But maybe we can find a few bargains among their landowners. Values are scarce among traditional hotel stocks. And, like Wyndham, that’s despite the fact that “profit normalcy” isn’t expected for several years down the road. Shares sit 12% higher than where they sat at the start of 2019, and trade at 33 times this year’s earnings estimates. But it has already been richly rewarded, too. That flexibility should serve STAY well as it attempts to navigate the next change in travel trends. And more recently, STAY resumed its dividend growth, bumping the payout up to 9 cents quarterly. That allowed it to pay a 35-cent special “catch-up” dividend to shareholders at the start of 2021. While STAY still cut its dividend early on during the pandemic, from 23 cents per share to just a penny, Extended Stay suffered shallower losses than many of its peers as a result. “That shrank to about a fifth of room revenue over the second quarter.” “Longer-term bookings have always comprised a majority of the revenue at Extended Stay America, but shorter transient travel still accounted for about a third of room revenue pre-pandemic,” Extended Stay America CEO Bruce Haase said back in August 2020.
BEST HOTEL STOCKS TO BUY NOW FULL
That means WH is not only trading at sky-high valuations, but it’s doing so when no one anticipates a full return to normalcy for several years out.Įxtended Stay America (STAY) caters to travelers looking for longer booking periods, and they doubled down on this type of customer during the pandemic. Shares trade at almost 34 times this year’s earnings estimates of $1.97 per share, and 22 times 2022 estimates of $2.87. And they’re only roughly flat from where they were at the start of 2019.īut that doesn’t make Wyndham a value. However, while WH shares have joined in the recovery, they haven’t been nearly as boisterous as other hotel names or the broader travel/leisure industries. Both have been showing signs of improvement, and the former could be especially potent should the Biden administration move on to long-awaited infrastructure legislation after its stimulus negotiations. That compares favorably to say, Marriott (MAR), where only 40% of bookings came from leisure travel.īut what’s also compelling is that, of that remaining 30% for Wyndham, “two-thirds comes from the infrastructure industries, including construction crews, utility workers and engineers,” according to CEO Geoffrey Ballotti, and the remaining third is from logistics industries. The primary reasoning is that 70% of Wyndham’s bookings come from leisure travelers. The hotel chain saw revenues plunge by more than a third in 2020 and sustained deep net losses, but it’s positioned for much better things in 2021. Wyndham itself-which includes its namesake brand, La Quinta Inn, Ramada, Dolce, Tryp, Dazzler and numerous other brands-appears to be one of the best plays on a recovery in vacation travel. In this case, WH cut its quarterly payout from 32 cents per share to 8 cents in the middle of the pandemic, but it has kicked off 21 by doubling the payment to 16 cents-still not great, but things are heading back in the right direction. But many hotel and even hotel REIT dividends were reduced or even eliminated outright, so investors in this space need to focus on dividend recovery.
Normally, you and I wouldn’t give a 1% yield the time of day. The current dividends aren’t particularly exciting, but there are three comeback stories in the works and we might get the best price on these stocks right now. Let’s take a closer look at five popular lodging payers. We shouldn’t blindly throw money at the hotel space.
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