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11 Best Hotel Stocks to Invest in 2022

Charlie Brooks

Apr 11, 2022 17:13


The hotel industry has suffered tremendous harm due to the COVID-19 pandemic, as well as the adverse effects of government-mandated lockdowns, travel restrictions, and unvaccinated vacationers.

It is predicted that the hotel business will generate revenue after vaccine distribution has been completed in most of the world's countries.

We'll discuss the best hotel stocks to buy right now and why in this piece.

A Comprehensive Overview of the Hotel Industry

The hotel business is a subset of the hospitality sector concerned with providing guest accommodations or lodgings. This category contains hotels and other businesses that offer overnight dwellings, such as motels, inns, guesthouses, and resorts.

Inns are more petite than hotels and often provide temporary lodging in addition to food and beverages. A motel offers overnight accommodation for motorists, often with easy access to an open parking lot. It is usually positioned beside the road.

Guesthouses are often converted private residences that serve as guest rooms. Usually, the guest section is maintained entirely separate from the owner's home and is self-service.

A resort is a significant business facility that often includes a hotel and other services and amenities. It offers housing, restaurants, bars, entertainment, recreational activities, and retail outlets that guests may use without leaving the property.

Even with pure hotel businesses, the specific amenities and services offered to guests might differ significantly. Generally, hotels attempt to target a particular consumer by their price structure, marketing approach, and service offerings. The majority of publicly listed hotel companies operate as a chain, having many hotels in various locations worldwide.

The development of Airbnb has had a significant business in the hotel sector, just as Uber did in the taxi industry. While hotels struggled to adjust to Airbnb's effect, the coronavirus pandemic wreaked havoc on the travel, tourist, and hospitality industries.

Is it prudent to invest in hotel stocks?

Hotel stocks may be an excellent investment. According to the World Tourism Organization, tourism accounts for 10% of global GDP, and when the economy is robust, hotel stays often increase.


Individuals often take additional holidays, using more funds to travel or see friends and relatives. Simultaneously, businesses may dispatch employees to other areas to pursue new business, attend conferences, or explore new sites.

When the market is robust, everyone in the travel sector benefits. Investing in hotel stocks is one strategy for taking advantage of this trend. Additionally, many younger generations — Millennials and Gen Xers – prioritize travel and experiences above material possessions, and they do not all stay in AirBnBs. Hotel stays may also increase as a result of the rising influx.

The issue is that once location and price point are considered, hotels are virtually identical. Budget hotels give specific amenities, luxury hotels provide an experience, and chain hotels. A hotel business must provide something unique to entice tourists.


However, any hotel stock will not suffice. Consider the demographics served by a firm, the variety of its property portfolio, and the Company's attempts to engage with tourists.

These are the hotel stocks rated using a growth model that weights quarterly year-over-year (YOY) percentage revenue growth and quarterly year-over-year (YOY) earnings-per-share (EPS) growth equally. Both sales and profitability are critical components of a business's success. Thus, evaluating companies only based on one growth measure leaves them vulnerable to accounting irregularities (such as changes in tax legislation or restructuring charges) that may render one or the other statistic unrepresentative of the business in general.

Types of Hotel Companies

Prior to investment, it's important to recognize that hotel companies are organized in one of two ways.

C-corporation hotels are companies that manage, brand, and promote hotels. These sorts of companies often run hotel franchises but do not own much real estate.

In general, hotel Real Estate Investment Trusts (REITs) do the opposite. REITs invest in, own, and operate real estate in which other companies operate. Occasionally, they manage the hotels that they own, although this varies per firm. Additionally, REITs are often obligated to distribute 90% of their earnings to shareholders.

Now, let's take a look at some attractive hotel stock investments.

Best hotel stocks

1. MGM Resorts International (NYSE: MGM) 

MGM Resorts International is a worldwide entertainment corporation with a portfolio of 29 hotel and destination gaming properties that provide casinos, meeting and convention facilities, live entertainment experiences, as well as the restaurant, nightlife, and retail services. The Company is primarily focusing its growth efforts in Asia on the integrated resort potential in Japan. In 2020, the Company's Las Vegas Strip resorts will generate net sales of $2.2 billion, while regional businesses will generate $2 billion. MGM China expects to have a net profit of $657 billion in 2020.

In 2020, Adjusted EPS was a loss per share of $3.94, compared to $0.77 in 2019. MGM Resorts International (MGM) returned 115 percent more than the NYSE composite during the ten years from 2009 to 2019. MGM Resorts International's consensus 12-month price target is 37.75, with a high estimate of 50.00 and a low estimate of 28.00.

2. Pebblebrook Hotel Trust (NYSE: PEB)

Pebblebrook Hotel Trust (NYSE: PEB) is an internally managed hotel investment trust that purchases and invests in hotels situated in major urban areas around the United States, with a particular emphasis on coastal assets. Pebblebrook Hotel Trust (NYSE: PEB) is well-known for investing in resorts that are conveniently placed in metropolitan centers and in unique tourist markets, with an emphasis on upscale customers. Pebblebrook Hotel Trust (NYSE: PEB) is one of the most attractive hotel stocks to invest in right now.

According to Insider Monkey's unique database, 17 hedge funds were positive on Pebblebrook Hotel Trust (NYSE: PEB) at the end of June, up from ten in Q1. Citadel Investment Group, led by Ken Griffin, is the largest shareholder in Pebblebrook Hotel Trust (NYSE: PEB), with 70.63 million shares valued at $80.37 million.

3. Hilton Worldwide

Hilton is one of the world's biggest hotel companies, with over 6,500 hotels worldwide. Its wide portfolio includes various midscale and premium hotels in addition to the Waldorf Astoria and Conrad Hotels luxury brands. Additionally, Hilton Honors, the Company's loyalty program, has over 115 million members.

As with other large travel and tourist companies, Hilton has reported good earnings, owing to increased travel demand. Revenue per available room increased by 234 percent year over year in the second quarter of 2021. Additionally, the hotel company, which has always placed a premium on expansion, built 119 new hotels and roughly 20,000 rooms during the same period.

Hilton's occupancy rates and income per available room are still much lower than they were before the pandemic. Restriction overseas and the delta variation are also affecting its recuperation. However, the firm is well-positioned for future development due to its iconic brands and loyalty program.

4. Ryman Hospitality Properties, Inc. (NYSE: RHP)

Ryman Hospitality Properties, Inc. (NYSE:RHP), a hotel and resort REIT, is one of the top hotel stocks to invest in. Ryman Hospitality Properties, Inc. (NYSE:RHP) is a real estate investment trust focused on the acquisition and management of upmarket convention facilities and resorts. The REIT owns five of the biggest non-gaming convention center assets in the United States, which are operated by Marriott International, Inc. under the Gaylord Hotels brand (NASDAQ:MAR). Ryman Hospitality Properties, Inc. (NYSE:RHP) now owns and operates 2.8 million square feet of indoor and outdoor space at premier convention centers and entertainment venues around the United States.

At the conclusion of the second quarter, Insider Monkey monitored 22 hedge funds that were long Ryman Hospitality Properties, Inc. (NYSE:RHP). This is in comparison to the same number of hedge funds in the first quarter of this year. With 1.45 million shares valued at $114.76 million, Mario Gabelli's GAMCO Investors is the largest shareholder in Ryman Hospitality Properties, Inc. (NYSE:RHP).

5. Texas Roadhouse

Texas Roadhouse, founded in 1993, is a popular casual eating destination for families. The restaurant chain operates more than 640 outlets via its franchisees. Although the majority of its restaurants are located in the United States, the firm has also grown worldwide.

Texas Roadhouse has done an outstanding job adapting to the pandemic's adjustments. While it has historically concentrated on sit-down meals, it has shifted its attention to carryout orders and begun delivering meal packages. These changes aided the restaurant chain's survival in 2020, and they have continued to pay dividends as dining visitor numbers have restored to pre-pandemic levels.

The results of the reopening have been rather remarkable. Revenue was $899 million in the second quarter of 2021, an increase of 88.7 percent over 2020 and 30.3 percent over 2019. The average number of guests is close to that of 2019, and the number of to-go orders is about two-and-a-half times that of 2019.

6. Las Vegas Sands (NYSE: LVS) 

Las Vegas Sands is a developer and operator of integrated resorts focused on meetings, incentives, conventions, and exhibitions, or MICE. Through its majority ownership in Sands China Ltd., Sands developed the largest portfolio of properties on Macao's Cotai Strip, including The Venetian Macao, The Plaza, Four Seasons Hotel Macao, The Londoner Macao, The Parisian Macao, and Sands Macao.

The business has signed into official agreements to sell its Las Vegas real estate and operations, which include The Venetian Resort Las Vegas and the Sands Expo & Convention Center, for an estimated $6.25 billion. Las Vegas Sands, a casino and entertainment resort corporation, expects to produce around $3.61 billion in revenue in 2020. However, EPS for the twelve months ended December 31, 2019 was -$2.21, a 163.14% year-over-year drop. However, from 2009 to 2019, the Company returned 62% more than the NYSE composite, and 14 analysts jointly anticipated a 12-month price target of 67.50, a high of 84.00, and a low of 50.00.

7. Sunstone Hotel Investors, Inc. (NYSE:SHO)

Sunstone Hotel Investors, Inc. (NYSE:SHO) is a lodging real estate investment trust (REIT) that presently owns 18 hotel properties totaling 9417 rooms, all of which are managed by well-known hotel chains.

Sunstone Hotel Investors, Inc. (NYSE:SHO) has 18 hedge funds as of the end of the second quarter, up from 17 in the previous quarter. By the end of Q2, these investments were valued more than $73.6 million. Capital Growth Management, led by Ken Heebner, is the largest shareholder in Sunstone Hotel Investors, Inc. (NYSE:SHO), with 1.77 million shares valued at $21.98 million.

Sunstone Hotel Investors, Inc. (NYSE:SHO) reported second-quarter results on August 3. The earnings per share (EPS) came in below expectations by $0.03 at -$0.01. The firm earned $117.21 million in sales, beating the projected earnings per share by $12.29 million.

8. Hotel REITs

A real estate investment trust (REIT) is another option to diversify your portfolio with hospitality stocks. These trusts make significant real estate investments and invest at least 90% of taxable revenue to shareholders. Hotel REITs are devoted only to hotel properties. If you want to invest in hotels while still receiving dividends, hotel REITs are a smart option.

Host Hotels & Resorts (NASDAQ:HST) is the largest hotel REIT, with a portfolio of more than 80 hotels, the majority of which are premium properties and resorts. Apple Hospitality REIT (NYSE:APLE) is a hotel REIT focused on midscale assets, having a portfolio of more than 210 hotels. Its reasonably priced hotels make it a favorite journey for business travelers.


Both of these REITs withheld dividends to save funds during the pandemic. While Host Hotels & Resorts has yet to resume dividend payments, Apple Hospitality did in the first quarter of 2021. Although not every hotel REIT has resumed dividend payments, this is expected to alter when travel recovers and they reclaim profitability.

9. Marriott International (MAR)

Marriott reported first-quarter profits of 26 cents per share, down from $1.41 per share last year. The corporation recorded an impairment charge of 45 cents and bad debt charges. Guarantee reserves were added at the cost of 42 cents per share. The washout quarter indicates that profits will only continue to improve from here.

Marriott began the year well in the fourth quarter. However, revenue per available room (RevPAR) decreased by 90% globally. Stability of RevPAR in April signals that its Greater China businesses will continue to recover first. Following that, occupancy will gradually but steadily increase throughout North America. Marriott's reopening of its business in Europe, where it closed three-quarters of its hotels, could boost income.

When the beaches reopened in early May, CEO Arne Sorenson predicted that "the Ritz-Carlton Bacara in Santa Barbara and our hotels in Hilton Head, South Carolina, for example, were projected to attain roughly 50% occupancy based on confirmed reservations."

The average price estimate of the 17 analysts that cover MAR is $91.40. (according to Tipranks). Marriott, on the other hand, is valued $95 per share using an 8% discount rate and a terminal revenue multiple of 7.1 times in a five-year discounted cash flow revenue exit scenario.

10. InterContinental Hotels (IHG)

On March 20, negative opinions about InterContinental Hotels skyrocketed. The firm reported the lowest hotel demand it has ever seen in the first quarter of the year. RevPAR decreased in January and February, causing the business to postpone dividend deliberations and save $150 million in expenditures.

The lifting of the lockdown in Europe and the United States provides some optimism for IHG shares. Vacationers will have more trust in InterContinental as the firm increases its cleaning program and launches an intensified effort on June 1.

In 2015, IHG formed a partnership with Ecolab and Diversey to procure hygiene and cleaning services. According to the corporation, they would "... practice social distancing, give personnel training and certification, supply hand sanitizer and wipes, increase contactless encounters, provide extra thorough cleaning of high-touch surfaces, and establish new standards for food and beverage service."

Investors in hotel stocks should anticipate a significant reduction in cash flow in the current quarter as reservations in the United States and Europe diminish. However, when travel restrictions begin to lessen in the months ahead, IHG will have a better sense of booking prices. It may be able to balance operating expenditures with the number of repeat clients at its hotels.

11. Hyatt Hotels (H)

Hyatt reported a 28.1 percent year-over-year decline in RevPAR in the first quarter. This decreased by 24.5 percent for hotels in the United States. CEO Mark Hoplamazian recognized the difficult operating circumstances throughout the time and said that the Company has sufficient money to sustain operations for at least 30 months.

Senior Vice President Brad O'Bryan said that "early demand for transportation to resorts and leisure areas would certainly be higher." We expect that as businesses expand their operations, business transient travel will follow." With business travel limitations in place, Hyatt will depend on summer vacation demand to boost up.

Investors should seek leading indications that indicate increased reservations at Hyatt. "We'll have to observe how some of the modifications in the standards that are presently restricting or limiting travel evolves," the CEO stated. Much of it will be contingent upon individuals boarding flights."

According to a Stock Rover warning, H stock now has a 13.5 percent short proportion of float. Bearish bets on hotel stocks such as Hyatt may pay off until the business announces increased occupancy rates, which may begin in early summer.

Final Thoughts

As governments throughout the world liberalize their travel policies, the hotel business is projected to thrive. By strategically adding some affordable hotel stocks to your portfolio, you may help give your portfolio the competitive edge it needs to perform magnificently in the remaining months of 2022. What better time to invest in the hotel business than in 2022, when a slew of industry giants and several fairly priced stocks are available?