In this article, we will discuss the 11 best hotel stocks to invest in. You can skip our comprehensive analysis of the hotel industry, and go directly to the 5 Best Hotel Stocks To Invest In.
The hotel industry has suffered terribly due to the COVID-19 pandemic, and the adverse effects of government mandated lockdowns, travel restrictions, and unvaccinated visitors legally being banned from certain establishments have caused serious financial damage to the entire travel and hospitality industry. According to McKinsey, the hotel industry is one of the hardest hit sectors by the global COVID-19 pandemic, and the recovery to the 2019 level of revenue and visitors is expected in 2023 or even later.
The hotel industry, however, is expected to make a comeback, once the vaccine rollout is completed for a majority of countries. The hotel industry is still a lucrative investment, especially as travel restrictions are being gradually lifted, and pent-up vacation plans will be carried out sooner or later. The smart money is certainly invested in the hospitality industry, and companies like MGM Resorts International (NYSE:MGM), Marriott International, Inc. (NASDAQ:MAR), Hilton Worldwide Holdings Inc. (NYSE:HLT), and Hyatt Hotels Corporation (NYSE:H) are very popular among hedge funds.
Our Methodology
Let’s dive into the 11 best hotel stocks to invest in. We took into account hedge fund sentiment, analysts’ ratings, long-term growth potential, and fundamentals while choosing these stocks. The stocks are ranked based on their popularity amongst the hedge funds.
Why should we pay attention to hedge fund sentiment while choosing stocks? Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021, our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the S&P 500 ETF (SPY). Our stock picks outperformed the market by more than 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
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Number of Hedge Fund Holders: 17
Pebblebrook Hotel Trust (NYSE:PEB) is a hotel investment company that is internally managed, and acquires and invests in hotels located in metropolitan United States cities, focusing mainly on coastal properties. Pebblebrook Hotel Trust (NYSE:PEB) is known to invest particularly in resorts that are located suitably near urban areas, and unique destination markets, focusing on the elite clientele. Pebblebrook Hotel Trust (NYSE:PEB) is one of the best hotel stocks to invest in currently.
At the end of June, 17 hedge funds were bullish on Pebblebrook Hotel Trust (NYSE:PEB) according to Insider Monkey’s exclusive database, up from 10 in Q1. Ken Griffin’s Citadel Investment Group is the leading stakeholder in Pebblebrook Hotel Trust (NYSE:PEB), with 70.63 million shares worth $80.37 million.
Number of Hedge Fund Holders: 18
Sunstone Hotel Investors, Inc. (NYSE:SHO) is a lodging REIT that currently owns 18 hotel properties comprising 9417 rooms, which are operating under popular hotel chains.
At the end of the second quarter, 18 hedge funds held stakes in Sunstone Hotel Investors, Inc. (NYSE:SHO), up from 17 in the previous quarter. These stakes were worth over $73.6 million by the end of Q2. Ken Heebner’s Capital Growth Management is the leading stakeholder in Sunstone Hotel Investors, Inc. (NYSE:SHO), with 1.77 million shares worth $21.98 million.
On August 3, Sunstone Hotel Investors, Inc. (NYSE:SHO) announced earnings for Q2. The EPS beat estimates by $0.03 at -$0.01. The company’s revenue was $117.21 million, exceeding estimated EPS by $12.29 million.
Number of Hedge Fund Holders: 22
A hotel and resort REIT, Ryman Hospitality Properties, Inc. (NYSE:RHP) is one of the best hotel stocks to invest in. Ryman Hospitality Properties, Inc. (NYSE:RHP) focuses on acquiring and managing upscale convention centers and resorts. The REIT owns five of the largest non-gaming convention center properties in the US that operate under the Gaylord Hotels brand name, and are managed by Marriott International, Inc. (NASDAQ:MAR). In total, Ryman Hospitality Properties, Inc. (NYSE:RHP) has ownership of 2.8 million square feet of indoor and outdoor space in top-notch convention centers and leisure establishments across the United States.
At the end of Q2, 22 hedge funds tracked by Insider Monkey were long Ryman Hospitality Properties, Inc. (NYSE:RHP). This is compared to the same number of hedge funds in Q1. Mario Gabelli’s GAMCO Investors is the biggest stakeholder in Ryman Hospitality Properties, Inc. (NYSE:RHP), with 1.45 million shares valued at $114.76 million.
Here is what Bireme Capital has to say about Ryman Hospitality Properties, Inc. (NYSE:RHP) in their Q4 2020 investor letter:
“In Q3, we purchased shares of Ryman Hospitality Properties (RHP), another company whose business and stock price were temporarily crushed by the pandemic. Ryman is an owner of large, convention-focused hotels under the “Gaylord” banner. Prior to 2020, the company had grown EBITDA every year since 2012, and has a demonstrated ability to profitably develop new hotels from scratch, having opened 5 since the year 2000. These hotels dominate their niche in the conference and convention segment: they have more meeting space square footage than almost all of their competitors.
Ryman also operates a fast-growing music venue business, which includes the Ryman Auditorium, the Grand Ole Opry, and a chain of bar and concert venues called “Ole Red.” These comprise RHP’s “entertainment” segment, which grew EBITDA from $14.5m in 2011 to $58m in 2019, an 18% CAGR.
We think the company will do more than $300m of free cash flow in 2022. When we were buying RHP at the end of Q3, it had a market cap of $2.0b, a mere 6x multiple of FCF. While the market cap has recently increased to $3.7b, we still find the valuation very attractive for a company with their track record.”
Number of Hedge Fund Holders: 23
Hyatt Hotels Corporation (NYSE:H) owns and franchises luxury hotels, resorts, vacation establishments. The luxury hospitality industry mega-corporation is traded as a Russell 1000 Component.
Out of the 873 hedge funds tracked by Insider Monkey, 23 funds reported owning stakes in Hyatt Hotels Corporation (NYSE:H), similar to Q1.
Baron Funds mentioned Hyatt Hotels Corporation (NYSE:H) in its Q2 2021 investor letter. Here is what they said:
“Shares of Hyatt Hotels Corp., a global hotelier, declined in the quarter due to investor concerns around a new, more contagious variant of COVID-19 and a reopening of Asia and Europe that was slower than market forecasts. While the slowed reopening is a disappointment, Hyatt’s domestic business and group bookings are starting to return, and we think conditions will normalize by 2022, at least domestically. The company remains on track with its asset sale program as the hotel transaction market returns to pre-pandemic valuations, which should make Hyatt a more valuable, fee-based business.”
Number of Hedge Fund Holders: 24
Host Hotels & Resorts, Inc. (NASDAQ:HST) is a S&P 500 company and the largest American lodging REIT. Host Hotels & Resorts, Inc. (NASDAQ:HST) owns and manages luxury and upper-upscale hotels, being a self-managed and self-administered REIT. Host Hotels & Resorts, Inc. (NASDAQ:HST) invests in geographically diverse assets, including 84 hotels across 20 top US markets.
Out of the hedge funds tracked by Insider Monkey, 24 funds were bullish on Host Hotels & Resorts, Inc. (NASDAQ:HST) at the end of the second quarter.
On October 18, Wells Fargo analyst Dori Kesten upgraded Host Hotels & Resorts, Inc. (NASDAQ:HST) from Underweight to Equal Weight, with an $18 price target. The analyst believes that Host Hotels & Resorts, Inc. (NASDAQ:HST) is well-positioned to benefit from steadily increasing hotel demand, but its increasingly large operations will make revenue management critical, as opposed to economy hotels.
Like MGM Resorts International (NYSE:MGM), Marriott International, Inc. (NASDAQ:MAR), Hilton Worldwide Holdings Inc. (NYSE:HLT), and Hyatt Hotels Corporation (NYSE:H), Host Hotels & Resorts, Inc. (NASDAQ:HST) is one of the best hotel stocks to invest in.
White Brook Capital mentioned Host Hotels & Resorts, Inc. (NASDAQ:HST) in its Q3 2021 investor letter. Here is what they said:
“Shares of Host Hotels (HST) were also sold during the 3rd quarter for similar reasons as Cogent given a degradation in the prospect of a return in group leisure and business travel. The capital was similarly redeployed.”
Number of Hedge Fund Holders: 24
Wyndham Hotels & Resorts, Inc. (NYSE:WH) ranks sixth on our list of the 11 best hotel stocks to invest in. Headquartered in New Jersey, Wyndham Hotels & Resorts, Inc. (NYSE:WH) is one of the leading franchisors globally, with its hotels spread across 9280 locations worldwide. Wyndham Hotels & Resorts, Inc. (NYSE:WH)’s portfolio of assets includes 20 hotels, such as Baymont, Days Inn, Howard Johnson, La Quinta, Ramada, Super 8, Travelodge, and Wyndham Grand. Wyndham Hotels & Resorts, Inc. (NYSE:WH) is traded as a S&P 400 Component.
At the end of Q2, 24 hedge funds were bullish on Wyndham Hotels & Resorts, Inc. (NYSE:WH). This is compared to the same number of hedge funds in Q1.
JPMorgan analyst Joseph Greff kept an Overweight rating on Wyndham Hotels & Resorts, Inc. (NYSE:WH)’s shares, raising the price target to $86 from $83 on October 18, citing the US lodging recovery in Q3 as the reason for the rating.
Like MGM Resorts International (NYSE:MGM), Marriott International, Inc. (NASDAQ:MAR), Hilton Worldwide Holdings Inc. (NYSE:HLT), and Hyatt Hotels Corporation (NYSE:H), Wyndham Hotels & Resorts, Inc. (NYSE:WH) is a notable hotel stock to invest in.
Click here to continue reading and see 5 Best Hotel Stocks To Invest In.
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10 Best Stocks Under $10 According to Billionaire Daniel Och's OZ Management
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George Soros Stock Portfolio: Top 10 Stock Picks
Disclosure: None. 11 Best Hotel Stocks To Invest In is originally published on Insider Monkey.
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