Hotel stocks have been hit hard in the coronavirus pandemic as business trips, sports events and tourism in general have all been halted.
Much of the hotel stocks space is trading at a discount as investors have adopted a wait and see attitude for travel stocks due to the coronavirus.
Willing to take the risk and buy hotel stocks?
Investors willing to take the risk of further disruptions from the coronavirus pandemic should read carefully and buy in batches to avoid any large pullbacks that another lockdown might present.
As the economy starts up and recovers, top hotel stocks could be a good bet
After all, travel and hotel stocks staged a spectacular come back after the 2008 financial crisis. Should the story repeat itself, some hotel and travel stocks could skyrocket 1000%+.
But, until a vaccine is available, perhaps buy one of these Top Covid-19 Vaccine Stocks, the risk of coronavirus still looms over the market.
Not yet ready for hotel stocks?
We’ve created other stock lists such as Top 5 Online Payment Stocks and Top 3 Retail Stocks to Buy During the Reopening if you don’t have the appetite for travel related stocks that you might find interesting. You could also take a look at the fun Kids’ Top Stock Picks Challenge we made for a change of pace.
Is Airbnb the future of travel stocks?
Airbnb was getting ready for their IPO, but then COVID-19 changed all plans. Investors are still watching closely to see how this plans out.
Airbnb is particularly promising for investors as they have already proven that they are profitable, unlike Lyft or Uber. Though the startup has disrupted the hotel and lodging industry in real ways, there are still some very good companies operating in the sector.
Hotels have adapted to the changing climate by offering more tailored customer experiences and services that Airbnb can’t offer necessarily.
Top 15 Hotel and Travel Stocks to Buy in 2020
🏢Top 3 Canada Hotel and Travel Stocks
Are there hotel and travel stocks in Canada? There once were a few Canadian hotel stocks, like Temple Hotels (TPH-T), but they have been privatized. What’s left are not pure hotel stocks, but travel stocks like Air Canada or Transat A.T., a Casino Stock and some hotel-focused REIT.
American Hotel Income Properties (HOT.UN-T)
American Hotel Properties owns 79 hotels in cities like Pittsburgh, Tampa, and Baltimore (secondary US cities). They’ve upgraded old hotels, many on railway lines.
It is a difficult stock to own in this environment. The pandemic has shut them. He believes the distribution has been suspended. They have impaired cash flow and higher level.
Transat A.T. Inc (A) (TRZ.T)
Will the Air Canada purchase happen? The agreed price to buy Transat was $18 a share, today it’s trading below $6.50. Its CEO recently stated Air Transat would survive wether the Air Canada deal happens or not.
The airline industry has taken a significant volume reduction. There will be a modest recovery that will gain strength over an 18 month time-frame. He finds a huge disconnect between valuations and what they should be. Most airlines are operating at virtually zero levels.
Great Canadian Gaming (GC-T)
Great Canadian Gaming operates an entertainment, casino-hotel model that has been hit hard by the coronavirus pandemic. If you’re looking for Canadian hotel stocks, it might be an interesting alternative to the big Las Vegas brands. No need to search further for Casino Stocks Canada, Great Canadian Gaming is THE Canadian casino stock to buy in 2020.
He got stopped out of this. It's well-run, but the casinos are closed so there's no revenue coming in. GC carries a reasonable amount of debt. Also, casinos have high operating expenses, even during this lockdown. He wants to see stability in their debt, though. In recessions, gambling performs well, though.
🏢 Top 12 US/International Hotels and Casino Stocks
In the US, Las Vegas reopened and people showed up…
But it seems they are also seeing record numbers of coronavirus infections two weeks after casinos reopened. Will they have to shutdown again? Many of the top US hotel stocks are big Las Vegas names.
Hyatt Hotels (H-N)
A luxury hotel and resort franchise that offer high-end lodging for discerning travelers. They are moving away from owning hotels and want to collect royalties from the franchise that they own. This project is expected to be complete in about 3-5 years, so it could just be the beginning of good growth. They have a cheaper valuation than Marriott and gives a yield of 0.9%.
Luxury hotels. The stock has flatlined due to worries over the coronavirus. They are selling their hotels for management contracts. They are using the cash to buy back stocks. He sees it trading over $100. A well-run business with the family having a lot of stocks. (Analysts’ price target is $86.13)
Marriott International Inc. (MAR-Q)
The world’s largest hotel company has a broad offering of hotels and lodging facilities for every level of traveller. Their brands include the Ritz-Carlton, St. Regis, Sheraton, Delta Hotels and a host of others.
A small Short for him because of a combination of its slightly poor momentum and fairly high valuation. 14X EBITDA, and trades 21X PE. Doesn’t have a ton of yield support.
LVMH (Owns Belmond Hotels) (LVMUY-OTC)
LVMH bought Belmond in 2018, a global luxury hotel and resort that specialize in exotic locations. They also operate luxury tourist trains and river cruises. The company is well diversified and also operates a renowned restaurant in New York. It’s not a pure hotel stock, but maybe a way to capitalize on the recovery with less risk.
Post-recession? A very unique retailing franchise. They have a great scale in luxury goods. They have a strong digital platform. They own and control all their products. There was not as large a fall in sales in Asia as some had expected. He thinks they will be a survivor and will be stronger.
Hilton Worldwide Holdings (HLT-N)
The classic American multinational hospitality company. They launched another branch called Tru by Hilton that targets the millennial generation by offering a more tailored experience. Brands under them include Double Tree by Hilton, Waldorf astoria among other well known hotel chains.
They are splitting up before the end of the year into three separate companies: A REIT, Time share and hotels. His analysis sees this stock in the low $30s in a year just by unlocking value.
An online travel company that operates several websites and search engines for flights and bookings. The company allows users to find competitive rates for hotels and flights. They are also well-fit to compete with Airbnb as they operate an online bookable vacation rental listing across the world.
Fundamental score of this company is very strong with strong earnings. Thinks the company is overvalued.
Booking Holdings Inc. (BKNG-Q)
An online travel and related services. Their portfolio includes Booking.com, KAYAK, and OpenTable amongst others. They provide other travel experiences through local partners. They changed their advertising approach that negatively affected their stock price but they have increased bookings and the stock price is expected to recover.
He has looked closely at it and the biggest struggle was trying them out and getting moved to Google. He would rather avoid it.
Las Vegas Sands Corp. (LVS-N)
A casino and resort operating company based in Paradise, Nevada. The reopening of the Las Vegas strip has gone relatively well. Bank of America estimates that Las Vegas Sands will endure the smallest drops in average room rates in the near term
MGM Mirage (MGM-N)
A global hospitality and entertainment company with brands such as the Bellagio, MGM Grand, Mandalay Bay and The Mirage. Resorts are located in Las Vegas, New Jersey and Detroit among other destination locations, including Macau. They pay $0.52 of dividends per share. They also benefited from the reopening of Las Vegas and saw long lines of clients waiting to enter the casino.
(A Top Pick Nov 19/19, Up 2%) Two days ago, it was up 12%, but the coronavirus has really pressured this. Buy this on any pullback.
Wynn Resorts (WYNN-Q)
A high end hotel and casino operator based on the Las Vegas Strip. With the reopening of Vegas, major casino resorts saw strong initial demand. The city allowed for casinos to reopen on June 4th and saw long lines and packed flights. Wynne Resorts saw the highest average room rates on the strip during this time.
Very volatile sector. It is still on a downtrend. He would like to see the stock stop making lower highs.
Vail Resorts (MTN-N)
They are the largest ski resort operator in the US. Analysts are optimistic this will come out of the crisis better and bigger. It is a pretty good sport for social distancing. It has a great long-term outlook.
He kept this one. He felt it fell too much. They will come out of this better and bigger. It is a pretty good sport for social distancing. Long term there is nothing better than this business.
Hotels on a boat have been hit the hardest.
Royal Caribbean Cruises (RCL-N)
An American global cruise company based in Miami. It is the second largest cruise line operator in the world. The cruise operates under the brands Royal Caribbean International, Celebrity Cruises, Azamara and Silversea Cruises. The stock was hit hard by the coronavirus outbreak but has shown a modest recovery this week. The current yield is 4.49%.
The cruiselines have really roared back. RCL is the biggest and has the best balance sheet among the big three cruiselines. Down the road, we'll be back on cruises and revenues will return. He likes this business and it will survive. But don't buy 30% of travel, but rather 5-15%. RCL is a quality name…
The world’s largest travel leisure company with over 100 vessels. They were hit hard after news of the virus spreading on their ships broke news early in the pandemic. They raised $6 billion at the end of April so they have the capital to ride it out.
Life is too short to catch a toxic trend like the cruiselines. Maybe you can make a trade of this, but he's a long-term trader. He fears waking up and seeing news of a virus hitting a cruise ship.