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Hotel Stocks Set for Further Growth, Analysts Say


Hotel stocks have seen a strong performance this year, driven by a surge in international travel demand. And according to analysts at Macquarie, there could be even more gains in store for at least two hotel giants.

Macquarie analysts pointed out that global lodging C corporations, including Hilton Worldwide Holdings, Marriott International, Choice Hotels International, Wyndham Hotels & Resorts, and Hyatt Hotels, have experienced an average increase of 26% in 2023, surpassing the S&P 500’s rise of 18.5%. Unlike real estate investment trusts (REITs), these C corp hotels focus on hotel management and licensing fees rather than owning real estate. In contrast, hotel REIT stocks have only risen by 6% this year.

Led by Chad Beynon, the analysts have upgraded their outlook for Marriott, Hilton, Hyatt, and Playa Hotels & Resorts for the fourth quarter of 2024 and 2025. They anticipate that all four companies will outperform earnings estimates in the current quarter, with U.S. revenue per available room projected to increase by 3.2%.

Out of their top picks, Hyatt and Playa are rated as “Outperform.” For Hyatt, the analysts have set a target price of $136, indicating a potential upside of 17% from Monday’s closing price. Meanwhile, their Playa target price of $14 suggests a staggering 81% rise.

There are several reasons behind the positive outlook. Leisure travel continues to show strength, and both group and business travel are gradually recovering. Furthermore, the rebound in China, where cross-border travel has lagged behind, adds to the optimistic sentiment. These trends have been highlighted by the management teams of the four companies, as mentioned in the analysts’ note.

While the analysts are neutral on Marriott and Hilton due to their current valuations and recent rally, they stated that they would become more constructive at a better entry level. Marriott shares have surged by 39% this year, and Hilton stock has climbed by 34%.

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