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"Summertime -- and the livin' is easy." So why not indulge a bit?
Given the rise in business and leisure travel with the onset of summer, an improving economy and the overall improving employment numbers, the hotel industry is set to experience strong gains this season.
As per summer forecast from Smith Travel Research (STR), the leading information and data provider for the lodging industry, the U.S. hotel industry is expected to experience record-high room demand during the Jun to Aug 2016 phase.
STR has stated that the number of rooms sold during the summer months is estimated to inch up roughly 2.1% on a year-over-year basis, banking on the current trend in the U.S.
Meanwhile, a healthy supply pipeline is anticipated to lead to a 1.7% increase in the number of rooms available and is likely to keep occupancy growth subdued at 0.4%. Moreover, hoteliers are not likely to raise prices to match 2015 levels.
Nonetheless, ADR at U.S. hotels is expected to be up around 4% in the summer months and RevPAR is projected to grow 4.4% over the same time frame.
Buoyed by these positives, the hotel industry seems to be a lucrative investment space at the moment.
3 Hot Picks
Here we have highlighted three stocks from the Hotels & Motels industry that are poised to rally this summer:
Starwood Hotels & Resorts Worldwide Inc. is a leading global hospitality company, which primarily focuses on property ownership, management and franchising. The hotelier’s strong developmental pipeline, global presence and asset disposition strategy bode well. Moreover, owing to an increase in demand for hotels, this Zacks Rank #1 (Strong Buy) company's average daily rates are on the rise. Further, the pending merger between Starwood’s and Marriott International, Inc. (MAR - Free Report) will create the world's largest hotel company.
Also, the upward estimate revisions reinstate hope on the stock’s prospects. The Zacks Consensus Estimate for 2016 and 2017 climbed 8.6% and 3.9%, respectively, over the last 60 days. Moreover, year to date, the stock has returned nearly 9%.
Marriott Vacations Worldwide Corp. (VAC - Free Report) is a developer, marketer, seller and manager of vacation ownership resorts and vacation club, destination club and exchange programs, principally under the Marriott and Ritz-Carlton brands and trademarks. Strong marketing initiatives have been helping this Zacks Rank #2 (Buy) company to keep its volume per guest levels strong over the past few quarters, thereby resulting in higher contract sales and development margins.
Notably, the stock has surged nearly 11% year to date. Moreover, the rise in estimate revisions for 2016 and 2017 earnings further add to the optimism over the stock. The Zacks Consensus Estimate for 2016 and 2017 EPS have scaled 2.5% and 2.3%, respectively, over the last 60 days. Additionally, for full-year 2016, sales and EPS are projected to grow 2.9% and 21%, respectively
Belmond Ltd. together with subsidiaries engages in the hotel and travel businessesThis Zacks Rank #1 company owns and operates unique and distinctive hotel, rail and river cruise experiences in many of the world's most celebrated destinations.
Moreover, the company has been seeing an upward trend in earnings estimate revision. Notably, over the past 60 days, the Zacks Consensus Estimate for 2016 and 2017 earnings have increased 37.5% and 35.3%, respectively. Moreover, for full-year 2016, sales growth is pegged at 3.3% while EPS is expected to grow a solid 22.2%. Also, year to date, the stock has returned nearly 4%.
Bottom Line
Though the hotel industry has had its share of pitfalls in the form of economic and political upheaval in certain pockets across the world and margin pressure, favorable supply and demand balances, strong investor appetite, higher transaction volumes and solid lodging fundamentals spread cheer across the industry.
We believe that the dark days are over for the lodging sector and this summer might be the perfect time to indulge in hotel stocks to make sure your portfolio sizzles with the rising mercury!
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
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3 Hot Hotel Stocks to Check into This Summer
"Summertime -- and the livin' is easy." So why not indulge a bit?
Given the rise in business and leisure travel with the onset of summer, an improving economy and the overall improving employment numbers, the hotel industry is set to experience strong gains this season.
As per summer forecast from Smith Travel Research (STR), the leading information and data provider for the lodging industry, the U.S. hotel industry is expected to experience record-high room demand during the Jun to Aug 2016 phase.
STR has stated that the number of rooms sold during the summer months is estimated to inch up roughly 2.1% on a year-over-year basis, banking on the current trend in the U.S.
Meanwhile, a healthy supply pipeline is anticipated to lead to a 1.7% increase in the number of rooms available and is likely to keep occupancy growth subdued at 0.4%. Moreover, hoteliers are not likely to raise prices to match 2015 levels.
Nonetheless, ADR at U.S. hotels is expected to be up around 4% in the summer months and RevPAR is projected to grow 4.4% over the same time frame.
Buoyed by these positives, the hotel industry seems to be a lucrative investment space at the moment.
3 Hot Picks
Here we have highlighted three stocks from the Hotels & Motels industry that are poised to rally this summer:
Starwood Hotels & Resorts Worldwide Inc. is a leading global hospitality company, which primarily focuses on property ownership, management and franchising. The hotelier’s strong developmental pipeline, global presence and asset disposition strategy bode well. Moreover, owing to an increase in demand for hotels, this Zacks Rank #1 (Strong Buy) company's average daily rates are on the rise. Further, the pending merger between Starwood’s and Marriott International, Inc. (MAR - Free Report) will create the world's largest hotel company.
Also, the upward estimate revisions reinstate hope on the stock’s prospects. The Zacks Consensus Estimate for 2016 and 2017 climbed 8.6% and 3.9%, respectively, over the last 60 days. Moreover, year to date, the stock has returned nearly 9%.
Marriott Vacations Worldwide Corp. (VAC - Free Report) is a developer, marketer, seller and manager of vacation ownership resorts and vacation club, destination club and exchange programs, principally under the Marriott and Ritz-Carlton brands and trademarks. Strong marketing initiatives have been helping this Zacks Rank #2 (Buy) company to keep its volume per guest levels strong over the past few quarters, thereby resulting in higher contract sales and development margins.
Notably, the stock has surged nearly 11% year to date. Moreover, the rise in estimate revisions for 2016 and 2017 earnings further add to the optimism over the stock. The Zacks Consensus Estimate for 2016 and 2017 EPS have scaled 2.5% and 2.3%, respectively, over the last 60 days. Additionally, for full-year 2016, sales and EPS are projected to grow 2.9% and 21%, respectively
Belmond Ltd. together with subsidiaries engages in the hotel and travel businessesThis Zacks Rank #1 company owns and operates unique and distinctive hotel, rail and river cruise experiences in many of the world's most celebrated destinations.
Moreover, the company has been seeing an upward trend in earnings estimate revision. Notably, over the past 60 days, the Zacks Consensus Estimate for 2016 and 2017 earnings have increased 37.5% and 35.3%, respectively. Moreover, for full-year 2016, sales growth is pegged at 3.3% while EPS is expected to grow a solid 22.2%. Also, year to date, the stock has returned nearly 4%.
Bottom Line
Though the hotel industry has had its share of pitfalls in the form of economic and political upheaval in certain pockets across the world and margin pressure, favorable supply and demand balances, strong investor appetite, higher transaction volumes and solid lodging fundamentals spread cheer across the industry.
We believe that the dark days are over for the lodging sector and this summer might be the perfect time to indulge in hotel stocks to make sure your portfolio sizzles with the rising mercury!
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>