In this article, we will explore the 10 most undervalued hotel stocks to invest in now.
Exploring the Hotel Market: Trends and Highlights
The hotel market is experiencing a significant transformation as it rebounds from the impacts of the COVID-19 pandemic. According to a report by Zion Market Research, the global hotel market was valued at $1.37 trillion in 2023. The market is expected to expand at a compound annual growth rate (CAGR) of 9.14% during 2024-2032 to reach a value of $2.99 trillion by the end of the forecast period. This growth is driven by increased travel demand, higher disposable incomes, and a resurgence in both leisure and business travel.
SiteMinder’s Hotel Booking Trends 2023 report reveals significant changes in the hospitality industry as it rebounds from the pandemic. The report analyzes bookings from travelers in 20 of the world’s most established destinations. According to the report, in 2023, international check-ins increased in all but one market compared to the previous year. Malaysia, New Zealand, and Taiwan experienced the biggest jumps due to their border reopenings in 2022.
In 2023, hotels raised their prices while still achieving record check-ins. The average daily rate (ADR) globally reached $192, reflecting an 11% increase from 2022 and a 38% rise compared to 2019. Italy saw the largest increase, with its ADR rising by $42 or 20% year-on-year. This indicates that hotels are responding to strong pent-up demand by adjusting their pricing strategies.
Despite the increase in prices, travelers are booking shorter stays. According to the report, 81% of hotel stays globally were for just one or two nights. Only a small fraction of stays were longer than three nights, highlighting a shift in traveler preferences.
Investor Sentiment in 2024
Overall, hotel investors are feeling positive about the market for 2024. In the US, many investors are eager to increase their investments in hotels.
CBRE Hotels Research conducted a Global Hotel Investor Intentions Survey in early 2024 to evaluate the hotel investment landscape. The results show that investor sentiment in the US is strong, with 50% of respondents planning to increase their allocation to hotel acquisitions this year. About 35% expect their acquisition activities to stay the same as in 2023, while less than 16% anticipate a decrease.
Despite high interest rates, many investors are looking to buy hotels. Over 70% of those surveyed said they are focusing on value-added and opportunistic investments. These types of acquisitions allow investors to improve properties by adding rooms, redesigning spaces, or enhancing amenities to boost returns and long-term value.
With this background in mind, let’s take a look at the 10 most undervalued hotel stocks to invest in now.
An aerial view of a high-rise hotel illuminated in the night sky.
Methodology
To compile our list of the 10 most undervalued hotel stocks to invest in now, we used the Finviz and Yahoo stock screeners to find the largest hotel companies. We also reviewed our own rankings and consulted various online resources to compile a list of the largest publicly traded hotel companies, the most popular hotel stocks, and REITs.
From an initial pool of over 30 hotel stocks, we focused on those trading at under 20 times their forward earnings as of November 11. Then, we selected the stocks that analysts believe possess the greatest potential for growth. Finally, we ranked the 10 most undervalued hotel stocks to invest in now based on their average price target upside potential according to analysts as of November 11, 2024.
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10 Most Undervalued Hotel Stocks To Invest In Now
10. Apple Hospitality REIT Inc. (NYSE:APLE)
Forward P/E: 18.73
Analysts’ Upside Potential: 5.99%
Apple Hospitality REIT Inc. (NYSE:APLE) is a real estate investment trust (REIT) that owns one of the largest and most diverse portfolios of upscale, rooms-focused hotels in the US. The company’s portfolio consists of 223 hotels with around 30,000 guest rooms located throughout 37 states and the District of Columbia. APLE is one of the most undervalued stocks in the hotel industry.
In 2024, the company demonstrated a strategic approach to capital allocation and portfolio management. From January to October, Apple Hospitality REIT Inc. (NYSE:APLE) strategically acquired two hotels for $196 million, sold three hotels for $41 million, and repurchased 2.4 million shares for $35 million. Additionally, contracts have been signed for the sale of four more hotels for about $31 million. This activity showcases the company’s ability to effectively manage capital.
For the third quarter of 2024, Apple Hospitality REIT Inc. (NYSE:APLE) reported a Comparable Hotels Average Daily Rate (ADR) of $163, which is a 1% increase from the previous year. The Comparable Hotels Occupancy rate remained essentially flat at 77%, while Comparable Hotels Revenue per Available Room (RevPAR) rose to $125, also reflecting a 1% increase year-over-year.
Apple Hospitality REIT Inc. (NYSE:APLE) has invested around $48 million in capital expenditures during the first nine months of 2024 and plans to spend between $75 million and $85 million throughout the year on major renovations at about 20 of its hotels. The company believes these reinvestments are crucial for maintaining competitiveness and driving EBITDA growth.
Over the past ten years, Apple Hospitality REIT Inc. (NYSE:APLE) has grown its revenue at a compound annual growth rate (CAGR) of 7%, while its net income has increased at a CAGR of 17% during the same period.
With its strong portfolio, strategic capital allocation, and ongoing renovations, Apple Hospitality REIT Inc. (NYSE:APLE) is well-positioned for future growth.
9. Atour Lifestyle Holdings Limited (NASDAQ:ATAT)
Forward P/E: 15.11
Analysts’ Upside Potential: 7.90%
Atour Lifestyle Holdings Limited (NASDAQ:ATAT) is a Chinese hospitality and lifestyle company that operates a rapidly expanding network of hotels. It is also the first Chinese hotel chain to develop a scenario-based retail business. As of June 30, 2024, the company managed 1,412 hotels with a total of 161,686 rooms, marking impressive year-over-year growth of 36.6% in the number of hotels and 34.3% in room count. Atour Lifestyle Holdings Limited (NASDAQ:ATAT) aims to reach 2,000 premier hotels by 2025, demonstrating its ambitious expansion strategy. Additionally, as of June 30, 2024, the company has 712 managed hotels in its development pipeline.
In the second quarter of 2024, Atour Lifestyle Holdings Limited (NASDAQ:ATAT) reported net revenues of RMB 1.79 billion ($247 million), which is a significant increase of 64.5% compared to the same period in 2023. Net income also rose by 27.1%, reaching RMB 304 million ($42 million). This strong financial performance reflects the successful integration of its accommodation and retail businesses.
During the second quarter, the company achieved a new quarterly record with 123 new hotel openings, contributing to its robust growth trajectory. Atour Lifestyle Holdings Limited’s (NASDAQ:ATAT) retail segment also performed exceptionally well, with gross merchandise volume (GMV) increasing by 157.6% year-over-year, driven by effective product development and ongoing product offering expansion.
Atour Lifestyle Holdings Limited’s (NASDAQ:ATAT) financial health is strong, with cash and cash equivalents totaling RMB3.3 billion ($457 million) as of June 30, 2024. Over the past three years, the company has experienced a compound annual growth rate (CAGR) of 44% in revenue and an impressive 69% in net income.
As one of the most undervalued stocks in the hotel industry, ATAT is trading at only 15 times its forward earnings. These factors make Atour Lifestyle Holdings Limited (NASDAQ:ATAT) an attractive investment opportunity in the hotel sector.
8. DiamondRock Hospitality Company (NYSE:DRH)
Forward P/E: 18.15
Analysts’ Upside Potential: 7.93%
DiamondRock Hospitality Company (NYSE:DRH) is a real estate investment trust (REIT) that ranks among the most undervalued hotel stocks to invest in. The company owns a portfolio of 36 premium hotels and resorts, totaling over 9,700 rooms across key gateway cities and destination resorts throughout the United States.
In the third quarter of 2024, DiamondRock Hospitality Company (NYSE:DRH) reported a net income of $26.6 million, or $0.11 per diluted share. Comparable revenues reached $285.1 million, marking a 2.5% increase from the same period in 2023. The company’s Comparable RevPAR (Revenue per Available Room) also increased by 2.8%, reaching $214.44.
While the DiamondRock Hospitality Company’s (NYSE:DRH) hotels in South Florida, New Orleans, and Charleston were unharmed by Hurricane Helene in September, the overall RevPAR growth was impacted by business interruptions from the storm.
DiamondRock Hospitality Company (NYSE:DRH) plans to invest approximately $85 million in capital improvements throughout 2024, having already spent about $58.4 million in the first nine months of the year. Key projects include the rebranding of Hilton Burlington to Hotel Champlain Burlington, a Curio Collection by Hilton in July 2024. During the second quarter of 2024, the company completed a comprehensive renovation at the Westin San Diego Bayview. In the third quarter, the company completed a renovation at the Bourbon Orleans Hotel.
Additionally, on November 1, 2024, DiamondRock Hospitality Company (NYSE:DRH) began repositioning Orchards Inn into Cliffs at L’Auberge. This project will connect the hotel with the nearby L’Auberge de Sedona and will feature a new pool linking both properties. The renovations will include updates to the guest rooms and the creation of a fresh arrival experience, along with new outdoor event spaces. The company anticipates completing this project in 2025.
With a strong financial performance and ongoing investments, DiamondRock Hospitality Company (NYSE:DRH) is well-positioned for future growth. It ranks 8th on our list of the undervalued stocks in the hotel industry.
7. Park Hotels & Resorts Inc. (NYSE:PK)
Forward P/E: 12.58
Analysts’ Upside Potential: 8.70%
Park Hotels & Resorts Inc. (NYSE:PK) is a lodging real estate investment trust (REIT) with a diverse portfolio of hotels and resorts. The company operates 41 premium-branded hotels and resorts with more than 25,000 rooms across the United States. Approximately 86% of its portfolio is in the luxury or upper upscale segment, with properties situated in major markets and central business districts.
In July 2024, Park Hotels & Resorts Inc. (NYSE:PK) announced that the unconsolidated joint venture that owns and operates the Hilton La Jolla Torrey Pines sold the hotel for about $165 million, resulting in a pro-rata share of $41 million for the company. Additionally, in August, Park Hotels & Resorts Inc. (NYSE:PK) permanently closed the 360-room Hilton Oakland Airport.
The company also repurchased 2.5 million shares for $35 million in August. With liquidity exceeding $1.4 billion, Park Hotels & Resorts Inc. (NYSE:PK) is focused on enhancing shareholder value through strategic asset sales and investments into its core portfolio.
In Q3 2024, the company began over $200 million of guest room renovations at several key properties, including the Rainbow Tower at the Hilton Hawaiian Village Waikiki Beach Resort, the Palace Tower at the Hilton Waikoloa Village, and the Main Tower at the Hilton New Orleans Riverside. These renovations are expected to improve guest experiences and the company’s financial performance.
In the third quarter of 2024, Park Hotels & Resorts Inc. (NYSE:PK) reported a 3.3% increase in Comparable RevPAR (Revenue per Available Room) compared to Q3 2023, driven by strong demand in cities like Chicago, New Orleans, and Boston.
6. VICI Properties Inc. (NYSE:VICI)
Forward P/E: 11.25
Analysts’ Upside Potential: 12.04%
VICI Properties Inc. (NYSE:VICI) is a real estate investment trust (REIT) that owns a portfolio of hotels, casinos, and other entertainment destinations. Among its most notable properties are iconic destinations like Caesars Palace, MGM Grand, and the Venetian Resort in Las Vegas, three of the most iconic entertainment facilities on the Las Vegas Strip.
The company boasts a diverse portfolio of 93 experiential assets, which includes 54 gaming properties and 39 other experiential properties across the United States and Canada. VICI Properties Inc.’s (NYSE:VICI) portfolio spans approximately 127 million square feet, featuring around 60,300 hotel rooms and over 500 restaurants, bars, nightclubs, and sportsbooks.
In the third quarter of 2024, VICI Properties Inc. (NYSE:VICI) reported total revenues of $964.7 million, reflecting a 6.7% increase compared to the same quarter in the previous year. Net income attributable to common stockholders rose significantly by 31.7%, reaching $732.9 million. The company also declared a quarterly cash dividend of $0.4325 per share, which is a 4.2% increase year-over-year, showcasing its commitment to returning value to shareholders.
Over the past five years, VICI Properties Inc. (NYSE:VICI) has demonstrated strong growth, with revenues increasing at a compound annual growth rate (CAGR) of 33% and net income growing at a CAGR of 36%. This consistent performance indicates robust management and strategic positioning within the industry.
Additionally, analysts currently recommend VICI stock as a buy, with a median one-year price target suggesting a potential upside of 12% from its current price.
This combination of strong financial results and positive market sentiment makes VICI Properties Inc. (NYSE:VICI) an attractive investment opportunity for those looking to invest in the hospitality and entertainment sectors.
5. Host Hotels & Resorts Inc. (NASDAQ:HST)
Forward P/E: 16.16
Analysts’ Upside Potential: 16.09%
Host Hotels & Resorts Inc. (NASDAQ:HST) is an American real estate investment trust (REIT) that owns a diverse collection of luxury and upper-upscale hotels across the United States and internationally. The company currently manages 76 properties in the US and five abroad, totaling approximately 43,400 rooms. Host Hotels & Resorts Inc. (NASDAQ:HST) ranks among the most undervalued stocks in the hotel industry.
In July 2024, Host Hotels & Resorts Inc. (NASDAQ:HST) made strategic acquisitions, purchasing the 234-room 1 Hotel Central Park for $265 million and the 450-room Ritz-Carlton O’ahu for $680 million. These investments enhance the company’s portfolio and position the company well for future growth.
Recently, the company faced challenges due to Hurricanes Helene and Milton, which struck Florida in September and October 2024. Four properties were temporarily closed due to evacuation orders and power outages, although three have since reopened. The most significant impact was on The Don CeSar, which remains closed with plans for a phased reopening expected by late Q1 2025.
Financially, Host Hotels & Resorts Inc. (NASDAQ:HST) reported a comparable hotel Total RevPAR (Revenue per Available Room) of $328.86 for Q3 2024, showing a 3.1% increase from the same quarter in the previous year. This growth was driven primarily by higher food and beverage revenues from group business and ancillary spending.
HST is currently trading at only 16 times its forward earnings. Host Hotels & Resorts Inc.’s (NASDAQ:HST) strategic acquisitions combined with its cheap valuation contribute to its attractiveness as a hotel stock.
4. Las Vegas Sands Corp. (NYSE:LVS)
Forward P/E: 18.02
Analysts’ Upside Potential: 16.92%
Las Vegas Sands Corp. (NYSE:LVS) is a developer and operator of integrated resorts that include hotels, casinos, entertainment, retail, and more. The company has properties in Macao and Singapore.
In the third quarter of 2024, Las Vegas Sands Corp. (NYSE:LVS) reported net revenue of $2.68 billion, down from $2.80 billion the previous year. Net income also decreased to $353 million from $449 million in the same quarter last year.
Despite these declines, Las Vegas Sands Corp. (NYSE:LVS) remains focused on its strategic goals and continues to invest in its properties. The company is enhancing its offerings in Macao, where it is committed to improving the tourism appeal of the region. The ongoing recovery in Macao during the third quarter of 2024 shows promise, although visitor numbers have not yet returned to pre-pandemic levels.
The company is investing in development work at the Londoner in Macao. Las Vegas Sands Corp. (NYSE:LVS) opened The Londoner Grand Casino in the last week of September, marking a key milestone in the resort’s transformation. Alongside the casino, the company also opened 300 Londoner Grand suites, with plans to introduce more throughout the next three quarters. By Lunar New Year 2025, a total of 1,300 suites will be available, and the full complement of 1,500 suites and 905 rooms is expected to be ready by Golden Week 2025. These enhancements are part of a broader strategy to elevate guest experiences and position The Londoner Macao as a premier destination in the region.
In Singapore, Marina Bay Sands has faced challenges in Q3 2024 due to low hold but continues to perform well overall. Las Vegas Sands Corp. (NYSE:LVS) has introduced new suite options and elevated service standards, positioning itself for growth as travel demand increases in Asia.
Las Vegas Sands Corp. (NYSE:LVS) maintains strong financial health, with significant cash flow supporting ongoing capital investments and shareholder returns. During the quarter, LVS repurchased $450 million in shares and plans to continue this trend with an authorized $2 billion for future buybacks. Additionally, the annual dividend was raised to $1.00 per share for 2025.
Analysts are also bullish on LVS. Analysts currently hold a consensus buy rating on the stock and the 1-year median price target set by analysts indicates a potential upside of 16% from current levels. This brings LVS to the fourth spot on our list of the most undervalued hotel stocks to invest in now.
3. Wynn Resorts Limited (NASDAQ:WYNN)
Forward P/E: 16.05
Analysts’ Upside Potential: 34.34%
Wynn Resorts Limited (NASDAQ:WYNN) is an American company that develops and operates high-end hotels and casinos. The corporation owns and operates Wynn Las Vegas, Encore Boston Harbor, Wynn Macau, and Wynn Palace, Cotai. WYNN is one of the most undervalued stocks in the hotels, resorts, and casinos industry.
The company has reported an impressive financial performance for the third quarter of 2024, with operating revenues reaching $1.69 billion, a slight increase from $1.67 billion in the same period last year. The third quarter results reflect strong demand, strong mass gaming win in Macau, and solid non-gaming performance in Las Vegas. Wynn Resorts Limited (NASDAQ:WYNN) managed to grow its hotel revenue by 5%.
The company is making strategic investments. In the third quarter of 2024, Wynn Resorts Limited (NASDAQ:WYNN) contributed $18.2 million of cash into a 40%-owned joint venture that is constructing the Wynn Al Marjan Island development in the UAE, which is expected to open in 2027. The company has already invested $532.6 million into this project, viewing it as a future tourism hotspot that could significantly enhance long-term cash flow.
Wynn Resorts Limited (NASDAQ:WYNN) is also focused on returning capital to shareholders. The company increased its share repurchase authorization to $1 billion. This move signals confidence in their financial health and future growth potential.
Additionally, the company continues to innovate its offerings. In the Q2 2024 earnings call, the management shared that Wynn Resorts Limited (NASDAQ:WYNN) is enhancing its food and beverage offerings with innovative concepts. The company has renovated four venues at Wynn Palace and introduced the new Drunken Fish restaurant at Wynn Macau. Additionally, a destination food hall is set to open in mid-2025 at Wynn Palace, promising an exciting dining experience. In the casino sector, Wynn Resorts Limited (NASDAQ:WYNN) is revitalizing the exclusive Chairman’s Club at Wynn Macau and planning a similar upgrade for the Chairman’s Club at Wynn Palace.
Overall, Wynn Resorts Limited’s (NASDAQ:WYNN) strategic investments in new developments, commitment to shareholder returns, and focus on enhancing customer experiences make it an attractive stock for investors looking for opportunities in the hospitality industry.
2. Melco Resorts & Entertainment Limited (NASDAQ:MLCO)
Forward P/E: 15.87
Analysts’ Upside Potential: 42.96%
Melco Resorts & Entertainment Limited (NASDAQ:MLCO) is a Hong Kong-based company that ranks among the most undervalued hotel stocks. The company develops, owns, and operates casino resorts and hotels in Macau, the Philippines, and other locations.
The company manages several key properties, such as City of Dreams and Altira Macau in Macau, City of Dreams Manila in the Philippines, and City of Dreams Mediterranean in Limassol in the Republic of Cyprus. Additionally, Melco Resorts & Entertainment Limited (NASDAQ:MLCO) operates three satellite casinos in Cyprus.
In the third quarter of 2024, Melco Resorts & Entertainment Limited (NASDAQ:MLCO) reported total operating revenues of $1.18 billion, an increase of 16% year-over-year. This growth is largely due to improved performance across all segments, driven by a recovery in tourism to Macau.
Melco Resorts & Entertainment Limited (NASDAQ:MLCO) is actively enhancing its properties to attract more visitors. In September, the company launched a revamped loyalty program aimed at premium customers, which is already showing positive results. In the Q3 2024 earnings call, management shared that the company has also opened new gaming areas at its resorts, such as a new signature premium slot area at City of Dreams and the Dragon Zone at Studio City.
To improve accessibility across its properties, Melco Resorts & Entertainment Limited (NASDAQ:MLCO) is making upgrades to its entrances and installing interactive LED screens to engage guests. The installation of RFID technology for gaming tables is also progressing well, with plans to complete it at City of Dreams by early 2025.
In October, the company opened the City of Dreams Sri Lanka, which includes the 687 key Cinnamon Life hotel. Looking ahead, Melco Resorts & Entertainment Limited (NASDAQ:MLCO) has a strong pipeline of projects for 2025, including enhancements to customer flow at City of Dreams and the relaunch of the popular House of Dancing Water show.
With its strong financial performance and strategic initiatives aimed at growth, Melco Resorts & Entertainment Limited (NASDAQ:MLCO) presents a compelling investment opportunity for those interested in hotel and casino stocks. Analysts are also bullish on MLCO. The 12-month median price target set by analysts indicates a potential upside of 42% from the current stock price.
1. MGM Resorts International (NYSE:MGM)
Forward P/E: 14.31
Analysts’ Upside Potential: 43.72%
MGM Resorts International (NYSE:MGM) is an American hospitality and entertainment company. It operates national and international locations, including hotels and casinos, meetings and conference spaces, live and theatrical entertainment experiences, and a wide range of restaurant, nightlife and retail offerings. MGM Resorts International (NYSE:MGM) has a portfolio of 31 unique hotels and gaming destinations globally.
The company has shown impressive financial performance, reporting record consolidated net revenues in the third quarter of 2024. This growth is driven by strong results from MGM China and increased activity in Las Vegas, where average daily rates (ADRs) and occupancy rates reached new highs.
In the first nine months of 2024, MGM Resorts International’s (NYSE:MGM) revenues grew by 9%, generating $1.7 billion in cash from operations. With capital expenditures around $750 million, this translates to a free cash flow of approximately $944 million. Such robust cash flow positions the company well for future investments and shareholder returns.
The company has been proactive in returning value to shareholders, repurchasing over $300 million in shares during the third quarter alone. MGM Resorts International (NYSE:MGM) has reduced shares outstanding by 40% since 2021.
MGM Resorts International (NYSE:MGM) is strategically focused on organic growth. This is evident as the company continues to enhance its resort operations and expand its online presence through BetMGM. In August, MGM Resorts International (NYSE:MGM) launched a unified single, digital wallet through BetMGM in Nevada to offer bettors seamless, nationwide connectivity. This showcases the company’s commitment to improving customer experience and leveraging technology for growth.
Additionally, in May, MGM Resorts International (NYSE:MGM) announced the completion of a $100 million redesign of its Mandalay Bay Convention Center. This initiative aims to strengthen the company’s position as a leader in meetings and events.
Analysts are also optimistic about MGM’s future and have a consensus buy rating on the stock. The 12-month median price target for the stock set by analysts indicates a potential upside of 43% from the current stock price.
Longleaf Partners stated the following regarding MGM Resorts International (NYSE:MGM) in its Q3 2024 investor letter:
“MGM Resorts International (NYSE:MGM) – Hospitality and gaming company MGM Resorts was the top detractor in the quarter. The day of the company’s earnings report, the stock price was down 13%; however, we saw nothing in the report that alters our long-term investment case. While this industry can experience some quarter-to-quarter volatility, we remain confident in the long-term earnings potential. MGM continues to generate substantial FCF and execute significant share buybacks, further boosting FCF per share. MGM is also enhancing its online offering and continuing to streamline its portfolio with more non-core asset sale potential ahead. We remain confident in the management team, led by CEO Bill Hornbuckle.”
Overall, MGM ranks first among the 10 most undervalued hotel stocks to invest in now. While we acknowledge the potential of hotel companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than MGM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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