(List compiled by Eben Esterhuizen, CFA)
Hotel rates serve as an indicator of business activity, which is why the steady climb of average room rates in the US provides an encouraging sign for the economic recovery.
According to the LA Times, in the first week of September the national average room rate rose to $107, just short of the March 2008 high of $110.
“In Los Angeles, room rates climbed to an average of $127, short of the $133 peak set in summer 2008, according to Smith Travel Research.”
Prices rising to pre-recession levels are largely a reaction to increased demand from business travellers, indicating an increase in corporate spending.
And according to industry analysts, leisure demand and overall prices are expected to rise further as the holiday season nears.
So, which hotel stocks are expected to see the biggest gains? For ideas, we collected data on institutional money flows, and identified three hotel stocks with significant hedge fund buying during the current quarter.
Big money managers seem to think there’s significant upside to these hotel names—do you agree?
analyse These Ideas (Tools Will Open In A New Window)
List sorted by market cap.
1. Hyatt Hotels Corporation (H): Hyatt Hotels Corporation and its subsidiaries engage in the management, franchising, ownership, and development of Hyatt-branded hotels, resorts, and residential and vacation ownership properties worldwide. Net institutional purchases in the current quarter at 2.7M shares, which represents about 6.1% of the company’s float of 44.28M shares.
2. Ctrip.com International Ltd. (CTRP): Provides travel services for hotel accommodations, airline tickets, and packaged tours in the People’s Republic of China. Net institutional purchases in the current quarter at 10.1M shares, which represents about 7.6% of the company’s float of 132.84M shares.
3. China Lodging Group, Limited (HTHT): Develops, operates, and manages a chain of hotels in the People’s Republic of China. Net institutional purchases in the current quarter at 1.9M shares, which represents about 8.31% of the company’s float of 22.86M shares.
Interactive Chart: Press Play to see how analyst ratings have changed for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.