PK - Top 3 hotel REITs to buy as the hospitality industry recovers
The hotel industry is doing well as the economy reopens. In May, hotel companies like Marriott, Hilton, and Wyndham published strong quarterly results and forward guidance. One way to benefit from this hotel supercycle is through hotel REITs. These are companies that own buildings that hotels operate in. Here are some of the best hotel and lodging REITs to buy.
Diamondrock Hospitality
Diamondrock Hospitality ( NYSE: DRH ) is a hotel REIT that operates a portfolio of 32 hotel properties that have over 9,349 rooms. The firm has a market cap of over $2.4 billion. It mostly focuses on premium hotels that are expected to have a strong comeback. Some of the hotels in its portfolio are Hilton Garden Inn, Westin, Courtyard by Marriott, and Kimpton among others.
Like all hotel REITs, the company’s revenue fell from over $938 million in 2019 to over $299 million in 2020. Its revenue crawled back to $567 million and analysts believe that it will keep rising.
The Diamondrock stock price has risen from about $8 in December last year to about $10.59. There is a likelihood that it will keep rising in the coming months as the industry recovers.
Park Hotels and Resorts
Park Hotels and Resorts ( NYSE: PK ) is another hotel REIT that could do well in the coming months. The company, which was originally known as Hilton Hotels orporation, is the second-biggest hotel REIT in the world with a market cap of over $4 billion. As such, its buildings house brands owned by Hilton like W and Doubletree.
Park Hotels and Resorts is in a recovery after its revenue declined from $2.8 billion in 2019 to over $813 million in 2020. The company’s revenue rose to over $1.3 billion. Its loss also narrowed from over $1.4 billion to $459 million. Therefore, because of its scale, Park Hotels stock price will likely keep rising.
Pebblebrook Hotel Trust
Pebblebrook Hotel Trust ( NYSE: PEB ) is a hotel REIT valued at over $3 billion. The company has 53 hotel properties with over 13,000 rooms. The firm operates some of the top hotels such as Chaminade Resort, Embassy Suites, Hilton, Hotel Monaco, and Hotel Zeppelin among others.
Pebblebrook’s revenue dropped from over $1.62 billion in 2019 to over $442 million. Its revenue rose to $733 million in 2021 and $907 million in the past 12 months. It is also expected to be profitable in 2022. Therefore, there is a likelihood that the Pebblebrook stock price will have a bullish breakout.
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