The hospitality industry has been severely affected by travel restrictions and social distancing rules brought about by the COVID-19 pandemic. However, given that solid progress on the vaccination front has helped contain the spread of the virus in several parts of the world this year, the industry appears poised for a strong rebound.
On November 8, the Biden administration announced the lifting of the ban on foreign travel to the United States for tourists vaccinated after almost 18 months. This should be a catalyst for the travel and tourism industry. Travel volume is expected to hit 5% of 2019 levels for Thanksgiving, according to AAA, with a few 53.40 million people take the air, roads and rails.
Therefore, we believe that it might be wise to bet on the stocks of quality hotels InterContinental Hotels Group PLC (IHG), Choice Hotels International, Inc. (CHH) and Wyndham Hotels & Resorts, Inc. (WH). They should perform well this quarter and beyond as travel picks up.
InterContinental Hotels Group PLC (IHG)
IHG owns, manages, franchises and leases hotels in various countries around the world. The UK-based company has approximately 5,964 hotels and 886,036 rooms in approximately 100 countries.
On October 22, 2021, Keith Barr, CEO of IHG Hotels & Resorts, said, “We continue to grow rapidly, opening 79 hotels during the quarter and signing another 91 in our pipeline of 1,800 properties, and we expect to that the development activity resumes. even more during the rest of the year. The rapid progress we are making with the review of the Holiday Inn and Crowne Plaza portfolios also ensures that we are well positioned for future growth. “
IHG’s occupancy rate was 66% in the Americas segment for the third quarter, ended September 30, 2021, compared to 60% in the previous quarter. In the same segment, the company’s gross system grew 3.3% year-over-year, with 2.9,000 rooms (30 hotels) opened in the quarter. In addition, in the EMEAA segment, its occupancy rate was 49%, compared to 34% in the second quarter.
For its 2021 fiscal year, analysts expect IHG’s revenue to rise to $ 1.40 billion, a 41.4% year-over-year increase. Of the society EPS is expected to rise 308.5% year-on-year to $ 1.28 this year. Over the past year, the stock has gained 10.4% of its price to close yesterday’s trading session at $ 67.93.
IHG POWR odds reflect this promising outlook. The stock has an overall rating of B, which is equivalent to a purchase in our POWR rating system. POWR ratings evaluate stocks based on 118 distinct factors, each with its own weight.
Additionally, the stock has a B rating for growth, sentiment, and quality. Within the Travel – Hotels / Resorts industry, it is ranked # 4 out of 19 stocks. Click here to see additional POWR ratings for value, dynamics and stability for IHG.
Choice Hotels International, Inc. (CHH)
Based in Rockville, Maryland CHH is a global hotel franchisor. Currently, it operates approximately 7,147 hotels with 597,977 rooms located in 50 states, the District of Columbia and approximately 40 countries and territories.
CHH announced on November 15 that Choice Privileges is once again offering its famous annual Members Only Madness promotion. Until November 20, Choice Privileges members will have exclusive access to daily offers, and Choice Hotels mobile app users will be able to receive an additional special offer. Thus, the demand for its services could increase considerably during this period.
CHH’s total revenue increased 53.4% year-on-year to $ 323.37 million for its fiscal third quarter, ended September 30, 2021. Its operating profit was $ 159.11 million. dollars, an increase of 213.8% year-on-year. Its net profit was $ 116.66 million, up 704.5% year-on-year. In addition, its EPS increased 700% year-on-year to $ 2.08.
Analysts expect CHH’s revenue to grow 38.1 percent year-on-year to $ 1.07 billion in its 2021 fiscal year. In addition, the company’s EPS is expected to increase by 82% year on year to reach $ 4.04 in current year. Over the past nine months, the stock has gained 42.5% to close yesterday’s trading session at $ 149.91.
CHH’s strong fundamentals are reflected in its POWR ratings. The stock has an overall rating of B, which is equivalent to a purchase in our proprietary rating system.
Additionally, it has an A grade for quality and a B grade for growth. It is ranked # 3 in the Travel – Hotels / Resorts industry. Click here to view additional POWR ratings for CHH (Feeling, Value, Stability, and Momentum).
Note that CHH is one of the few stocks handpicked by our Chief Growth Strategist, Jaimini Desai, currently in the POWR Growth portfolio. Learn more here.
Wyndham Hotels & Resorts, Inc. (WH)
WHH operates through its Hotel Franchising and Hotel Management segments. The hotel brand portfolios of the Parsippany, New Jersey-based company include Super 8, La Quinta, Hawthorn, Wyndham Grand, Dolce and Wyndham.
On October 5, 2021, WH and Playa Hotels & Resorts announced the launch of a new all-inclusive resort brand, Wyndham Alltra. Geoffrey A. Ballotti, President and CEO of WH, said, “Partnering with a leading owner, operator and developer of all-inclusive resorts in prime beachfront locations will create immediate access for our customers and our more than 80 million Wyndham Rewards members have a fabulous, all-inclusive guest experience: Members will be able to redeem their Wyndham Rewards points for a new all-inclusive vacation experience at Wyndham Alltra resorts and earn points for their stays.
For its fiscal third quarter, ended September 30, 2021, WH’s adjusted net income was $ 109 million, compared to $ 34 million in the prior quarter. Its adjusted EPS was $ 1.16 compared to $ 0.36 for the period last year. In addition, its Adjusted EBITDA increased 88.3% year-on-year to $ 194 million.
WH’s revenue and EPS are expected to grow 19.5% and 189.3% year-over-year, respectively, to $ 1.55 billion and $ 2.98 in its 2021 fiscal year. it has beaten Street’s EPS estimates in each of the past four quarters. Over the past nine months, the stock has gained 44.2% to close yesterday’s trading session at $ 86.30.
WH has an overall rating of B, which represents Buy in our proprietary rating system. Also, it has a B rating for growth, feeling, and quality. WH is ranked # 2 in the Travel – Hotels / Resorts industry. Click here to see WH’s ratings for value, stability, and momentum.
IHG stock was trading at $ 68.17 per share on Thursday afternoon, up $ 0.24 (+ 0.35%). Year-to-date, IHG has gained 4.68%, compared to a 26.81% increase in the benchmark S&P 500 over the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist passionate about the analysis of financial instruments. With a master’s degree in economics, she helps investors make informed investment decisions through her insightful commentary. Following…