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4 Hotel Stocks to Buy as Americans Go Holidaying This Summer

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Concerns over rising prices are growing but that hasn’t dampened the spirits of Americans as they are in no mood to cut down on their holiday plans and spending this summer. Even the huge rush, which is forcing several airline companies to cancel hundreds of flights daily, isn’t coming in the way of vacations.

Despite the massive cancelations, both leisure and business flights have surpassed pre-pandemic levels, according to the Mastercard Economics Institute: Travel 2022 Trends and Transitions. With the economy now having reopened, Americans are once again aggressively planning vacations, leading to soaring hotel bookings. Thus, hotel stocks like Marriott International, Inc. MAR, Choice Hotels International, Inc. CHH, Playa Hotels & Resorts N.V. PLYA and Bally's Corporation BALY are likely to benefit in the near term.

Americans Go Holidaying

Hotel bookings are once again on the rise after suffering for over two years as an increasing number of Americans plan to travel this summer. According to a survey by Vacationer, 80% of American adults are planning to go on vacation this summer. Among them, 45% plan on traveling more than once.

This means around 93 million people in the United States will travel at least once this summer, while 115 million will travel at least twice. According to the survey, at least 35 million more people will be traveling this year, as only 135 million American adults said they would travel in 2021.

A separate survey by Deloitte titled 2022 Summer Travel Survey, shows that nearly 46% of Americans are planning vacations this summer wherein they plan to stay in hotels or other types of paid lodging. Moreover, 30% of the people traveling plan to spend more than they did in 2019, despite rising prices.

Understandably, more people traveling means a tough time for hotels as more rooms will be booked. According to Amadeus’ Demand360’s business intelligence data, hotel bookings have been on par with the 2019 level since March and are likely to soar during summer.

In fact, hotel reservations globally surpassed the pre-pandemic levels for the first time in April and went on to hit a new high of 63% in May compared to 60% in May 2019. The performance was even better in the United States, with occupancy level reaching 68%, reflecting a jump of 7% from the pre-pandemic levels of 2019.

Flight Bookings Soar Despite Cancelations

According to Amadeus’ Demand360, 55% of hotel bookings in the United States have been taking place 0-7 days before travel. Thus, hotel bookings are likely to soar as more people travel during the summer.

The biggest challenge, however, is being faced by airline companies. Higher traffic is compelling them to cancel a record number of flights daily. Business and leisure travel surpassed the pre-pandemic level much before summer.

According to Mastercard Economics Institute: Travel 2022 Trends and Transitions global leisure flight bookings surpassed the pre-pandemic level by 25% in April. Medium-haul leisure flight bookings were up 25% and 27%, respectively, during this period. This, too, is only going to increase in the coming days.

Moreover, according to Amadeus’ forward-tracking data, inbound flights to the United States will be the highest globally during the months of June, July and August. This means that many people are choosing the United States as their preferred holiday destination this summer.

The pandemic took its toll on the travel and tourism industry over the past couple of years, which saw airlines and hotels suffering the most. However, with restrictions now eased and millions vaccinated, leisure travel is once again on the rise.

Our Choice

The travel boom makes this an opportune time to invest in hotel stocks. We have handpicked four such stocks that carry a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Marriott International, Inc. is a leading worldwide hospitality company focused on lodging management and franchising, after the spin-off of its timeshare business into a publicly-traded company in November 2011. MAR’s classic premium hotel brands include Marriott Hotels, Sheraton, Delta Hotels, Marriott Executive Apartments, and Marriott Vacation Club. Moreover, its distinctive premium hotel brands comprise Westin, Renaissance, Le Méridien, Autograph Collection, Gaylord Hotels, Tribute Portfolio and Design Hotels.

Marriott International’s expected earnings growth rate for the current year is 87.5%. The Zacks Consensus Estimate for current-year earnings has improved 8.5% over the past 60 days. MAR sports a Zacks Rank #1.

Choice Hotels International, Inc. is one of the largest hotel franchisors globally. As of Mar 31, 2022, CHH had 6,996 hotels open, representing nearly 577,714 rooms. Choice Hotels International operates across 40 countries and territories internationally and is present in 50 states domestically and the District of Columbia.

Choice Hotels International’s expected earnings growth rate for the current year is 18.2%. The Zacks Consensus Estimate for current-year earnings has improved 3.7% over the past 60 days. CHH has a Zacks Rank #2.

Playa Hotels & Resorts N.V. is an owner, operator and developer of resorts primarily in Mexico and the Caribbean. PLYA owns and manages Hyatt Zilara and Hyatt Ziva Cancun, Hyatt Zilara and Hyatt Ziva Rose Hall Jamaica, Hyatt Ziva Puerto Vallarta and Hyatt Ziva Los Cabos.

Playa Hotels & Resorts N.V.’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved more than 100% over the past 60 days. PLYA has a Zacks Rank #2.

Bally's Corporation owns and manages casinos, horse racetrack and authorized OTB licenses principally in Colorado. BALY’s properties include Twin River Casino Hotel, Tiverton Casino Hotel, Hard Rock Hotel & Casino, Casino Vicksburg, Dover Downs Hotel & Casino, Casino KC, Golden Gates Casino, Golden Gulch Casino, Mardi Gras Casino and Arapahoe Park racetrack.

Bally's Corporation’s expected earnings growth rate for the current year is 20%. The Zacks Consensus Estimate for current-year earnings has improved more than 100% over the past 60 days. BALY has a Zacks Rank #2.


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