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Hotel Stocks To Buy

The hotel industry was severely affected by the COVID-19 pandemic, travel and dining restrictions, and other social distancing rules, although many companies have begun to recover as restrictions have loosened.

hotel stocks to buy

In this article, we will discuss the 12 best hotel stocks to buy now. You can skip our comprehensive analysis of the hotel industry, and go directly to the 5 Best Hotel Stocks To Buy Now.

The hotel industry is a branch of the hospitality sector that focuses on offering lodging services to clients. According to Statista, the global market for hotels and resorts reached its peak in 2019 at $1.52 trillion. The coronavirus (COVID-19) pandemic caused the market size to fall under $1 trillion in 2020 and 2021. The market was anticipated to be worth $1.06 trillion in 2022. According to Deloitte, there is an indication that some consumers are still adjusting to COVID while there has been a welcome uptick in activity across the industry. Consumers are also highly concerned about inflation and the cost of living, but these worries have not yet had a significant impact on their intentions to spend money on travel.

According to CBRE, inbound tourism will increase hotel demand in 2022 in the U.S., driven primarily by leisure travelers from Europe and the Asia-Pacific region. In 2022, resorts and all-inclusive vacation spots will continue to do well as travelers look for simplicity and price stability. The advantages won't all be the same. Miami has benefited from the change in travel habits and is already doing 13% better than 2019's summer revenue per available room (RevPAR). Greater benefits may accrue in 2022 for harder-hit markets like San Francisco and New York, where RevPAR is still down 61% and 56%, respectively, from 2019. Given rising construction costs and manpower scarcity, supply growth will generally continue to be low.

Smart money is certainly invested in the hospitality industry, and companies like Marriott International, Inc. (NASDAQ:MAR), Hilton Worldwide Holdings Inc. (NYSE:HLT), and MGM Resorts International (NYSE:MGM) are some of the best hotel stocks that are very popular among hedge funds.

Along with Marriott International, Inc. (NASDAQ:MAR), Hilton Worldwide Holdings Inc. (NYSE:HLT), and MGM Resorts International (NYSE:MGM), Hilton Grand Vacations Inc. (NYSE:HGV) is one of the best hotel stocks to buy now.

On September 27, Hyatt Hotels Corporation (NYSE:H) was upgraded by Evercore ISI analyst Duane Pfennigwerth from In Line to Outperform with a $100 price target. According to Pfennigwerth, Hyatt Hotels Corporation (NYSE:H) shift to asset-light fee-based revenue would gradually increase the creation of free cash flow. Pfennigwerth believes that the asset-light hotel brands are generally appealing despite their recent downturn, but Hyatt Hotels Corporation (NYSE:H) has a higher long-term re-rating potential than the other brands in the group.

Wyndham Hotels & Resorts, Inc. (NYSE:WH) is a Parsippany-Troy Hills, New Jersey-based hotel franchisor with over 9,280 locations globally. Wyndham Hotels & Resorts, Inc. (NYSE:WH) performed well in Q2 2022, exceeding forecasts for sales and earnings per share (EPS). Wyndham Hotels & Resorts, Inc. (NYSE:WH) RevPAR exceeded pre-COVID levels for the first time during Q2. The business has four times outperformed consensus EPS forecasts during the last four quarters.

On September 8, Wyndham Hotels & Resorts, Inc. (NYSE:WH) announced the acquisition of Vienna House for $44 million. The acquisition has added about 40 upscale and midscale hotels and more than 6,000 rooms to Wyndham Hotels & Resorts, Inc. (NYSE:WH) existing fleet of resorts. In exchange for long-term franchise agreements with Wyndham Hotels & Resorts, Inc. (NYSE:WH), the Berlin-based HR Group will continue to own, lease, and manage the current Vienna House hotels after Wyndham purchases the Vienna House brand from them. After closing, the Vienna House name will change to Vienna House by Wyndham and it will join Wyndham's portfolio of famous brands.

Just like Marriott International, Inc. (NASDAQ:MAR), Hilton Worldwide Holdings Inc. (NYSE:HLT), and MGM Resorts International (NYSE:MGM), Wyndham Hotels & Resorts, Inc. (NYSE:WH) is one of the best hotel stocks to buy now.

Airlines certainly give us insight into current and future travel demand, but they might not be the best investment option at the moment given their exposure to oil prices and high levels of debt. Hotel stocks, on the other hand, have much better economics and pricing power. Further, hotels didn't have to dilute shares and borrow money as excessively as airlines during the pandemic. And many were able to use the downturn to improve operating margins.

InterContinental Hotels Group (IHG (opens in new tab), $69.82) owns, manages, franchises and leases hotels in various countries worldwide. The U.K.-based company has approximately 6,000 hotels and 886,000 rooms in roughly 100 countries.

Large hotel operators like IHG have been able to use the pandemic to pursue growth opportunities while smaller operators were more focused on survival. The company opened 291 hotels in 2021 and signed another 437 into its pipeline of properties.

InterContinental Hotels Group has an overall B (Buy) rating in the POWR Ratings system. B-rated stocks have posted an average annual return of 20.1% which compares favorably to the S&P 500's annual return of 8.0%.

Included in the firm's score is a Quality Grade of B, considering IHG is one of the top hotel stocks in the space with ownership of well-known brands and premium properties. IHG also has a Sentiment Grade of B, with four out of the five Wall Street analysts covering the stock giving it a Strong Buy rating. Check out the complete POWR Ratings for IHG, including a deeper dive into its component scores. (opens in new tab)

TNL operates in two segments: Vacation ownership and leisure travel and membership. The company's portfolio is made up of hotels and resorts, and includes brands such as Club Wyndham, Worldmark by Wyndham and Margaritaville Vacation Club by Wyndham.

Target Hospitality (TH (opens in new tab), $5.73) is one way to play the red-hot energy sector via hotel stocks. The specialty rental and hospitality services company caters to a variety of clients, including those in the oil and gas equipment & services industry.

Choice Hotels (CHH (opens in new tab), $143.09) is a unique company relative to other hotel stocks. CHH franchises lodging properties under several brands, including Comfort Inn, Clarion, EconoLodge and Rodeway Inn. It currently franchises more than 7,100 hotels in no fewer than 40 countries and territories.

Franchising means higher margins than operating a hotel. This is evidenced in CHH's gross margin of 56.1%, well above the industry average of 28.9%. Choice Hotels also markets cloud-based property management software to non-franchised hoteliers, which helps boost margins too.

While higher margins are supportive of multiple expansion, the recovery in travel will help accelerate earnings growth. And Choice Hotels is poised to be a major beneficiary of this increase in travel, as it has a 24% market share of middle-market hotels and a 20% market share of economy properties. Plus, 80% of its portfolio is in the U.S., which is the market seeing the strongest recovery.

A major source of revenue for BVH is its Bluegreen Vacation Club. This is a flexible, points-based, deeded vacation ownership plan with 68 Club and Club Associate Resorts and access to nearly 11,300 other hotels and resorts through partnerships and exchange networks.

Given this combination of growth and value, it's not surprising that BVH is one of the best hotel stocks in the POWR Ratings system, with an overall A (Strong Buy) rating. A-rated stocks have posted an average annual performance of 31.1%, which compares favorably to the S&P 500's average annual 8% gain.

Like the rest of the travel industry, hotels were heavily hit by COVID-19, seeing occupancy rates drop below 20% and close to 5 million jobs disappearing from the sector in just a few months in 20201.

Hotel stocks plummeted, but many saw this as an opportunity to look for strong travel stocks to buy while prices were low. However, after several months of the travel recovery, is 2023 still a good time to invest in hotel stocks?

Global occupancy rates increased from 43% in January to 66% in September2, and hotels that reported data for both 2019 and 2022 showed that in September 2022, demand was just 6% short of pre-pandemic levels3. Meanwhile, average daily rate surpassed pre-pandemic levels4, and revenue per available room (RevPAR) hit record highs up nearly 108% over 2019 levels5.

CRUZ is a wider travel ETF with holdings in leading airline, cruise, and hotel stocks, allowing investors to benefit from the travel recovery while mitigating exposure to risk. CRUZ tracks the rules-based weighted BlueStar Global Hotels, Airlines, and Cruises Index, has an expense ratio of 0.45%, and is currently trading at $15.9614.

InterContinental is a UK-based hotel chain with properties all around the world. Towards the end of 2022, many considered it undervalued20, but the subsequent rush to buy IHG shares still leaves plenty of opportunity for decent returns for investors who buy now.

IHG is seen as a stable hotel stock, and is expected to grow revenue significantly over the next couple of years, with profits predicted to rise by 58%21. Investment bank Peel Hunt noted that the company owns 4% of the global hotels market, but 10% of the space currently being developed, allowing plenty of scope for it to grow its market share22. IHG is currently trading at 48.2223.

Based in China with over 8,000 hotels, H World Group is a significant player in the hotel industry. With most of its hotels located in China, H World Group could benefit from the much-delayed reopening of the country, although the current surge in COVID-19 could temporarily dent its occupancy rates. 041b061a72

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