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Zacks Industry Outlook Highlights: Marriott International, Wyndham Worldwide, Hilton Grand Vacations, Intrawest Resorts Holdings and China Lodging Group

Zacks Equity Research

For Immediate Release

Chicago, IL – March 22, 2017 – Today, Zacks Equity Research discusses the Industry: Hotels, Part 2, including Marriott International, Inc. (NASDAQ: MAR – Free Report ), Wyndham Worldwide Corporation (NYSE: WYN – Free Report ), Hilton Grand Vacations Inc. (NYSE: HGV – Free Report ), Intrawest Resorts Holdings, Inc. (NYSE: SNOW – Free Report ) and China Lodging Group, Ltd. (NASDAQ: HTHT – Free Report ).

Industry: Hotels, Part 2

Link: https://www.zacks.com/commentary/107182/will-2017-bring-growth-for-the-us-hotel-industry

The moderating but positive outlook for lodging demand growth indicates that people are steadfast on spending time with loved ones, despite economic or political upheaval in certain pockets worldwide. They're looking for unique experiences at all price points and hoteliers believe that their diverse portfolio of travel offerings can continue to deliver on that growing demand. Also, we see no reason why the economy cannot stay afloat and thrive in 2017. And new supply is not likely to stop the continuation of positive RevPAR growth.

Thus, there are plenty of reasons to be optimistic about the broader hotel industry over both the short and long terms. Below, we discuss what investors can look forward to in the coming period:

International Expansion : Major hoteliers are exploring growth opportunities abroad, especially in the emerging markets and the outlying areas surrounding major cities. Hoteliers are forging ahead with expansion plans in emerging markets with great long-term potential despite looming macroeconomic concerns.

A number of U.S.-based hoteliers are targeting the unsaturated markets in Asia-Pacific, the Middle East, Brazil, Russia and Africa. Within Asia, China promises significant growth, despite an economic slowdown, with visits expected to increase substantially, moving ahead. In fact, China is the fastest growing lodging market in the world. Interestingly, the country is a major revenue contributor forMarriott International, Inc. (NASDAQ: MAR – Free Report ).

Apart from China, India is becoming a hot spot for U.S.-based hoteliers with its emergence as a global business hub. Although economic growth rates are slightly lower than China, the country has great long-term growth potential as a tourism market. Among others, Japan, Indonesia, Australia, Singapore and Thailand continue to attract travelers.

The key players in the industry are also targeting the high-potential Middle East countries such as Turkey and United Arab Emirates (UAE) that offer strong infrastructure.

Many of the hoteliers are also looking to leverage from Latin America’s upsurge in accommodation demand. In this regard,Wyndham Worldwide Corporation’s (NYSE: WYN – Free Report ) Hotel Group recently announced the acquisition of Latin America's leading Fen Hotels. Meanwhile, with an increasing number of managed and franchised limited service hotels in Mexico, Colombia and Brazil, Marriott expects its distribution in the Caribbean and Latin American region to increase 75% by 2018.

Embracing Social Media and Smartphone Technology to Build Loyalty : In today’s world of price comparison and shared economy, hotels have to constantly push their boundaries to retain customers. In this regard, digital innovation and social media have started to play a key role. Social media can enhance a brand’s prospects by connecting directly with guests, especially millennials and can, in turn, increase loyalty and market share. Social media sites like Facebook, Twitter and TripAdvisor are commonly used by travelers to select hotels. Moreover, hoteliers are using apps to help guests manage bookings and offering interactive maps/GPS to increase occupancy.

In fact, mobile check-ins and check-outs have increased substantially over the past two years as the service is helping guests to use their smart devices to connect with the hotel for faster and seamless check in/check out. Hoteliers are therefore looking to introduce responsive designs in their apps, one-click booking, customized travel content and location technology to improve operating efficiencies and enhance guest services. Being tech savvy is thus no longer an option but a necessity to survive in the intensely competitive hotel industry.

As per an eMarketer's report, a Dec 2016 study from OpenMarket highlights the growing enthusiasm for chat-based messaging apps, like chatbots, among potential hotel customers. Travelers like these text interfaces as they can then avoid calling the front desk and easily access confirmation details. Thus, we can expect hospitality companies to embrace this technology, going forward, in order to appeal to their guests.

Many hotel companies are also setting up analytics tools to understand consumer preferences — and deliver a differentiated experience — which could eventually motivate customers to visit frequently, stay longer and spend more.

Key Picks

Currently, InterContinental Hotels andHilton Grand Vacations Inc. (NYSE: HGV – Free Report ) sport a Zacks Rank #1 (Strong Buy), while Intrawest Resorts Holdings, Inc. (NYSE: SNOW – Free Report ) and Choice Hotels carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here

Despite being Zacks Rank #3 (Hold) stocks, we are optimistic about Marriott, Wyndham, and China Lodging Group, Ltd. (NASDAQ: HTHT – Free Report ), given their positive outlook for 2017.

Bottom Line

The lodging sector will prove to be a worthy investment proposition in the near-to-medium term provided the economy continues to shows signs of recovery. This in turn will perk up investor confidence and lead to greater demand, thereby boosting hoteliers’ profitability.

Particularly, hoteliers with experience, solid equity, strong brands and unique ideas in great markets, and those that are solid borrowers and considered trustworthy will be able to expand and surely convert the challenges into opportunities.

Check out our latest “ Hotel Industry Outlook ” here for more on the current state of affairs from an earnings and valuation perspective as well as the trend for this important sector.

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Marriott International (MAR): Free Stock Analysis Report
Wyndham Worldwide Corp (WYN): Free Stock Analysis Report
Hilton Grand Vacations Inc. (HGV): Free Stock Analysis Report
Intrawest Resorts Holdings, Inc. (SNOW): Free Stock Analysis Report
China Lodging Group, Limited (HTHT): Free Stock Analysis Report
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