The other key differentiator for Marriott International Inc (NYSE:MAR) is that it owns only a few of its lodging properties. Rather, Marriott generates fees from lodging property owners by manning their properties and allowing the properties to operate under the Marriott brand.
Take a vacation
The other major hotel option is Wyndham Worldwide Corporation (NYSE:WYN), which operates the Wyndham Hotels, Ramada, Days Inn and Super 8 brands. The hotel company posted quarterly EPS of $0.71, versus $0.60, on the back of 20% year over year increase in lodging revenues. Meanwhile, domestic revenue per average room was up 6%, while the international segment was flat.
Wyndham Worldwide Corporation (NYSE:WYN) has a dominant position in the vacation rental business — with more than 100,000 properties in its vacation rental portfolio. In 2012, the hotel operator acquired two beach resorts, one in the U.S. and one in the U.K. Wyndham Worldwide Corporation (NYSE:WYN) also snatched up the Smoky Mountain Property Management business in 2012.
Wyndham Worldwide Corporation (NYSE:WYN) gets a large portion of revenue from its vacation ownership or timeshare business, which has solid long-term potential. Wyndham Vacation Ownership is the largest vacation ownership business, with respect to the number of resorts and sales. The timeshare and vacation business offers one of the best yields per unit in the industry.
Hedgie trade
Going into 2nd quarter, Starwood had interest from hedge funds, with 38 funds long the stock — a 12% increase from the previous quarter. This includes the hedge fund with the highest position, billionaire Steve Cohen’s SAC Capital, with a $117 million position. Wyndham Worldwide Corporation (NYSE:WYN) had 33 hedge funds long the stock; meanwhile, Marriott had only 22 hedge funds long the stock.
Bottom line
Starwood trades just below Marriott and Wyndham Worldwide Corporation (NYSE:WYN) at at only 19 times earnings, and Starwood is seeing the biggest rebound in its free cash flow generation over the past few years.
As a result, I like Starwood the best, given its valuation and international growth prospects. However, with Marriott’s big plans for international expansion and Wyndham’s stronghold in the vacation market, the two could be worthwhile investments to check out.
The article This Travel Industry Is Hot originally appeared on Fool.com.
Marshall Hargrave has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Marshall is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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