3 Hotel Stocks Worth Watching Despite Industry Pressure

The Zacks Hotels and Motels industry is hurt by economic uncertainty, labor shortages and rising wages,    as well as dismal occupancy and RevPAR. However, industry participants are focusing on growth strategies, including expanding their portfolios, converting properties, forming partnerships and enhancing loyalty programs. Industry players, such as Marriott International, Inc. MAR, Hilton Worldwide Holdings Inc. HLT and Choice Hotels International, Inc. CHH are likely to benefit from the factors mentioned above.

Industry Description

The Zacks Hotels and Motels industry comprises companies that own, lease, manage, develop and franchise hotels. Some vacation ownership and exchange firms are also part of the industry. Several participants own, construct and operate resorts. Some companies develop lodges and mobile accommodations, including modular, skid-mounted ones and central amenities that provide long-term and temporary workforce accommodations. Some industry players develop, market, sell and manage vacation ownership and associated products. A few hoteliers also offer studios, one-bedroom suites and accommodations to mid-market business and personal travelers.

4 Trends Shaping the Future of the Hotels & Motels Industry

Economic Uncertainty & Slowing Growth: The broader U.S. economy remains a headwind for hotels, with inflation, high interest rates and softening consumer confidence curbing discretionary spending. Leisure demand has cooled from its post-pandemic highs, while corporate travel budgets remain cautious. Many companies are trimming travel-related expenses, leading to weaker bookings in both urban and convention-heavy markets.

Labor Shortages & Rising Wages: Staffing continues to be one of the most significant challenges for hoteliers. Despite wage hikes and added incentives, hotels struggle to recruit and retain enough workers across housekeeping, food service and front-desk operations. Elevated labor costs directly erode profitability, while understaffed properties often compromise service quality, hurting guest satisfaction and repeat business.

RevPAR & Occupancy Declines: Recent data from CoStar shows that U.S. hotel performance softened in mid-November, with all key metrics posting year-over-year declines. For the week ending Nov 15, occupancy slipped to 60.9%, down 4.1%, as a shift in the Veteran’s Day calendar triggered a sharp drop in group travel and weakened overall demand. Average daily rate also edged slightly lower to $154.41, reflecting reduced pricing power in a more competitive environment. With both occupancy and room rates under pressure, revenue per available room fell 4.6% to $93.97, signaling a challenging week for hotel operators.

Digitalization to Drive Growth: Hotel owners are focused on maintaining the balance between maximizing hotel profitability and driving guest satisfaction. To this end, hoteliers have leveraged mobile and web check-in and mobile key technologies. These hoteliers also increased the use of digital tools to strengthen infrastructure, grow online package sales, enable self-service bookings, make real-time offerings and enhance the overall customer experience. This, along with the emphasis on pricing optimization and merchandising capabilities, will likely help hoteliers capture additional market share.

Zacks Industry Rank Indicates Dull Prospects

The Zacks Hotels and Motels industry is grouped within the broader sector.

The group's Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates dull near-term prospects. The Zacks Hotels and Motels industry currently carries a Zacks Industry Rank #182, which places it in the bottom 25% of the 243 Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.

The industry's position in the bottom 50% of the Zacks-ranked industries results from a negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, analysts are gradually losing confidence in this group's earnings growth potential. 

Before we present a few stocks that you may want to keep an eye on, let us look at the industry's recent stock-market performance and valuation picture.

Industry Underperforms the S&P 500

In the past year, the Zacks Hotels and Motels industry has underperformed the S&P 500 and the sector. Over this period, the industry has declined 9.4% compared with the sector's decrease of 17.3%. Meanwhile, the Zacks S&P 500 composite has rallied 12.3%.

Price Performance

Hotels & Motels Industry's Valuation

Based on the trailing 12-month EV/EBITDA, which is a commonly used multiple for valuing Hotels and Motels stocks, the industry is currently trading at 15.59X compared with the S&P 500's 17.94X. The sector's trailing 12-month EV/EBITDA ratio stands at 10.55X.

Over the last five years, the industry has traded as high as 89.02X and as low as 13.17X, the median being 16.86X, as the chart shows.

3 Hotels & Motels Stocks to Watch

Marriott: The company is benefiting from solid rooms growth, profit gains and continued development momentum. Global revenue per available room improved slightly, led by strength in international markets. Management is advancing digital transformation and expanding the Marriott Bonvoy loyalty program to deepen guest engagement and drive incremental fee revenues. 

MAR currently carries a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for Marriott’s 2025 bottom line indicates a surge of 7.6% from the year-ago period’s actual. MAR’s shares have risen 2.7% in the past year. 

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Price & Consensus: MAR

Hilton: The company is benefiting from strong net unit growth, hotel conversions and recovery across international markets. Hilton’s focus on expanding its luxury portfolio, along with digital advancements, remains a key positive. Also, its focus on a capital-light model and disciplined capital return strategy bodes well.

HLT presently has a Zacks Rank #3. The Zacks Consensus Estimate for Hilton’s 2025 EPS implies growth of 12.6% from the year-ago period’s actual. HLT’s shares have gained 8.3% in the past year.

Price & Consensus: HLT

Choice Hotels International: The company is benefiting from unit expansion, franchising efforts and the integration of the Radisson Americas brands. Also, the focus on strategic partnerships and loyalty programs bodes well. Going forward, the company emphasizes strategic investments in AI-driven technology, loyalty enhancements and franchisee productivity tools to drive growth.

CHH currently carries a Zacks Rank #3. The company’s 2025 bottom line is likely to witness year-over-year growth of 1.6%. CHH’s shares have lost 40.5% in the past year.

Price & Consensus: CHH

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Marriott International, Inc. (MAR): Free Stock Analysis Report
 
Choice Hotels International, Inc. (CHH): Free Stock Analysis Report
 
Hilton Worldwide Holdings Inc. (HLT): Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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