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5 Hotel Stocks to Buy for a Prosperous Portfolio

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The global economy, especially the U.S. economy, reopened fully in the first half of 2022 after two years of Coronavirus-led lockdowns and restrictions. The pandemic has eased to a great extent since the outbreak of the Omicron variant of the COVID-19 infection last December-January.

As the United States and other major developed and emerging countries become fully vaccinated, almost every country has withdrawn restrictions on travel and staying in hotels.

At this stage, it should be fruitful to invest in hotel stocks. Here are five hotel stocks with a favorable Zacks Rank — Marriott International Inc. (MAR - Free Report) , Hyatt Hotels Corp. (H - Free Report) , Choice Hotels International Inc. (CHH - Free Report) , Marriott Vacations Worldwide Corp. (VAC - Free Report) and InterContinental Hotels Group PLC (IHG - Free Report) .

Near-Term Positives

The hotel industry has been recovering from the effects of the pandemic felt over the last two years. A fully vaccinated America and strong pent-up demand supported by astonishing savings under the pandemic are helping a lot to recover this industry.

Moreover, hotel demand in 2022 is likely to be driven by leisure travelers from Europe and the Asia-Pacific. Although the occupancy rate is improving, it is still below the pre-pandemic level. This indicates significant growth opportunities.

Higher costs remain a concern for the industry participants. However, the devastating global supply-chain system is stabilizing gradually. This along with stringent cost-cutting measures adopted by hoteliers during the pandemic era, will improve this industry’s bottom line.

Hotel owners continue to focus on maintaining a balance between maximizing hotel profitability while driving guest satisfaction. In this regard, hoteliers have leveraged technologies such as mobile and web check-in and mobile key.

The hoteliers have also increased the use of these digital tools to strengthen infrastructure, grow online package sales, enable self-service bookings, make real-time offerings and enhance the overall customer experience.

Hotel owners have been making every effort to enhance the contactless experience and leveraging technologies such as mobile and web check-in as well as mobile key. The industry players have resorted to streamlining operations with efficient management levels, the benefits of which are likely to remain even after the pandemic fades out.

Our Top Picks

We have narrowed our search to five hotel stocks that have solid growth left for the rest of 2022. These stocks have seen positive earnings estimate revisions in the last 30 days. Each of our picks carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The chart below shows the price performance of our five picks in the past month.

Zacks Investment Research
Image Source: Zacks Investment Research

Marriott International is benefiting from its focus on expansion initiatives, digital innovation and the loyalty program. MAR is gaining from the reopening of the international borders and leniency in travel restrictions.

Marriott is consistently expanding its worldwide presence and capitalizing on the demand for hotels in the international markets. The U.S. and global economies have reopened to a great extent as new coronavirus cases have dropped considerably. Several countries are gradually removing travel restrictions. MAR will be a major gainer of the economy’s reopening.

Marriott International has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings improved 7.2% over the last 30 days.

Marriott Vacations is a leading global vacation company that offers vacation ownership, exchange, rental, resort and property management services. VAC’s  upside can be attributed to strong occupancies related to its Aqua-Aston business and solid contract sales. Also, focus on digitization bodes well.

Marriott Vacations is progressing with the technology required to link Marriott, Westin and Sheraton products into a single points-based offering. Progress with respect to the integration of Welk into its high vacation ownership business bode well.

Marriott Vacations has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for the current year has improved 0.1% over the last 7 days.

Choice Hotels is benefiting from sequential increases in its business and group travel demand, driven by a rise in extended vacations, household relocations and temporary remote work assignments.

The transition of leisure travel into mainstream business added to the positives. CHH anticipates the momentum to continue on the back of investments in infrastructure build coupled with onshoring of the U.S. supply chain.

Choice Hotels has an expected earnings growth rate of 19.6% for the current year. The Zacks Consensus Estimate for the current year has improved 0.2% over the last 7 days.

Hyatt Hotels has benefitted from solid leisure transient demand, easing travel restrictions and ramped-up airline capacity. Also, focus on new hotel openings and acquisition initiatives bode well.

As people return to the office and further cross-border travel resumes, H remains optimistic about the recovery of business transient and its continued momentum over the back half of the year.

Hyatt Hotels has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for the current year has improved more than 100% over the last 7 days.

InterContinental Hotels owns, manages, franchises, and leases hotels in the Americas, Europe, Asia, the Middle East, Africa, and Greater China. IHG also provides the IHG Rewards loyalty program.

InterContinental Hotels operates hotels under the Six Senses, Regent, InterContinental Hotels & Resorts, Vignette Collection, Kimpton Hotels & Restaurants, Hotel Indigo, EVEN Hotels, HUALUXE, Holiday Inn, Holiday Inn Express, Holiday Inn Club Vacations, avid, Staybridge Suites, Atwell Suites, Candlewood Suites, voco, and Crowne Plaza.

IHG has an expected earnings growth rate of 81.63% for the current year. The Zacks Consensus Estimate for the current year has improved 2.7% over the last 7 days.