires “are less severe than on Maui and PK has noted that thus far it has not seen any impact or cancellations,” he writes.
He kept a Market Perform rating and $15 price target on Park Hotels’ shares, which dipped 2.7% to $13.04 on Friday.
Sunstone Hotel Investors
(SHO) owns Maui’s Wailea Beach Resort; Klein doesn’t cover the company, but notes the property was responsible for $66 million of Ebitda last year—or 18% of the company’s total. The shares were off 1.8% to $9.09.
Some other Hawaii-related stocks were falling ahead of the broader market on Friday:
Hawaiian Holdings
(HA), owner of Hawaiian Airlines, and the
Maui Land & Pineapple
Company (MLP) were both down more than 3%.
Hawaiian Electric Industries
(HE), which owns the utility Maui Electric Company, was roughly flat but has tumbled nearly 12% this week.
Ultimately, the total cost and impact of these wildfires won’t be known for some time. The biggest question for the island’s companies—and broader economy—will be how long tourists will stay away.
Write to Teresa Rivas at [email protected]
Source: https://www.barrons.com/articles/maui-wildfires-hotels-stocks-tourism-economy-137ea7cf?siteid=yhoof2&yptr=yahoo