Five hotel & resort stocks to explore as festive season nears

Highlights

  • Dow Jones US Hotels Total Stock Market Index (DWCHTL) grew 7% in September and 25.26% year-to-date. 
  • Bluegreen Vacations Holding Corporation (NYSE: BVH) stock skyrocketed by 81% YTD.
  • Expedia Group, Inc. (EXPE) stock gained 26.72% YTD; its dividend yield is 0.8%.

Resisting concerns of an economic slowdown in recent weeks, the hospitality sector, including hotel and resort segments, is giving a valiant fightback and raring to take on the challenges. The robust confidence comes from an upbeat sales outlook for the festive season, say experts.

These final months of the year are typically a busy period for businesses as consumers stock up essential items before the big winter celebrations get underway.

Besides vacation and airline companies, retailers from various disciplines unveil big sales campaigns to attract more customers to their stores. For instance, the Dow Jones US Hotels Total Stock Market Index (DWCHTL) grew by 7% in September, and 9.08% in one month-to-date, suggesting a spike in business activities.

Here we discuss the top five stocks in the industry in terms of year-to-date return.

Bluegreen Vacations Holding Corporation (NYSE: BVH) 

Bluegreen is a vacation ownership company. It is engaged in marketing and selling vacation ownership interests (VOI) to customers. The Boca Raton, Florida-headquartered company also manages resorts in urban locations. The stock gained 81% YTD based on the closing price of US$25.12 on Oct 12. Its trading volume was 31,723.

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For the three months ended June 30, 2021, the revenue was US$193.5 million, including US$91.8 million from VOI net sales. In the year-ago quarter, the revenue was US$68.2 million.

The net income attributable to shareholders was US$19.5 million or US$0.93 per share diluted against a net loss of US$35.8 million or US$1.95 per share diluted the June quarter of 2020. The company sold 56,000 vacation packages compared to 8,000 in the same quarter of 2020.

Its current market cap is US$537 million, while the P/E ratio is 128.58, and the forward P/E for one year is 11.58. 

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Top hotel and resort stocks: Bluegreen Vacations Holding Corporation (NYSE: BVH), and Hilton Grand Vacations Inc. (HGV).

Source – pixabay

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Hilton Grand Vacations Inc. (NYSE: HGV)

HGV is a timeshare company that markets and sells vacation ownership interest (VOI). It also operates a points-based vacation club and manages urban located leisure resorts. As of June 30, 2021, the company had 62 properties at various locations in North America. The stock closed at US$48.73 with a share volume of 441,198 on Oct 12. The HGV stock rose 53.43% YTD.

For the three months ended June 30, Hilton Grand earned revenue of US$334 million compared to US$123 million for the same period in 2020. Its net income was US$9 million against a net loss of US$48 million in the previous year’s June quarter. Its cash and cash equivalents were US$1,780 million, including US$1,462 million of restricted cash as of June 30, 2021. The Florida-based company has a market cap of US$5.8 billion and forward P/E for one year of 41.30. 

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Wyndham Hotels & Resorts, Inc. (NYSE: WH)

The Parsippany, New Jersey-based company had 798,000 rooms in the economy and midscale segments across 20 brands. It is a global hotel franchisor that licenses its hotel brand to hoteliers in 95 countries. The stock rose 39.43% YTD. It closed at US$83.71 on Oct 12 with a share volume of 426,230.

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For the three months ended June 30, 2021, the revenue and the net income were US$406 million and US$68 million, respectively. In the June quarter of 2020, the revenue was US$258 million, and net loss was US$174 million. 

The diluted earnings per share reduced to US$0.73 for the June quarter compared to a loss of US$1.86 per share diluted in the June quarter of the previous year. Its market capitalization is US$7.77 billion, the P/E ratio is 69.28, and the forward P/E for one year is 31.12. 

The current dividend yield is 1.15%, and annualized dividend is US$0.96. 

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Choice Hotels International, Inc. (NYSE: CHH)

The Rockville, Maryland based Choice Hotels Internationals operated 601,245 rooms in the economy and midscale segments across 13 brands. Its 78% of rooms are in the US. As of June 30, 2021, it was building 944 hotels with 80,420 rooms across the US and other countries.

On Oct 12, the stock closed at US$136.75, with a share volume of 393,778. It grew 28.67% YTD.


Its total revenue was US$278 million for the June quarter of 2021 compared to US$151.7 million in the corresponding period of the previous year. The net income rose to US$85.88 million against a net loss of US$2.4 million for the same period a year ago. Its EPS diluted rose to US$1.53 against a net loss of US$0.04 per share diluted in the June quarter of 2020. 

CHH has a market capitalization of US$7.66 billion. Its P/E ratio is 59.08, and forward P/E for one year is 34.80, the dividend yield is 0.67%, and the annualized dividend is US$0.90.

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Top hotel and resort stocks: Wyndham Hotels & Resorts, Inc. (WH), Choice Hotels International, Inc. (CHH), and Expedia Group, Inc. (EXPE).

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Expedia Group, Inc. (NASDAQ: EXPE)

Expedia is one of the world’s largest online travel agencies. It offers lodging, air tickets, cruises, rental cars, and other related services. Some of its revenue comes from advertising. In addition, the company operates booking websites like Expedia.com, Orbitz, Travelocity, etc. Expedia stock gained 26.72% YTD. On Oct 12, it closed at US$169.55 with a share volume of 1,016,768.

Its revenue was US$2,111 million for the quarter ended June 30, 2021, while the revenue for the corresponding duration in 2020 was US$566 million. The net loss was US$301 million compared to a net loss of US$753 million in the June quarter of 2020. The loss per share diluted reduced to US$2.02 against US$5.34 in the previous year’s June quarter.

The Seattle, Washington-based Expedia has a current market capitalization of US$25.3 billion. Its dividend yield is 0.8%, and its annualized dividend is US$1.36. 

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Bottomline

The Dow Jones US Hotels Total Stock Market Index (DWCHTL) gave a YTD return of 25.26%, while its one-year return was 62.75%. The sector is upbeat over the prospect of brisk business during the festive season, which kicks off with the Halloween festival on October 30. However, since it is a service-driven industry, factors like inflation and workforce can affect performance. Hence, investors must analyze the companies carefully before investing in stocks.

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