In this article, we discuss the 5 best hotel stocks to invest in. If you want our detailed analysis of the hotel industry, go directly to the 11 Best Hotel Stocks To Invest In.
5. Travel + Leisure Co. (NYSE:TNL)
Number of Hedge Fund Holders: 30
Travel + Leisure Co. (NYSE:TNL) is an American timeshare company that develops, manages, and sells timeshare properties under various vacation ownership clubs, like Club Wyndham and WorldMark by Wyndham. Travel + Leisure Co. (NYSE:TNL)’s three core businesses include Wyndham Destinations, which is the largest global vacation ownership business; Panorama, a travel technology and vacation exchange operation; and Travel + Leisure Group, offering online travel subscription services and product licensing. Travel + Leisure Co. (NYSE:TNL) is one of the best hotel stocks to invest in.
At June end, 30 hedge funds in Insider Monkey’s database were stakeholders in Travel + Leisure Co. (NYSE:TNL), similar to Q1.
4. Wynn Resorts, Limited (NASDAQ:WYNN)
Number of Hedge Fund Holders: 37
Wynn Resorts, Limited (NASDAQ:WYNN) is a Nevada-based company developing and operating luxury high-end hotels and casinos. Wynn Resorts, Limited (NASDAQ:WYNN)’s core income generating properties are located on the Las Vegas Strip, namely Wynn Las Vegas and Encore Las Vegas. Other properties are situated in Everett, Massachusetts, and Macau, China.
Morgan Stanley analyst Thomas Allen kept an Overweight rating on Wynn Resorts, Limited (NASDAQ:WYNN), but lowered the price target from $113 to $107 on October 20. He believes that the Q3 estimates for Wynn Resorts, Limited (NASDAQ:WYNN)’s Vegas properties will be good, but since travel restrictions are still in place, the Macau estimates will be lower than expected.
Out of the 873 hedge funds monitored by Insider Monkey, 37 funds were long Wynn Resorts, Limited (NASDAQ:WYNN) at the end of Q2.
3. Hilton Worldwide Holdings Inc. (NYSE:HLT)
Number of Hedge Fund Holders: 45
Hilton Worldwide Holdings Inc. (NYSE:HLT) is a multinational American hospitality company, managing a huge portfolio of hotels and leisure establishments, as well as franchising extensively. Hilton Worldwide Holdings Inc. (NYSE:HLT) owns 18 brands that are spread over different market sectors, including: Conrad Hotels & Resorts, Hilton Hotels & Resorts, DoubleTree by Hilton, Waldorf Astoria Hotels & Resorts, and Hilton Grand Vacations, among others. Its self-owned properties and franchised outlets are located across 118 countries as of 2020. Hilton Worldwide Holdings Inc. (NYSE:HLT) is one of the top hotel stocks to purchase.
At the end of Q2, 45 hedge funds were bullish on Hilton Worldwide Holdings Inc. (NYSE:HLT).
On October 5, Hilton Worldwide Holdings Inc. (NYSE:HLT) was assigned a Hold rating with a $135 price target by Loop Capital analyst Alton Stump. He has a mixed outlook about Hilton Worldwide Holdings Inc. (NYSE:HLT)’s growth profile over the next 18 months.
Here is what Pershing Square Holdings has to say about Hilton Worldwide Holdings Inc. in its Q2 2021 investor letter:
“While the hotel industry has been extremely negatively impacted by the COVID-19 pandemic, Hilton has done an excellent job navigating industry volatility, a testament to the company’s high-quality, asset light, high-margin business model and superb management team. From the moment the pandemic began, Hilton’s management team took decisive actions to ensure the company not only managed through what it knew would be a challenging period, but also positioned the company to generate improved margins, cash flows and investment returns once the business recovers to pre-COVID-19 demand levels.
Industry RevPAR (the industry metric for same-store sales at a given hotel) bottomed in April 2020 and has shown sequential improvement every quarter as travel and mobility have recovered along with COVID-19 vaccine rollouts and a resumption in travel. In recent months, there is increasing evidence that a robust recovery scenario is underway, led by domestic leisure travel occasions which is currently trending above 2019 demand levels. For the first three weeks of July, the most recent data the company provided, RevPAR has already recovered to 85% of 2019 levels – a significant improvement over prior months driven by increased hotel occupancy and a rapid recovery in rate.
While management anticipates a moderation in leisure demand as we exit the summer, it expects the moderation in leisure travel to be offset by a more pronounced recovery in business transient travel occasions as offices reopen this fall. Although there remains near-term uncertainty in domestic travel given the increase in COVID-19 case numbers following the arrival of the Delta variant in the U.S., we believe that the medium-term outlook continues to point to a robust recovery scenario. Throughout the pandemic, Hilton took actions to reduce corporate expenses by about 20% compared to 2019 levels.
Simultaneously, the company provided resources and support to the Hilton owner community which further solidified Hilton as the preferred franchise partner, thereby expanding Hilton’s pipeline of units around the world.
In the most recent quarter Hilton affirmed its near-to-medium term outlook of mid-single-digit net unit growth, and a resumption of its historical 6-7% net unit growth beginning in 2023-2024, higher growth than competitors, and further evidence of Hilton’s unique business model.
We believe that Hilton will continue to grow its market share over time given independent hotels’ increased interest in seeking an affiliation with global brands, particularly in the wake of the pandemic. While the recovery may continue to be uneven, Hilton has made tremendous progress which will help it become an even more profitable and stronger business going forward.”
2. Marriott International, Inc. (NASDAQ:MAR)
Number of Hedge Fund Holders: 49
An American multinational engaged in operating, managing, and franchising hotels, residential, and timeshare properties, Marriott International, Inc. (NASDAQ:MAR) is a Maryland-based corporation with 30 brands and over 7600 properties, located across 131 countries. Marriott International, Inc. (NASDAQ:MAR) is traded as a NASDAQ 100 Component and a S&P 500 Component, and is currently one of the best hotel stocks to invest in.
Of the hedge funds monitored by Insider Monkey, 49 funds reported owning stakes in Marriott International, Inc. (NASDAQ:MAR) at the end of the second quarter.
Evercore ISI analyst Rich Hightower downgraded Marriott International, Inc. (NASDAQ:MAR) to In Line from Outperform, with a price target of $160, up from $145. He explained that Marriott International, Inc. (NASDAQ:MAR) has outperformed estimates in the last 60 days, so this rating is simply a valuation call. He also raised performance estimates for Q3.
Here is what Artisan Partners has to say about Marriott International, Inc. in its Q2 2021 investor letter:
“Hotel operator Marriott had performed well in the pandemic reopening trade. Their subsequent weakness reflects that trade’s slowing momentum in Q2 as virus variants surged globally and rising uncertainty weighed on economic growth expectations. Still, we remain confident in this business. Each are leaders in their respective industries with wide moats and superior business economics. Each is led by a battle-tested management team we believe is executing well on an appropriately set strategy to deliver shareholder value. They are carefully and wisely financed, and they have undemanding valuations based on normalized earnings power.”
1. MGM Resorts International (NYSE:MGM)
Number of Hedge Fund Holders: 59
MGM Resorts International (NYSE:MGM) is the best hotel stock to invest in, ranked based on its popularity among the elite hedge funds. An American global hospitality and entertainment mega corporation, MGM Resorts International (NYSE:MGM) owns and operates hotels like the Bellagio, Mandalay Bay, MGM Grand, and Park MGM. MGM Resorts International (NYSE:MGM) operates destination resorts across Las Vegas, Massachusetts, Detroit, Mississippi, and New Jersey. The company has major stakes in MGM China Holdings Ltd and MGM Growth Properties, which is a sought-after REIT.
At the end of June, 59 hedge funds were bullish on MGM Resorts International (NYSE:MGM), up from 57 in Q1.
Here is what Longleaf Partners Global Fund has to say about MGM Resorts International in its Q2 2021 investor letter:
“The investments in the preceding paragraph have been long-term holdings, but what about our newer purchases? We have heard from long-time Southeastern/Longleaf observers who look at these stock charts and ask, “How can that still be cheap?” We continue to focus on the importance of value growth and dynamically updating our appraisals. MGM for example has seen very strong value growth since our purchase last year as the company’s properties in the US have rebounded much stronger than even the biggest optimists predicted. Management and the board have reduced risk by monetizing more of MGM’s holdings in MGM Growth Properties, its real estate subsidiary. There is still plenty of value to be added in the online division as well. All this leads to a value per share that was in the $30s last year now approaching $50. The company remains attractively discounted, even after price appreciated 101% since we first bought the stock 9 months ago.
MGM (12%, 0.43%), the casino and online gaming company, was a top contributor as it reported a solid first quarter with Vegas EBITDAR (earnings before interest, taxes, depreciation, amortization and restructuring or rent costs) doubling sequentially and Regional EBITDAR actually growing strongly YOY due to exceptional cost control. The second quarter saw clear signs of even more growth with a strong rebound in travel to the company’s US properties. MGM also continued to de-risk its value and balance sheet by selling over $1 billion of fully valued shares of its real estate subsidiary MGM Growth Properties in the quarter. On the first day of July, the company announced a transaction to consolidate and sell the real estate of its CityCenter project at a price that was accretive to our value per share. “
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