We recently compiled a list of the 10 Best Hospitality Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where Hilton Worldwide Holdings Inc. (NYSE:HLT) stands against the other hospitality stocks.
The hospitality industry is growing quickly and covers businesses related to lodging, dining, tourism, and other services. Approximately 17 million individuals, or more than 10% of the US total, are employed in the leisure and hospitality industry, according to the US Bureau of Labor Statistics. The industry remains a major attraction for recent immigrant labor and an engine of upward mobility, and hotels continue to be sites where hourly staff can advance to the executive suite.
However, the COVID-19 pandemic was a challenging time for the hospitality industry. While many hospitality businesses saw profits drop, the most successful were able to face the challenges and recover once restrictions were eased.
In 2024, the global hospitality market reached $4.9 trillion, showing consistent expansion in the hospitality industry. It contributed to 10% of the world’s GDP as per The World Travel and Tourism and had an economic impact of a record $11.1 trillion. Between January and September 2024, there were 1.1 billion tourists worldwide, an 11% rise over 2023. Looking ahead, the travel and tourism industry is forecast to increase at a 5.8% annual rate between 2022 and 2032, surpassing global economic growth of 2.7% per year.
Looking forward, as per EHL’s hospitality industry insights, 2025 will see a shift in hospitality trends driven by sustainability, innovation, and personalization. From cutting-edge AI technology that improves visitor experiences to contemporary work styles that empower staff, the industry is changing to meet changing expectations. Secondly, workplaces are being shaped by flexibility, inclusivity, and well-being, which is drawing in a new generation of talent ready to work together and have an effect. Meanwhile, innovations like hyper-personalized services and predictive maintenance are redefining excellence. Nowadays, sustainability and customization are key components of hospitality, as visitors look for experiences that are meaningful and customized from establishments that value well-being and ethical behavior. The industry is further elevated by culinary trends, experiential dining, and data-driven analytics, which open doors for innovative, forward-thinking experts.
Dr Jean-Philippe Weisskopf, Assistant Professor of Finance at EHL, stated:
“Tools capable of crunching large swaths of user data are offering hospitality businesses of all sizes the key to unlock smarter financial decisions. With machine learning and real-time analytics, leaders can now predict trends and make moves faster, turning data-driven strategies into a competitive edge.”
On the other hand, according to PwC’s report, which focuses on the key areas of innovation, evolution, and concern that hotel industry leaders and investors are focusing on through 2025 and beyond, the hospitality industry is balancing stability in the short term with long-term expansion. According to the projections, hotel occupancy in the United States is expected to increase to 63.6% in 2024, with RevPAR rising 2.2% to nominally reach 116% of pre-pandemic levels. However, inflation is putting pressure on profits, and room rate hikes have slowed. Group and business travel are getting better, but they are unable to keep up with the drop in demand for leisure travel. Secondly, extended-stay properties, which are worth $300 billion worldwide, are a bright light, but investment activity is still muted because of high capital costs.
Over the next fifty years, growth is anticipated to be driven by mid-market hotels, while luxury developments continue to draw cash. However, there are still labor issues because wages are rising faster than revenue. The sector prioritizes staff retention because it employs 17 million people in the United States, as mentioned above. Key tactics for future resilience include brand transformations, technology investments, and alternate real estate purchases. Hospitality executives are hopeful about continued long-term growth despite economic concerns.
Empty lobby of a high-end hotel showcasing the modern, luxurious interior of the hotel chain.
Methodology
We sifted through holdings of hospitality ETFs and online rankings to form an initial list of 30 Hospitality stocks. These companies specialize in lodging, dining, tourism, and other related services. From the resultant dataset, we chose the top 10 stocks most favoured by hedge funds, using Insider Monkey’s database of 1009 hedge funds in Q4 2024 to gauge hedge fund sentiment for stocks.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Hilton Worldwide Holdings Inc. (NYSE:HLT)
Number of Hedge Fund Investors: 79
The Best Hospitality Stock, Hilton Worldwide Holdings Inc. (NYSE:HLT) is also one of the biggest hotel firms in the world, with over 8,300 hotels worldwide. Its varied portfolio comprises several midscale and premium hotels, as well as the luxury brands Waldorf Astoria and Conrad Hotels. Moreover, it has over 200 million members in its Hilton Honors loyalty program.
Hilton Worldwide Holdings Inc. (NYSE:HLT) has reported impressive results, similar to other major travel and tourism stocks, as a result of rising travel demand. In Q4 2024, the company saw sales growth that set a new high. The quarter saw 4.45% YoY growth in revenue. Adjusted EBITDA surpassed $3.4 billion, up 11% from the previous year, because of strong net unit expansion. The business’s expansion strategy and fee-based model are still profitable. The firm produced $150 million in dividends for the year, along with $3 billion in shareholder returns for the quarter.
The fact that Hilton Worldwide Holdings Inc. (NYSE:HLT) has historically placed a high priority on expansion is another positive sign for investors. In 2024, it achieved record net unit growth of 7.3% by opening more rooms than ever before, adding the most rooms in its history, and entering new markets like Australia, Paraguay, and Bonaire with new brands and strategic alliances.
Stephen Grambling, a Morgan Stanley analyst, raised his price objective on Hilton Worldwide Holdings Inc. (NYSE:HLT) from $265 to $274. The firm advises investors to stick with businesses that can sustain or even grow in-construction pipelines with limited usage of capital, pointing out that 2025 outlooks in the lodging industry are similar to 2024 in that they have low RevPAR, consistent net unit growth, but a challenging development backdrop
Overall, HLT ranks 1st on our list of the Best Hospitality Stocks to Buy According to Hedge Funds. While we acknowledge the potential for HLT as an investment, our conviction lies in the belief that some 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 HLT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stock To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
