The hotel industry comprises companies specializing in short- and long-term accommodation and related services. Examples include Hilton, Hyatt, Marriott, and other well-known hotels.
2020 was a poor year for hotel stocks, just as it was for the rest of us. But, on the other hand, the hotel sector is keen to push on. While the Covid-19 outbreak was challenging for most companies, it was “devastating” for the hotel sector, according to the American Hotel & Lodging Association (AHLA). Furthermore, it said the pandemic’s impact was nine times higher than 9/11.
The worst of the pandemic appears to have passed. However, the AHLA does not expect to rebound to pre-pandemic levels until at least 2024. In addition, certain aspects of business travel may never be the same again due to the rising popularity of remote work.
However, hard times may give fantastic shopping opportunities. If you’re hoping to add a few of the best hotel stocks to your portfolio, We’ve put together a list of the top three that you should consider.
Why is it worth investing in hotel stocks?
Yes, they are, with one eye on the still-in-place pandemic restrictions. Covid-19 wreaked havoc on the travel and lodging industries. Global government shutdowns, unvaccinated guests, and varying travel restrictions hurt the industry. The hotel industry was the most hit by the pandemic in a symbiotic connection.
Consequently, investors must keep a long-term view in mind while assessing hotel equities in the current environment. The recovery will be slow, but revenue creation should return to pre-pandemic levels in the following years. The pace of vaccine deployment throughout the globe is the primary driver of the industry’s entire recovery.
Hotel stocks continue to pique the curiosity of institutional investors, and the smart money is still heavily invested in them. Moreover, the hotel industry might be profitable once travel restrictions are eased and canceled vacation plans due to the epidemic.
How does it work?
It’s critical to know the differences in the business models used by hotel chains before making any financial commitments.
A C-corporation hotel is operated, branded, and advertised by a company. These firms usually operate hotel franchises but don’t own much property.
REITs in the hotel industry tend to do the opposite. Real estate investment trusts focus on acquiring, owning, and managing commercial real estate. They may, on rare occasions, operate their hotels; however, this is primarily dependent on the company. REITs are also obligated to pay out 90 percent of their earnings to their shareholders.
How to start?
On WeBull, you may receive all of these alternatives and more. WeBull is a stock market that will provide you with a few free stocks just for joining up. Travel may be put on hold for the time being. The hotel sector is projected to flourish when our planet adopts immunization and eventually decreases travel restrictions. Investing in low-cost hotel companies now might give your portfolio the boost it needs in the months ahead in 2022.
Hilton Worldwide (HLT)
52-week range: $114.70-$160.96
1-year price change: the HLT has seen a tremendous uptrend in the last year. The stock found a bottom at 114.70 on July 21.
Forecast 2022: the HLT stock price may continue the upside and hit beyond the $200 mark in 2022. After Covid-19 restrictions are easing off, we expect a rise in the hotel and lodging sector.
Hilton is one of the world’s major hotel businesses, with over 6,500 properties worldwide. Its vast portfolio includes several midscale and premium hotels and its high-end Waldorf Astoria and Conrad Hotels brands. Hilton Honors, the company’s loyalty program, has over 115 million members.
Increasing travel demand has helped Hilton and other extensive travel and tourism companies achieve strong earnings. Revenue per available room climbed 234 percent year over year in the second quarter of 2021. In the same quarter, traditionally stressed development, the hotel firm added 119 new hotels and nearly 20,000 rooms.
As a result, occupancy and revenue per available room at Hilton have yet to rebound. Both international restrictions and the delta variation are interfering with recovery. However, its well-known brands and customer loyalty program put it in a good position for future growth.
Texas Roadhouse (TXRH)
52-week range: $76.65-$110.75
1-year price change: the TXRH stock found a bottom around the $76 mark on January 22. The asset is still below the 52-week highs. But the future potential is quite significant.
Forecast 2022: the TXRH stock price may hit fresh highs around $125 in 2022 as the revenue for the company has shown remarkable growth and future potential.
Since its inception in 1993, Texas Roadhouse has been a go-to spot for families looking for a casual meal. The restaurant firm and its franchisees operate in more than 640 locations. The bulk of its restaurants are in the United States; however, it has also spread overseas.
Texas Roadhouse has handled the pandemic’s adaptations well. Despite its previous concentrate on sit-down dining, it has changed its attention to carry out orders and began delivering meal packages. After the pandemic in 2020, these alterations helped the restaurant industry stay afloat, and the number of diners has since returned to pre-pandemic levels.
Following the reopening, we’ve seen excellent outcomes. In the second quarter of 2021, total revenue was $899 million, an increase of 88.7 percent over 2020 and 30.3 percent over 2019. The average number of visitors is close to that of 2019. The number of to-go orders is about two-and-a-half times larger than in 2019.
Сentury Casinos (CNTY)
52-week range: $8.05-$16.44
1-year price change: the CNTY stock price found a bottom around $9.00 on January 22 and has been above $11 on March 22. The stock is in the middle of its 52-week range.
Forecast 2022: the CNTY stock is expected to hit the $18.00 mark in 2022 as we anticipate a rise of 22% in this stock’s earnings.
Century Casinos is a gaming company owner and operator of mid-sized casinos in the US. Even though most casinos are located in North America (namely in the United States and Canada), it also has a significant stake in many Polish casinos.
Century Casinos reached new milestones in the second quarter of 2021, pulling in $92.2 million in revenue and $25.2 million in adjusted EBITDA. Considering that its casinos in Canada and Poland were closed for most of the quarter, the results are even more stunning.
The COVID-19 pandemic may have an impact on the leisure industry. In the instance of Century Casino, some of its facilities may be forced to close again. But this is subject to the prevailing infection rate in the area. However, even if that happens, this game company has done a great job of reducing costs and being profitable despite that possibility.
Upsides and downsides
Now, let us take a look at the upsides and downsides.
| Upsides | Downsides |
| High profits are possible. | They are particularly at risk in times of economic hardship. |
| The flexibility of changing the price is possible. | There is a considerable lot of cash flow variability. |
| Variable expenditures have substantial profit margins. | Trends among consumers keep shifting. |
Final thoughts
Hotels will always be required, even though the industry has taken a huge hit. Covid-19 has been merciless in laying financial strain on the hotel sector, much as the aviation industry. Even though international travel has decreased dramatically, many hotel firms have rebounded to pre-pandemic share levels. Hotels and tourist stocks are likely to increase when the world opens up again after many months of isolation.
After obtaining the immunization, people will need to see friends and family they haven’t seen in months. People who love to travel will resume their everyday work and leisure travel plans.
