We recently compiled a list of the 10 Most Undervalued Hotel Stocks To Invest In Now. In this article, we are going to take a look at where Las Vegas Sands Corp. (NYSE:LVS) stands against the other hotel stocks.
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.
Our 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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The dazzling Las Vegas Strip lined with luxury Integrated Resorts, seen from a high elevation.
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.
Overall, LVS ranks 4th on our list of the most undervalued hotel stocks to invest in now. While we acknowledge the potential of LVS as an investment, 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 LVS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article is originally published at Insider Monkey.
