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3 Hotel Stocks to Keep on Your Radar Despite Industry Challenges
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The Zacks Hotels and Motels industry faces challenges from rising labor, utility and maintenance costs, economic uncertainty and cautious consumer spending, which could weigh on hotel occupancy, room rates and profit margins. Intense competition and substantial capital requirements for property upgrades and renovations are also putting pressure on profitability. However, the industry continues to benefit from steady travel demand, higher guest spending and the gradual recovery of business and group travel. Major events, including the FIFA World Cup held earlier this year and ongoing celebrations marking America's 250th anniversary, have created opportunities to drive hotel demand in key markets. Additionally, investments in loyalty programs, digital platforms and enhanced guest services are helping operators strengthen customer retention and improve the guest experience. Industry players, such as Marriott International, Inc. (MAR - Free Report) , Wyndham Hotels & Resorts, Inc. (WH - Free Report) and Choice Hotels International, Inc. (CHH - Free Report) , are positioned to benefit from these favorable industry trends.
Industry Description
The Zacks Hotels and Motels industry comprises companies that own, lease, manage, develop and franchise hotels. Some vacation ownership and exchange firms are also part of the industry. Several participants own, construct and operate resorts. Some companies develop lodges and mobile accommodations, including modular, skid-mounted ones and central amenities that provide long-term and temporary workforce accommodations. Some industry players develop, market, sell and manage vacation ownership and associated products. A few hoteliers also offer studios, one-bedroom suites and accommodations to mid-market business and personal travelers.
4 Trends Shaping the Future of the Hotels & Motels Industry
Rising Operating Costs and Margin Pressure: Hotel operators continue to face elevated expenses related to labor, utilities, maintenance, insurance and property upkeep. Wage inflation and the need to retain skilled employees can increase payroll costs, while higher utility and maintenance expenses add to the cost of running properties. These pressures can limit the industry's ability to expand profit margins, particularly when operators cannot fully pass on higher costs to guests through room-rate increases.
Economic Uncertainty and Intense Competition: Persistent inflation, economic uncertainty and pressure on household budgets could make travelers more selective about their accommodation spending. Leisure guests may opt for shorter trips, lower-priced properties or alternative lodging options, while corporate clients may exercise greater discipline over travel budgets. At the same time, competition from hotels across different price categories and alternative accommodation providers can limit pricing flexibility. Operators must balance room rates with occupancy levels to remain competitive, potentially constraining revenue growth and profitability.
Recovery in Business and Group Travel:The continued recovery in corporate travel, meetings, conventions and group bookings is creating opportunities for hotel operators to improve occupancy and room-rate performance. Business and group travelers can generate demand beyond leisure travel periods, helping properties maintain more consistent room utilization. Major events, including the FIFA World Cup held earlier in 2026, have also provided opportunities to attract visitors in host cities and surrounding markets. Meanwhile, celebrations marking America's 250th anniversary have supported event-related tourism, although the impact varies by location. These demand drivers can help hotels strengthen revenues and improve operating leverage.
Loyalty Programs, Technology and Enhanced Guest Services: Hotel companies are increasingly investing in loyalty programs, digital booking platforms, personalized guest experiences and operational technology to strengthen their competitive positions. Loyalty memberships can encourage repeat stays, improve direct bookings and help reduce reliance on third-party booking channels and their associated commissions. Technology investments can also streamline reservations, improve service delivery and support more efficient revenue management. In addition, upgraded amenities and personalized services can help hotels differentiate their offerings, attract new customers and build long-term guest relationships. These initiatives can support customer retention, revenue generation and operating efficiency over time.
Zacks Industry Rank Indicates Dull Prospects
The Zacks Hotels and Motels industry is grouped within the broader sector.
The group's Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates dull near-term prospects. The Zacks Hotels and Motels industry currently carries a Zacks Industry Rank #166, which places it in the bottom 33% of the 247 Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
The industry's position in the bottom 50% of the Zacks-ranked industries results from a negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, analysts are gradually losing confidence in this group's earnings growth potential.
Before we present a few stocks that you may want to keep an eye on, let us look at the industry's recent stock-market performance and valuation picture.
Industry Outperforms the S&P 500
In the past year, the Zacks Hotels and Motels industry has outperformed the S&P 500. Moreover, over this period, the industry has gained 33.4% against the sector's decrease of 14.4%. Meanwhile, the Zacks S&P 500 composite has rallied 12.2%.
Hotels & Motels Industry's Valuation
Based on the trailing 12-month EV/EBITDA, which is a commonly used multiple for valuing Hotels and Motels stocks, the industry is currently trading at 16.02X compared with the S&P 500's 17.88X. The sector's trailing 12-month EV/EBITDA ratio stands at 10.55X.
Over the past five years, the industry has traded as high as 40.11X and as low as 13.38X, the median being 15.88X, as the chart shows.
3 Hotels & Motels Stocks to Watch
Marriott: The company continues to benefit from broad travel demand, pricing power, steady room additions and a strong pipeline led by conversions. Growth in Marriott Bonvoy, new U.S. co-branded card agreements and technology investments are supporting fee growth and customer engagement.
MAR currently holds a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for Marriott’s 2026 bottom line indicates a surge of 17.2% from the year-ago period’s actual. MAR’s shares have risen 50.4% in the past year.
Wyndham Hotels & Resorts: The company is benefiting from its asset-light business model, extensive global franchise network and strong presence in the economy and midscale segments. New hotel openings, demand for affordable accommodation, and investments in loyalty programs and digital booking platforms are supporting franchise growth and fee-based revenues.
WH presently carries a Zacks Rank #2. The Zacks Consensus Estimate for Wyndham Hotels & Resorts’ 2026 EPS implies growth of 6.6% from the year-ago period’s actual. WH’s shares have gained 1.7% in the past year.
Price & Consensus: WH
Choice Hotels International: The company is benefiting from higher franchise-agreement activity, improving hotel retention, conversion-led development and international expansion. Growth in extended-stay brands and increasing engagement through Choice Privileges and Business Direct bode well.
CHH currently carries a Zacks Rank #3 (Hold). The company’s 2026 bottom line is likely to witness a year-over-year improvement of 0.6%. CHH’s shares have gained 18.8% in the past year.
View the Zacks #1 Rank List
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3 Hotel Stocks to Keep on Your Radar Despite Industry Challenges
The Zacks Hotels and Motels industry faces challenges from rising labor, utility and maintenance costs, economic uncertainty and cautious consumer spending, which could weigh on hotel occupancy, room rates and profit margins. Intense competition and substantial capital requirements for property upgrades and renovations are also putting pressure on profitability. However, the industry continues to benefit from steady travel demand, higher guest spending and the gradual recovery of business and group travel. Major events, including the FIFA World Cup held earlier this year and ongoing celebrations marking America's 250th anniversary, have created opportunities to drive hotel demand in key markets. Additionally, investments in loyalty programs, digital platforms and enhanced guest services are helping operators strengthen customer retention and improve the guest experience. Industry players, such as Marriott International, Inc. (MAR - Free Report) , Wyndham Hotels & Resorts, Inc. (WH - Free Report) and Choice Hotels International, Inc. (CHH - Free Report) , are positioned to benefit from these favorable industry trends.
Industry Description
The Zacks Hotels and Motels industry comprises companies that own, lease, manage, develop and franchise hotels. Some vacation ownership and exchange firms are also part of the industry. Several participants own, construct and operate resorts. Some companies develop lodges and mobile accommodations, including modular, skid-mounted ones and central amenities that provide long-term and temporary workforce accommodations. Some industry players develop, market, sell and manage vacation ownership and associated products. A few hoteliers also offer studios, one-bedroom suites and accommodations to mid-market business and personal travelers.
4 Trends Shaping the Future of the Hotels & Motels Industry
Rising Operating Costs and Margin Pressure: Hotel operators continue to face elevated expenses related to labor, utilities, maintenance, insurance and property upkeep. Wage inflation and the need to retain skilled employees can increase payroll costs, while higher utility and maintenance expenses add to the cost of running properties. These pressures can limit the industry's ability to expand profit margins, particularly when operators cannot fully pass on higher costs to guests through room-rate increases.
Economic Uncertainty and Intense Competition: Persistent inflation, economic uncertainty and pressure on household budgets could make travelers more selective about their accommodation spending. Leisure guests may opt for shorter trips, lower-priced properties or alternative lodging options, while corporate clients may exercise greater discipline over travel budgets. At the same time, competition from hotels across different price categories and alternative accommodation providers can limit pricing flexibility. Operators must balance room rates with occupancy levels to remain competitive, potentially constraining revenue growth and profitability.
Recovery in Business and Group Travel: The continued recovery in corporate travel, meetings, conventions and group bookings is creating opportunities for hotel operators to improve occupancy and room-rate performance. Business and group travelers can generate demand beyond leisure travel periods, helping properties maintain more consistent room utilization. Major events, including the FIFA World Cup held earlier in 2026, have also provided opportunities to attract visitors in host cities and surrounding markets. Meanwhile, celebrations marking America's 250th anniversary have supported event-related tourism, although the impact varies by location. These demand drivers can help hotels strengthen revenues and improve operating leverage.
Loyalty Programs, Technology and Enhanced Guest Services: Hotel companies are increasingly investing in loyalty programs, digital booking platforms, personalized guest experiences and operational technology to strengthen their competitive positions. Loyalty memberships can encourage repeat stays, improve direct bookings and help reduce reliance on third-party booking channels and their associated commissions. Technology investments can also streamline reservations, improve service delivery and support more efficient revenue management. In addition, upgraded amenities and personalized services can help hotels differentiate their offerings, attract new customers and build long-term guest relationships. These initiatives can support customer retention, revenue generation and operating efficiency over time.
Zacks Industry Rank Indicates Dull Prospects
The Zacks Hotels and Motels industry is grouped within the broader sector.
The group's Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates dull near-term prospects. The Zacks Hotels and Motels industry currently carries a Zacks Industry Rank #166, which places it in the bottom 33% of the 247 Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
The industry's position in the bottom 50% of the Zacks-ranked industries results from a negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, analysts are gradually losing confidence in this group's earnings growth potential.
Before we present a few stocks that you may want to keep an eye on, let us look at the industry's recent stock-market performance and valuation picture.
Industry Outperforms the S&P 500
In the past year, the Zacks Hotels and Motels industry has outperformed the S&P 500. Moreover, over this period, the industry has gained 33.4% against the sector's decrease of 14.4%. Meanwhile, the Zacks S&P 500 composite has rallied 12.2%.
Hotels & Motels Industry's Valuation
Based on the trailing 12-month EV/EBITDA, which is a commonly used multiple for valuing Hotels and Motels stocks, the industry is currently trading at 16.02X compared with the S&P 500's 17.88X. The sector's trailing 12-month EV/EBITDA ratio stands at 10.55X.
Over the past five years, the industry has traded as high as 40.11X and as low as 13.38X, the median being 15.88X, as the chart shows.
3 Hotels & Motels Stocks to Watch
Marriott: The company continues to benefit from broad travel demand, pricing power, steady room additions and a strong pipeline led by conversions. Growth in Marriott Bonvoy, new U.S. co-branded card agreements and technology investments are supporting fee growth and customer engagement.
MAR currently holds a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for Marriott’s 2026 bottom line indicates a surge of 17.2% from the year-ago period’s actual. MAR’s shares have risen 50.4% in the past year.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Price & Consensus: MAR
Wyndham Hotels & Resorts: The company is benefiting from its asset-light business model, extensive global franchise network and strong presence in the economy and midscale segments. New hotel openings, demand for affordable accommodation, and investments in loyalty programs and digital booking platforms are supporting franchise growth and fee-based revenues.
WH presently carries a Zacks Rank #2. The Zacks Consensus Estimate for Wyndham Hotels & Resorts’ 2026 EPS implies growth of 6.6% from the year-ago period’s actual. WH’s shares have gained 1.7% in the past year.
Price & Consensus: WH
Choice Hotels International: The company is benefiting from higher franchise-agreement activity, improving hotel retention, conversion-led development and international expansion. Growth in extended-stay brands and increasing engagement through Choice Privileges and Business Direct bode well.
CHH currently carries a Zacks Rank #3 (Hold). The company’s 2026 bottom line is likely to witness a year-over-year improvement of 0.6%. CHH’s shares have gained 18.8% in the past year.
Price & Consensus: CHH
