We recently compiled a list of the 10 Most Undervalued Hotel Stocks To Invest In Now. In this article, we are going to take a look at where Host Hotels & Resorts Inc. (NASDAQ:HST) stands against the other hotel stocks.
Exploring the Hotel Market: Trends and Highlights
The hotel market is experiencing a significant transformation as it rebounds from the impacts of the COVID-19 pandemic. According to a report by Zion Market Research, the global hotel market was valued at $1.37 trillion in 2023. The market is expected to expand at a compound annual growth rate (CAGR) of 9.14% during 2024-2032 to reach a value of $2.99 trillion by the end of the forecast period. This growth is driven by increased travel demand, higher disposable incomes, and a resurgence in both leisure and business travel.
SiteMinder’s Hotel Booking Trends 2023 report reveals significant changes in the hospitality industry as it rebounds from the pandemic. The report analyzes bookings from travelers in 20 of the world’s most established destinations. According to the report, in 2023, international check-ins increased in all but one market compared to the previous year. Malaysia, New Zealand, and Taiwan experienced the biggest jumps due to their border reopenings in 2022.
In 2023, hotels raised their prices while still achieving record check-ins. The average daily rate (ADR) globally reached $192, reflecting an 11% increase from 2022 and a 38% rise compared to 2019. Italy saw the largest increase, with its ADR rising by $42 or 20% year-on-year. This indicates that hotels are responding to strong pent-up demand by adjusting their pricing strategies.
Despite the increase in prices, travelers are booking shorter stays. According to the report, 81% of hotel stays globally were for just one or two nights. Only a small fraction of stays were longer than three nights, highlighting a shift in traveler preferences.
Investor Sentiment in 2024
Overall, hotel investors are feeling positive about the market for 2024. In the US, many investors are eager to increase their investments in hotels.
CBRE Hotels Research conducted a Global Hotel Investor Intentions Survey in early 2024 to evaluate the hotel investment landscape. The results show that investor sentiment in the US is strong, with 50% of respondents planning to increase their allocation to hotel acquisitions this year. About 35% expect their acquisition activities to stay the same as in 2023, while less than 16% anticipate a decrease.
Despite high interest rates, many investors are looking to buy hotels. Over 70% of those surveyed said they are focusing on value-added and opportunistic investments. These types of acquisitions allow investors to improve properties by adding rooms, redesigning spaces, or enhancing amenities to boost returns and long-term value.
Our Methodology
To compile our list of the 10 most undervalued hotel stocks to invest in now, we used the Finviz and Yahoo stock screeners to find the largest hotel companies. We also reviewed our own rankings and consulted various online resources to compile a list of the largest publicly traded hotel companies, the most popular hotel stocks, and REITs.
From an initial pool of over 30 hotel stocks, we focused on those trading at under 20 times their forward earnings as of November 11. Then, we selected the stocks that analysts believe possess the greatest potential for growth. Finally, we ranked the 10 most undervalued hotel stocks to invest in now based on their average price target upside potential according to analysts as of November 11, 2024.
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A high-end hotel lobby, with modern furnishings, lush carpeting, and natural light.
Host Hotels & Resorts Inc. (NASDAQ:HST)
Forward P/E: 16.16
Analysts’ Upside Potential: 16.09%
Host Hotels & Resorts Inc. (NASDAQ:HST) is an American real estate investment trust (REIT) that owns a diverse collection of luxury and upper-upscale hotels across the United States and internationally. The company currently manages 76 properties in the US and five abroad, totaling approximately 43,400 rooms. Host Hotels & Resorts Inc. (NASDAQ:HST) ranks among the most undervalued stocks in the hotel industry.
In July 2024, Host Hotels & Resorts Inc. (NASDAQ:HST) made strategic acquisitions, purchasing the 234-room 1 Hotel Central Park for $265 million and the 450-room Ritz-Carlton O’ahu for $680 million. These investments enhance the company’s portfolio and position the company well for future growth.
Recently, the company faced challenges due to Hurricanes Helene and Milton, which struck Florida in September and October 2024. Four properties were temporarily closed due to evacuation orders and power outages, although three have since reopened. The most significant impact was on The Don CeSar, which remains closed with plans for a phased reopening expected by late Q1 2025.
Financially, Host Hotels & Resorts Inc. (NASDAQ:HST) reported a comparable hotel Total RevPAR (Revenue per Available Room) of $328.86 for Q3 2024, showing a 3.1% increase from the same quarter in the previous year. This growth was driven primarily by higher food and beverage revenues from group business and ancillary spending.
HST is currently trading at only 16 times its forward earnings. Host Hotels & Resorts Inc.’s (NASDAQ:HST) strategic acquisitions combined with its cheap valuation contribute to its attractiveness as a hotel stock.
Overall, HST ranks 5th on our list of the most undervalued hotel stocks to invest in now. While we acknowledge the potential of HST as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than HST but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.