5 Best Hotel Stocks To Buy Now

Published on April 15, 2021 at 8:19 am by Trish Novicio in Hedge Funds, News

In this article, we are going to list the 5 best hotel stocks to buy now. To read our detailed analysis of the hotel industry outlook, please go to the 10 Best Hotel Stocks to Buy Now.

5. Wyndham Hotels & Resorts, Inc. (NYSE: WH)

Number of Hedge Fund Holders: 26

Ranking 5th on the list of the 10 best hotel stocks to buy now is Wyndham Hotels & Resorts, Inc. (NYSE: WH). Incorporated in 2017, the New Jersey-based hotelier is one of the fastest-growing hotel franchisors worldwide, operating a portfolio of 20 hotel brands including TRYP, Baymont, Ramada Encore, La Quinta, and Wyndham Grand. The company owns approximately 8,900 hotels with 796,000 rooms in 95 countries around the world.

The company has a market cap of $6.8 billion and total revenue of $1.3 billion in 2020. Shares of WH surged 117.2% over the past twelve months.

John Khoury’s Long Pond Capital held the most shares of WH with more than 2 million shares worth more than $129.8 million at the end of the fourth quarter. The total value of the shares held by 26 hedge funds in Q4 2020 was over $666.8 million.

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4. Hyatt Hotels Corporation (NYSE: H)

Number of Hedge Fund Holders: 27

Chicago-based hotel giant Hyatt Hotels Corporation (NYSE: H) ranks 4th on the list of the 10 best hotel stocks to buy now. Hyatt Hotels is one of the world’s leading luxury hotel and resort operators, with a portfolio of 1,000 properties worldwide. Also, the organization runs the World of Hyatt loyalty program, which awards points that can be exchanged for hotel nights and other benefits.

The company has a market cap of $8.5 billion and total revenue of $2.06 billion in 2020. Shares of Hyatt increased 55.89% over the past twelve months.

Mason Hawkins’ Southeastern Asset Management held the most shares of Hyatt with more than 4 million shares worth more than $305 million at the end of the fourth quarter. The total value of the shares held by 27 hedge funds in Q4 2020 was $757 million.

Baron Partners Fund mentioned that Hyatt remains a leading player in the hospitality industry market in its Q4 2020 investor letter:

“Global hotelier Hyatt Hotels Corp. contributed to results on investor expectations that travel will increase as several newly developed COVID-19 vaccines work to help bring an end to the pandemic. While it may take time for Hyatt’s business and group customers to return, a strong leisure business is aiding recovery in revenue per available room. Hyatt has also successfully lowered its breakeven occupancy levels by reducing fixed costs and has cut its capital budget to preserve cash. Hyatt’s strong balance sheet is allowing it to weather the pandemic-generated disruption.”

3. MGM Resorts International (NYSE: MGM)

Number of Hedge Fund Holders: 44

Casino resort operator MGM Resorts International (NYSE: MGM) ranks 3rd on the list of the 10 best hotel stocks to buy now. Headquartered in Las Vegas, MGM Resorts International owns casino firms, entertainment, and hotel resorts in the US and China. MGM Resorts’ portfolio includes 29 exclusive hotel and destination gaming offerings, including some of the industry’s most well-known resort brands like Bellagio, MGM Grand, ARIA, and Park MGM.

The company has a market cap of $20.4 billion and a full-year 2020 revenue of $5.2 billion, about 40% of 2019 revenues. Shares of MGM surged 198% over the past twelve months.

Keith Meister’s Corvex Capital held the most shares of MGM, with more than 22 million shares worth $710 million at the end of the fourth quarter. The total value of the shares held by 27 hedge funds in Q4 2020 was $2.17 billion.

Memphis-based Longleaf Partners Fund mentioned that MGM remains as one of the successful casino and entertainment companies amid a global crisis:

“MGM Resorts (54%, 2.10%; 46%, 2.32%), the casino and online gaming company, quickly became a top contributor for the year after we initiated the position in the third quarter. 3Q EBITDA came in moderately above breakeven, a strong improvement from the COVID lockdown-impacted second quarter. MGM’s regional casinos performed very well, while flight restrictions caused its Las Vegas properties to lag. More importantly, CEO William Hornbuckle finished implementing $450 million of necessary recurring annual cost savings, which should result in a 15% increase in pretax earnings once post-vaccine leisure travel resumes and MGM revenues normalize. The stock remains cheap against this post-reopening earnings power. BetMGM, the company’s new online gaming and sports-betting app, is on track for over $150 million revenues this year and growing very quickly in a market with enormous potential. Comparable pure-play digital gaming businesses trade for extremely high multiples today, and BetMGM has a sustainably superior economic model due to its lower customer acquisition costs.”

2. Marriott International, Inc. (NASDAQ: MAR)

Number of Hedge Fund Holders: 58

Securing the second spot in the 10 best hotel stocks to buy now is Marriott International, Inc. (NASDAQ: MAR). Headquartered in Maryland, Marriott International is one of the leading hoteliers in the world with a portfolio of 30 brands, including Ritz-Carlton, The Luxury Collection, and Marriott Hotels & Resorts. The company owns approximately 7,600 properties with nearly 1.4 million rooms in 131 countries.

The company has a market cap of $48.7 billion. The company’s revenue in full-year 2020 came in at $10.6 billion, down 50% from 2019. The stock has gained 86% in the last twelve months.

Touk Sinantha’s AltraVue Capital held the most shares of MAR with 76,570 shares worth $11.3 million at the end of the fourth quarter. The total value of the shares held by 58 hedge funds in Q4 2020 was $3.42 billion, up from $2.33 billion in the preceding quarter.

1. Hilton Worldwide Holdings Inc. (NYSE: HLT)

Number of Hedge Fund Holders: 60

Topping the list of the 10 best hotel stocks to buy now is Hilton Worldwide Holdings Inc. (NYSE: HLT). Based in Virginia, one of the world’s largest hotel firms manages, franchises, owns, and leases hotels and resorts, as well as licenses its trademarks and intellectual property. Hilton opened 414 new hotels totaling 55,600 rooms in 2020, representing a net unit increase of 47,400 rooms.

The company has a market cap of $35 billion and full-year revenue of $4.3 billion in 2020, down from $9.4 billion in 2019. The stock has gained 80% over the past twelve months.

Bill Ackman’s Pershing Square held the most shares of HLT with 13 million shares worth $1.48 billion at the end of the fourth quarter. The total value of the shares held by 60 hedge funds in Q4 2020 was $6.02 billion.

New York-based Pershing Square Holdings Ltd mentioned that HLT remained resilient through the pandemic in its Q4 2020 investor letter:

“Hilton is a high-quality, asset light, high-margin business with significant long-term growth potential, led by a superb management team. The hotel industry was one of the most negatively impacted as a result of the COVID-19 pandemic. As the pandemic set in, Hilton’s management team deftly navigated a challenging situation and took decisive actions to right size Hilton’s cost structure for the current economic environment, and fortify its balance sheet. As a result, Hilton managed through the pandemic and positioned the company to generate enhanced margins, improved cash flows and returns, once the business recovers to pre-COVID-19 demand levels.

Hilton’s systemwide occupancy bottomed at 13% in April 2020, but rebounded to approximately 40% during Q3 and Q4 as COVID-19 became better understood and travel restrictions lifted. Positive demand momentum experienced in the summer and early fall were disrupted in November and December due to rising COVID-19 cases and tightening travel restrictions.

Hilton management expects a more pronounced and sustained recovery to commence in the second half of 2021, particularly as the COVID-19 vaccine is rolled out more broadly, driven by increased leisure demand and a rebound in business travel. Management’s conviction is driven by a number of factors which include: (1) pent-up leisure travel demand, (2) large amounts of unspent consumer savings, (3) large corporations indicating a desire to resume business travel, (4) improving business transient booking trends, (5) proprietary survey work in which 80% of respondents express a desire to travel, and a substantially better second half of 2021 group booking calendar.

Despite significant headwinds, Hilton continued to execute on its long-term strategy, and opened 47,400 net new rooms in 2020 (+5%). Hilton’s pipeline expanded 3% year-over-year to 397,000 rooms, or 39% of the existing room footprint, 51% of which are currently under construction. We believe Hilton will continue to grow its market share over time given independent hotels’ increased interest in seeking an affiliation with global brands, particularly in the wake of the pandemic.

Hilton is well positioned to thrive as the recovery sets in due to its best-in-class management team, portfolio of great brands, dominant market position, capital-light economic model, deep development pipeline and strong balance sheet. Hilton is in the early stages of a multi-year recovery, which we believe will deliver long-term earnings that are meaningfully greater than pre-2020 levels.”