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The hotel industry is focused on the provision of short-term lodging, including hotels and motels, as well as accommodation-related services. It’s one segment within the broader hospitality, or leisure, industry. The hotel industry is split into two main categories of companies: C-corporation hotels, such as Marriott International Inc. (MAR) and Hilton Worldwide Holdings Inc. (HLT); and hotel real estate investment trusts (REITs), like DiamondRock Hospitality Co. (DRH) and Park Hotels & Resorts Inc. (PK).

The hotel industry has been severely affected by the COVID-19 pandemic and its resulting travel and dining restrictions, and other social-distancing rules.

C-corp hotels generally are engaged in hotel management, branding and marketing, and sometimes franchise licensing. They often own little real estate and their legal structure requires them to pay corporate taxes on dividends. These hotel stocks are best represented by the S&P 1500 Hotels Restaurants & Leisure Industry Index, which had a total return over the past year of 17.1%, as of Jan. 6, 2022.

Hotel REITs, on the other hand, are companies that focus more on the acquisition, ownership, and operation of hotel real estate. Some REITs even manage the hotels they own. They are legally structured in a way that exempts them from paying taxes on distributed dividends, but they must distribute 90% of their taxable income to shareholders in order to be eligible as a REIT. These hotel REITs are best represented by the S&P 1500 Hotel & Resort REITs Sub-Industry Index, which had a total return of 11.4% over the past year.

Both hotel stocks and hotel REITs have underperformed compared to the broader equity market, as represented by the Russell 1000 Index, which provided a total return of 24.4% over the past 12 months, as of Jan. 6, 2022. All statistics in the tables below are as of Jan. 6, 2022.

Many hotel companies reported a sharp rebound in revenue and improvement in their profit position in the third quarter of 2021, despite the spread of the Delta variant of COVID-19. The industry’s recovery occurred as the economy opened up and vaccinations increased. This prompted many experts in November to forecast a near full recovery of the hotel industry in 2022. But the emergence of the new, fast-spreading Omicron variant the same month has threatened to slow the rebound of the U.S. and global economy. The full impact on the hotel industry of the Omicron variant won’t be clear until companies report their fourth-quarter results in the coming weeks.

In the first half of this story we look at the top 3 hotel stocks with: the best value, the fastest growth, and the most momentum. In the second half, we examine the top 3 hotel REITs with: the best value, the fastest growth, and the most momentum. For the hotel REIT section, we use the price-to-sales ratio to determine the best value stocks and sales growth to determine the fastest growth stocks.

These are the hotel stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.

Best Value Hotel Stocks
 Price ($)Market Cap ($B)12-Month Trailing P/E Ratio
Choice Hotels International Inc. (CHH)154.578.637.3
Wyndham Hotels & Resorts Inc. (WH)88.308.244.2
Huazhu Group Ltd. (HTHT)36.4211.8111.6

Source: YCharts

  • Choice Hotels International Inc.: Choice Hotels International is a hotel franchising company with over 7,100 franchises with almost 600,000 rooms across more than 40 countries and territories. It has a dozen different lodging brands including Quality Inn, EconoLodge, and Cambria Hotels. The company announced in early December that its board of directors has approved a 6% increase in its quarterly cash dividend on common stock, raising the dividend to approximately $0.24 per share. The increase will be effective for the dividend payable on Jan. 18, 2022 to shareholders of record as of Jan. 4, 2022.
  • Wyndham Hotels & Resorts Inc.: Wyndham Hotels & Resorts owns and operates a hotel and resort chain. It offers resorts, meetings and events spaces, wedding venues, and more.
  • Huazhu Group Ltd.: Huazhu Group is a China-based hotel management company that provides hotel leasing, hotel operation, and co-development services.

These are the hotel stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly YOY percentage revenue growth and their most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general.

Fastest Growing Hotel Stocks
 Price ($)Market Cap ($B)EPS Growth (%)Revenue Growth (%)
Choice Hotels International Inc. (CHH)154.578.6700.053.4
Hyatt Hotels Corp. (H)94.5610.4N/A (see company description)113.3
Marriott International Inc. (MAR)165.2253.8116.175.1

Source: YCharts

  • Choice Hotels International Inc.: See above for company description.
  • Hyatt Hotels Corp.: Hyatt Hotels is a multinational hospitality company that develops and manages branded hotels, resorts, and residential and vacation ownership properties. The company announced in early November financial results for Q3 of its 2021 fiscal year (FY), the three-month period ended Sept. 30, 2021. Hyatt posted net income of $120 million, a significant turnaround from the net loss of $161 million reported in the year-ago quarter. Revenue rose 113% YOY. The company said that the travel industry has been recovering amid the easing of pandemic-related travel restrictions and the reopening of borders. Because the company’s EPS went from negative in the year-ago quarter to positive in the most recent quarter, an EPS growth rate could not be calculated for the table above.
  • Marriott International Inc.: Marriott International owns and operates hotels, motels, and timeshare properties worldwide. The company announced in early November financial results for Q3 FY 2021, ended Sept. 30, 2021. Net income rose 120.0% as revenue increased 75.1% compared to the year-ago quarter. The company said that it continued to see improvement in global demand despite the spread of the Delta variant of the coronavirus during the second half of the quarter.

These are the hotel stocks that had the highest total return over the last 12 months.

Hotel Stocks with the Most Momentum
 Price ($)Market Cap ($B)12-Month Trailing Total Return (%)
Wyndham Hotels & Resorts Inc. (WH)88.308.244.3
Choice Hotels International Inc. (CHH)154.578.642.6
Hilton Worldwide Holdings Inc. (HLT)152.1842.437.4
Russell 1000N/AN/A24.4
S&P 1500 Hotels Restaurants & Leisure Industry IndexN/AN/A17.1

Source: YCharts

  • Wyndham Hotels & Resorts Inc.: See above for company description.
  • Choice Hotels International Inc.: See above for company description.
  • Hilton Worldwide Holdings Inc.: Hilton Worldwide Holdings is a holding company that, through its subsidiaries, provides hospitality services. It owns and manages hotels, resorts, and timeshare properties in various regions throughout the world. The company announced in late October financial results for Q3 FY 2021, ended Sept. 30, 2021. Net income attributable to the company’s shareholders was $241 million, a significant improvement from the net loss of $79 million reported in the year-ago quarter. Revenue grew 87.5% YOY. Hilton noted that while the pandemic continued to have an adverse impact on its operations, trends in travel and tourism were improving.

These are the hotel REITs with the lowest 12-month trailing price-to-sales (P/S) ratio. For companies in early stages of development or industries suffering from major shocks, the price-to-sales ratio can be substituted as a rough measure of a business’s value. A business with higher sales could eventually produce more profit when it achieves, or returns to, profitability. The price-to-sales ratio shows how much you’re paying for the stock for each dollar of sales generated.

Best Value Hotel REITs
 Price ($)Market Cap ($B)12-Month Trailing P/S Ratio
Ashford Hospitality Trust Inc. (AHT)9.950.30.2
Braemar Hotels & Resorts Inc. (BHR)5.280.30.7
Service Properties Trust (SVC)9.651.61.2

Source: YCharts

  • Ashford Hospitality Trust Inc.: Ashford Hospitality Trust is a REIT whose geographically diversified portfolio mainly consists of dominant branded, upper upscale, full-service hotels.
  • Braemar Hotels & Resorts Inc.: Braemar Hotels & Resorts is a REIT focused on investing in luxury hotels and resorts.
  • Service Properties Trust: Service Properties is a REIT that focuses on hotels and service-focused retail net lease properties. The majority of its hotels are extended stay and select service. The company announced in early November financial results for Q3 FY 2021, ended Sept. 30, 2021. Its net loss narrowed to $59.7 million from $102.6 million in the year-ago quarter. Revenue grew 47.4% YOY. Service Properties said that its hotel portfolio continued to recover and that it was expecting to benefit from a rebound in business travel in the coming quarters.

These are the hotel REITs with the highest year-over-year (YOY) sales growth for the most recent quarter. Rising sales can help investors identify companies that are able to grow revenue through organic or new ways, as well as find growing companies that have not yet reached profitability. In addition, earnings per share can be significantly influenced by accounting factors that may not reflect the overall strength of the business. However, sales growth can also be potentially misleading about the strength of a business, because growing sales on money-losing businesses can be harmful if the company has no plan to reach profitability.

Fastest Growing Hotel REITs
 Price ($)Market Cap ($B)Revenue Growth (%)
Sunstone Hotel Investors Inc. (SHO)11.802.6479.1
Ryman Hospitality Properties Inc. (RHP)90.665.0336.9
Park Hotels & Resorts Inc. (PK)19.014.5331.6

Source: YCharts

  • Sunstone Hotel Investors Inc.: Sunstone Hotel Investors is a lodging REIT that owns primarily upper scale hotels. Its hotels operate under various nationally recognized brand names.
  • Ryman Hospitality Properties Inc.: Ryman Hospitality Properties is a REIT that owns and operates group-oriented, destination hotel properties in urban and resort markets. It specializes in upscale convention center resorts and country music entertainment experiences. The company announced in early November financial results for Q3 FY 2021, ended Sept. 30, 2021. Its net loss available to common shareholders narrowed to $8.5 million from $117.7 million in the year-ago quarter. Revenue expanded 336.9% YOY. Ryman noted that leisure demand remained strong despite the impact of the Delta variant during the quarter.
  • Park Hotels & Resorts Inc.: Park Hotels & Resorts is a REIT focused on premium-branded hotels and resorts primarily located in prime city center and resort locations. The company announced in early November financial results for Q3 FY 2021, ended Sept. 30, 2021. Its net loss attributable to stockholders narrowed to $86 million from $276 million in the year-ago quarter. Revenue increased 331.6% YOY. Park Hotels & Resorts said that the lodging industry was recovering and that it expected to see demand continuing to increase in 2022.

These are the hotel REITs that had the highest total return over the last 12 months.

Hotel REITs with the Most Momentum
 Price ($)Market Cap ($B)12-Month Trailing Total Return (%)
CorePoint Lodging Inc. (CPLG)15.670.9128.4
Ryman Hospitality Properties Inc. (RHP)90.665.032.2
Apple Hospitality REIT Inc. (APLE)16.483.823.0
Russell 1000N/AN/A24.4
S&P 1500 Hotel & Resort REITs Sub-Industry IndexN/AN/A11.4

Source: YCharts

  • CorePoint Lodging Inc.: CorePoint Lodging is a REIT focused on midscale and upper-midscale select-service hotels. Its portfolio includes hotels located near employment centers, airports, and major travel thoroughfares. The company announced in early November that it has agreed to be acquired through a joint venture (JV) between affiliates of Highgate and Cerberus Capital Management LP for approximately $1.5 billion. The transaction is expected to close in the first quarter of 2022.
  • Ryman Hospitality Properties Inc.: See above for company description.
  • Apple Hospitality REIT Inc.: Apple Hospitality REIT owns a large and diversified portfolio of upscale hotels in the U.S., focusing on leading brands such as Marriott, Hilton, and Hyatt.

The comments, opinions and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or to adopt any investment strategy. While we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described on our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.

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