Top 5 Must-Watch Hospitality Stocks for 2024: Future Growth Favorites

Looking to invest in the hospitality industry in 2024? You’ll want to keep an eye on these “5 must watch hospitality stocks for 2024”.

With strategic plans and consumer engagement that sets them apart, these companies are shaping up to be the big players in the hospitality game. Discover why these stocks make our must-watch list.

Exploring the Hospitality Sector: An Investor's Primer

Picture the consumer discretionary sector as a vibrant marketplace offering a plethora of non-essential goods and services, including electronics retailers. This marketplace comes alive when consumers have surplus cash, ready to splurge on travel, dining out, and luxury items. However, it holds its breath during economic downturns when consumer spending retracts, especially on services like hotels, restaurants, and leisure activities.

What makes this sector appealing to numerous investors? The answer lies in the multiplicative effect of investment in the hospitality industry. This sector:

• Paves the way for job creation
• Supports local businesses
• Promotes cultural exchange
• Pumps the lifeblood into local economies.

After the COVID - 19 pandemic, in which travel and vacations were banned, the industry is on a decidedly upward trend. Hotels that are smart about meeting consumer expectations are in a winning position.

And what do hospitality customers realistically want? Check out the chart below prepared by financesonline portal!

The vacations are coming, and people want to relax and have an adventure thanks to companies from entertainment sector. Betting on this kind of stocks therefore seems to be a shot at the proverbial bull's eye.

The Top 5 Hospitality Stocks to Keep an Eye On in 2024

We’ll reveal five hospitality stocks set to create a buzz in 2024. These stocks belong to well-known brands that have demonstrated impressive growth over the past five years. But what makes them the best stocks? They’ve leveraged social media platforms, empowered their workforce, and embraced technological innovations.

Let’s examine these companies closely.

Marriott International (MAR)

Marriott International, a titan in the hospitality industry, has been expanding its realm across the globe. With the addition of 46,000 net rooms in the first quarter alone, Marriott’s portfolio now encompasses over 1.6 million rooms across nearly 8,900 properties. What strategies does this company employ to retain its customers?

The answer lies in Marriott’s loyalty program, Marriott Bonvoy, which is like a magnet for consumers. Breaching the mark of 203 million members, the program has welcomed 7 million new members in just the first quarter. This growth in consumer engagement, coupled with the anticipated worldwide RevPAR increase of 3% to 5%, promises a bright 2024 for Marriott.

Hilton Worldwide Holdings Inc. (HLT)

Hilton Worldwide Holdings Inc. is another superstar in the hospitality sector, focusing on enhancing guest experience through technology integration. This tech-forward approach has not only streamlined communication between guests and hotel staff but also contributed to increased guest satisfaction, reinforcing Hilton’s brand strength in the hospitality market.

In its mission to stay ahead of the curve, Hilton is expanding its mobile messaging platform to all its properties globally, slated for completion by the end of 2024. This technological leap has resulted in faster response times for guest inquiries and requests, painting a promising future for Hilton in 2024.

Wyndham Hotels & Resorts (WH)

Wyndham Hotels & Resorts, with its strong growth in international markets, is another gem in the hospitality sector. The company has achieved a 4% year-over-year growth in system-wide rooms, adding more sparkle to its diverse portfolio. What’s the driver behind this growth?

The answer lies in Wyndham’s global expansion strategy, which led to strong growth, especially in the upscale extended stay segment. The company’s development pipeline witnessed a notable 8% growth, reaching a record 243,000 rooms, with more than 13,000 rooms opened in the first quarter of 2024. This indicates a robust growth trajectory for Wyndham in the coming years.

Hyatt Hotels Corporation (H)

Hyatt Hotels Corporation, with its focus on expanding luxury, resort, and lifestyle hotels, is a showstopper in the hospitality industry. The company’s portfolio has nearly tripled since going public, and it plans to add more than 35 hotels globally within its diverse range of luxury brands by the end of 2025.

The growth of Hyatt’s luxury segment includes new hotels in key global markets and the introduction of new brands, such as the ultra-luxury brand Impression by Secrets. Furthermore, Hyatt is growing its Independent Collection hotels, extending the brand’s presence into new markets. With these expansion plans in place, Hyatt’s future looks brighter than ever.

InterContinental Hotels Group PLC (IHG)

InterContinental Hotels Group PLC is a stalwart in the hospitality sector, boasting a robust pipeline and a strong growth trajectory. The company has experienced a consistent increase in market share, setting it apart from its competitors. What propels IHG’s growth?

IHG’s ambitious expansion strategy includes a robust pipeline with 1,812 hotels and 274,000 rooms under development. This pipeline represents a 7.5% increase in total system size over the past year, indicating a strong growth trajectory for IHG. Coupled with strategic moves to bolster its presence in Latin America, IHG’s future looks promising.

Below you will find a screen from the Scrab.com tool comparing the situation of all 5 stocks mentioned in the previous paragraph. Thanks to fundamental scoring feature it takes a second to see which company is best and get an instant overview of their strengths and weaknesses.

It is a great tool providing in depth analysis in literal seconds. At the same time, it is much cheaper than hiring an in-house analyst - the functionality is available on the spot, 24/7, and is definitely cost-effective.

Investment Strategies for the Hospitality Market

Investing in the hospitality sector can be as thrilling as a roller coaster ride, full of ups and downs. It requires a well-diversified portfolio, a keen eye for individual stocks, and an understanding of the role of index funds and ETFs.

Whether you’re a risk-taker or prefer a safer path, the hospitality market has something to offer every investor.

Selecting Individual Stocks

Walking down the aisle of individual stocks can seem daunting, but the secret lies in understanding key financial ratios, such as free cash flow. For instance, liquidity ratios are critical in the hospitality industry due to businesses’ substantial working capital requirements and numerous short-term liabilities. A higher current ratio signifies a stronger ability to meet short-term obligations, making it an important consideration for investors.

Financial leverage ratios offer insights into a company’s long-term solvency and ability to manage long-term debt, which is essential given the industry’s dependency on financing for property and asset acquisition. Meanwhile, profitability ratios help assess a stock’s ability to turn a profit, considering the high revenue generation accompanied by significant operational costs.

Are you prepared to explore the world of individual stocks and stock trades in the stock market?

The Role of Index Funds and ETFs

Index funds and ETFs are like the Swiss army knife of investing, offering exposure to a broad range of companies and sectors within the travel industry. From airlines to hotels and booking services, these investment avenues provide a diversified portfolio all within a single fund.

While these investments offer diversification, they also come with annual fees that investors need to consider when calculating potential returns. However, ETFs and index funds hold strong long-term prospects for investors, promising potential returns beyond short-term market volatility.

Are you prepared to incorporate these tools into your investment strategy?

The Impact of Market Trends on Hospitality Stocks

The performance of hospitality stocks is influenced by various factors, including:

• Economic cycles
• Consumer spending
• Interest rates
• Geopolitical tensions
• Natural disasters

These market trends significantly impact hospitality investments.

How can you steer clear through these turbulent conditions?

Stock Market: Understanding Economic Indicators

Understanding economic indicators is like learning the language of the financial world. It helps you decipher the impact of market trends on hospitality stocks. For instance, the hospitality industry, as per the global industry classification standard, accounted 10.4% of the global GDP in 2020, and this percentage is expected to rise by 10% in the next decade.

The hospitality industry plays a pivotal role in economies worldwide by:

• Providing jobs
• Boosting demand and sales for local businesses
• Generating revenue through taxes from services offered within the industry
• Preserving local art, culture, and historical sites, thus contributing to the national GDP

Understanding these economic indicators (which are available in the Scrab tool as well) can guide you in making informed investment decisions.

Adapting to Consumer Behavior Changes

In a world where change is the only constant, adapting to consumer behavior changes is crucial for the hospitality sector. From integrating technology to offering unique experiences and focusing on sustainability trends, the hospitality industry is constantly evolving to meet consumer expectations.

Take, for instance, Hilton’s digital initiatives, such as mobile messaging and the Connected Room Experience, that meet consumer expectations for technology integration. Then there’s the trend towards immersive and experiential dining, transforming how dining and drinking services are presented. Such adaptations to evolving consumer behaviors are shaping the future of the hospitality industry.

Navigating Risks and Rewards in Hospitality Investing

The hospitality sector can seem like a labyrinth of risks and rewards, with every turn offering potential pitfalls and treasures. Understanding risk management techniques, diversifying investments, and identifying long-term growth opportunities are key to navigating this labyrinth successfully.

Risk Management Techniques

The key to risk management lies in diversification and strategic selection of companies. Investors should look for companies with proactive risk management practices, indicative of long-term stability and growth potential.

For those willing to tread off the beaten path, Hotel Real Estate Investment Trusts (REITs) offer an alternative avenue for investing in hospitality stocks. Focusing on hotel properties, these trusts provide opportunities for potential dividends. Are you prepared to confront the risks and harvest the rewards?

Psst... The list of such REITs is easiest to find with Scrab screener, as seen below ;)

Identifying Long-Term Growth Opportunities

Identifying long-term growth opportunities is like prospecting for gold in the hospitality sector. Key financial ratios are essential tools for this prospecting, enabling investors to identify businesses with solid financial health and potential for sustained growth.

Certain companies, like Hyatt Hotels Corporation, show promising growth potential. Some key factors contributing to this potential include:

• The company reported a record year of deal signings in 2023, which positively impacted the company’s revenue
• The company has a pipeline of 127,000 rooms worldwide, representing nearly 40% of the existing rooms in the Hyatt portfolio
• The real estate properties in the hospitality sector have robust growth potential

These factors offer promising long-term earnings growth opportunities, as well as potential for revenue growth.

Summary

The hospitality sector, a vibrant arena of opportunities, is an appealing investment prospect for many investors. From understanding the nature of the sector to exploring top hospitality stocks, adopting investment strategies, and navigating the impact of market trends, the journey through the hospitality sector is a thrilling ride.

As investors, understanding risk management techniques and identifying long-term growth opportunities can help navigate this sector. So, are you ready to embark on this investment voyage in the hospitality sector?

‍