Top hotel stocks for the second quarter include MGM Resorts International, Marriott International Inc., and H World Group Ltd., shares of which have outperformed their industry peers over the past year.
The hotel industry is split into two main categories of companies: C-corporation hotels and hotel real estate investment trusts (REITs).
C-corporation hotels are generally engaged in hotel management, branding, and marketing, and are best represented by the S&P 1500 Hotels, Resorts, and Cruise Lines Sub-Industry Index, which had a total return over the past year of 7.9%.Hotel REITs are companies that focus on the acquisition, ownership, and operation of hotel real estate. These companies are best represented by the S&P 1500 Hotel & Resort REITs Sub-Industry Index, which has fallen 25.1% in the past year. Meanwhile, the Russell 1000 Index has risen 5.6%. Below we look at the top hotel stocks and the top hotel REITS for best value, fastest growth, and most momentum or best performance. All data below are as of May 3, 2023.
Best Value Hotel 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 ($)||Market Capitalization (Market Cap) ($B)||12-Month Trailing P/E Ratio|
|MGM Resorts International (MGM)||43.74||15.9||9.3|
|Hilton Grand Vacations Inc. (HGV)||42.60||4.7||13.5|
|Marriott Vacations Worldwide Corp. (VAC)||134.66||5.0||15.5|
- MGM Resorts International: MGM Resorts operates gaming and entertainment resorts, providing accommodations, hospitality management, dining, and other services for casinos and non-casino properties around the world. The company's net revenue surged by 36% in the most recent quarter amid a rebound in casino travel and its acquisition of Cosmopolitan of Las Vegas.
- Hilton Grand Vacations Inc.: Hilton Grand Vacations markets, sells, and manages timeshare resorts. It also operates a points-based vacation club. Revenue increased about 20% in the most recent quarter, while shares of Hilton Grand Vacations have climbed by 5% in the last year.
- Marriott Vacations Worldwide Corp.: Marriott Vacations is a timeshare company that sells, rents, and manages properties. It also provides other timeshare companies with products and services. The company's stock has shed a tenth of its value in the last year amid inflation and rising interest rates.
Fastest Growing Hotel Stocks
These are the top 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 most recent quarterly YOY 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 figure or the other unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of more than 1,000% were excluded as outliers.
|Fastest Growing Hotel Stocks|
|Price ($)||Market Cap ($B)||EPS Growth (%)||Revenue Growth (%)|
|Marriott International Inc. (MAR)||178.45||54.1||113.2||33.7|
|Hilton Worldwide Holdings Inc. (HLT)||145.73||38.6||2.7||33.3|
|Hilton Grand Vacations Inc. (HGV)||42.60||4.7||52.4||19.9|
- Marriott International Inc.: Marriott operates a chain of hotels, timeshare properties, and residential properties worldwide. EPS more than doubled and revenue climbed by about a third for the latest quarter, driven by strong demand in the company's leisure and group segments.
- Hilton Worldwide Holdings Inc.: Hilton Worldwide Holdings is a global hospitality company. It owns and manages hotels, resorts, and timeshare properties throughout the world. Revenue grew by a third in the first quarter of 2023 amid a resurgence of travel demand to near pre-pandemic levels.
- Hilton Grand Vacations Inc.: See company description above.
Hotel Stocks With the Most MomentumThese are the hotel stocks that had the best returns over the past 12 months out of the companies we looked at.
|Hotel Stocks With the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|H World Group Ltd. (HTHT)||44.87||14.3||48.7|
|Hyatt Hotels Corp. (H)||118.20||12.7||32.1|
|InterContinental Hotels Group (IHG)||69.91||12.2||9.3|
|Russell 1000 Index||N/A||N/A||5.6|
|S&P 1500 Hotels, Resorts, and Cruise Lines Sub-Industry Index||N/A||N/A||7.9|
- H World Group Ltd.: H World is a Chinese hotel operator and franchisor. It offers hotel leasing, operation, and co-development services worldwide. The company's stock climbed steadily from October to early March as the company posted better-than-expected financial results and investors anticipated an end to China's zero-COVID restrictions.
- Hyatt Hotels Corp.: Hyatt Hotels is a multinational hospitality company that develops and manages branded hotels, resorts, and residential and vacation ownership properties. Hyatt shares have also benefited from reduced COVID restrictions in China, where the company is developing dozens of properties.
- InterContinental Hotels Group: InterContinental Hotels is a British hospitality company operating worldwide hotel chains including Holiday Inn, Regent, and Crowne Plaza. The company's expansion into the luxury hotel space helped to drive momentum in the last several months.
Best Value Hotel REITs
These are the hotel REITs 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 REITs|
|Price ($)||Market Cap ($B)||12-Month Trailing P/E Ratio|
|Park Hotels & Resorts Inc. (PK)||12.40||2.7||11.2|
|Diamondrock Hospitality Co. (DRH)||8.22||1.7||17.9|
|Host Hotels & Resorts Inc. (HST)||16.27||11.6||18.5|
- Park Hotels & Resorts Inc.: Park Hotels is a hotel REIT that owns and operates 46 properties across 15 states and Puerto Rico. Park has a larger footprint in California than in any other state, with half of those properties located in the San Francisco Bay Area. The company has shed almost a quarter of its value in the last year amid recession fears and a tech industry slowdown.
- Diamondrock Hospitality Co.: Diamondrock Hospitality is a self-advised hotel REIT that owns 35 luxury and upscale properties across 14 states. In the last two years, the REIT has joined the nationwide southward migration and acquired 6 hotels, all of them in the South—4 in Florida, 1 in Texas, and 1 in Louisiana. Diamondrock shares also plunged in the last year, falling almost 20%.
- Host Hotels & Resorts Inc.: Host Hotels & Resorts owns 77 hotel properties across 21 states, Canada, and Brazil. It primarily acquires luxury and upper upscale hotels. Host shares are down about 13% over the last year.
Fastest Growing Hotel REITsThese are the hotel REITs with the highest YOY sales growth for the most recent quarter. Rising sales can help investors to both identify companies that are able to increase revenue through organic or new ways and find growing companies that have not yet reached profitability. In addition, accounting factors that may not reflect the overall strength of the business can significantly influence earnings per share. 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 (%)|
|VICI Properties Inc. (VICI)||32.12||32.3||110.7|
|Ryman Hospitality Properties Inc. (RHP)||90.99||5.0||64.4|
|Sunstone Hotel Investors Inc. (SHO)||9.68||2.0||41.3|
- VICI Properties Inc.: VICI is a casino and hotel REIT. It owns a portfolio of gaming, hospitality, and entertainment properties including Caesars Palace Las Vegas, MGM Grand, and the Venetian Resort Las Vegas. Revenue more than doubled for the first quarter of 2023 on rebounding casino business and the company's acquisition of four properties from PURE Canadian Gaming.
- Ryman Hospitality Properties Inc.: Ryman Hospitality is a convention and lodging REIT that owns convention center resorts and entertainment properties outside of the gaming industry. Its properties include Gaylord Opryland Resort & Convention Center, Gaylord Palms Resort & Convention Center, and many others. Revenue for the first quarter of 2023 reached record levels due to strength in room rates and outside-the-room spending.
- Sunstone Hotel Investors Inc.: Sunstone Hotel Investors is a lodging REIT that owns 15 primarily upscale hotels and resorts. Management attributed revenue gains in the most recent quarter to improved room, food, and drink sales.
Hotel REITs With the Best PerformanceThese are the hotel REITs that had the highest total return or smallest decline in total returns over the last 12 months.
|Hotel REITs With the Best Performance|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return|
|Service Properties Trust (SVC)||8.70||1.4||18.4|
|VICI Properties Inc. (VICI)||32.12||32.3||12.7|
|Ryman Hospitality Properties Inc. (RHP)||90.99||5.0||-1.1|
|Russell 1000 Index||N/A||N/A||5.6|
|S&P 1500 Hotel & Resort REITs Sub-Industry Index||N/A||N/A||-25.1|
- Service Properties Trust: Service Properties is a REIT that owns 220 hotels across the U.S. and Canada. The company also owns service-focused retail properties. In May, Service Properties completed the sale of its TravelCenters of America locations to BP PLC (BP) for over $379 million.
- VICI Properties Inc.: See company description above.
- Ryman Hospitality Properties Inc.: See company description above.
The Impact of COVID-19 on Hotel Stocks
Companies owning, operating, or investing in hotels had significant disruptions to their business throughout the early days of COVID-19. In a span of months, nearly five million hospitality and leisure jobs were lost across the U.S., and occupancy rates in the last months of 2020 fell to below 20% in many cases. As of mid-2023, many businesses across the hospitality industry have largely recovered, with pent-up demand and other factors contributing to a significant rise in room prices in some cases.
To be sure, the recovery has not been entirely even, and the pandemic will likely continue to impact the hotel industry for years to come. For example, certain travel destinations have seen stronger demand than others, with the entertainment and gaming city Las Vegas recovering faster than business hubs like New York City.
Risks of Investing in Hotel Stocks
Investing in companies that own and operate hotels comes with a number of risks, some of them significant. While some of the biggest hotel companies have thousands of locations around the world and benefit from global brand recognition, most other hotel businesses are less stable. Here are some of the risks to be aware of when considering an investment in hotel stocks:
- Property: Property-related risk is a key factor to consider when making any investment in real estate, a REIT, or a company that owns or operates real estate. Hotels are subject to wear and tear, damage from guests, construction and renovation issues, and a host of other liabilities. These property-related risks exist during development as well as operation of a hotel.
- Operation: Operational risks are associated with the day-to-day business and management of the hotel. A hotel must be able to maintain high levels of cash flow to continue to function properly. But factors such as poor planning and mismanagement can jeopardize this.
- Market Factors: External factors also create significant risk within the hotel industry. The pandemic and its devastating impact on travel and hotel use is a notable example. Other factors include macroeconomic conditions such as inflation or a recession, political or regulatory changes, and competition from newer hospitality companies such as Airbnb Inc. (ABNB).
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