3 Hotels & Motels Stocks to Look at Despite Industry Woes

Core Viewpoint - The Zacks Hotels and Motels industry in 2024 is expected to face challenges from high costs, geopolitical risks, and macroeconomic uncertainty, but expansion efforts and digital enhancements may provide growth opportunities [1][3]. Industry Overview - The Zacks Hotels and Motels industry includes companies that own, lease, manage, develop, and franchise hotels, as well as vacation ownership and exchange firms [2]. Trends Impacting the Industry - High costs and inflation are significant concerns, with rising labor costs and high inflation likely to reduce consumer spending [3]. - The industry is experiencing strong growth in Revenue per Available Room (RevPAR) and Average Daily Rate (ADR), with a projected increase of 4.1% and 3.1% year-over-year for 2024, respectively [4]. - Digitalization is driving growth, with hotel owners leveraging mobile technologies to enhance customer experience and optimize pricing [5]. Industry Performance and Valuation - The Zacks Hotels and Motels industry has outperformed its sector, increasing by 37.9% over the past year compared to the sector's 10.2% increase [8]. - The industry is currently trading at a forward 12-month EV/EBITDA of 14.07X, higher than the S&P 500's 12.55X [9]. Company Highlights - Hyatt Hotels: Anticipates a 3% to 5% increase in system-wide RevPAR for 2024, benefiting from leisure demand and new hotel openings [10]. - Hilton Worldwide: Expects a 2% to 4% increase in system-wide RevPAR for Q1 2024, supported by unit expansion and strategic partnerships [11]. - Hilton Grand Vacations: Projects a 12.1% growth in 2024 EPS, aided by new properties and leisure travel momentum [13].