Hotel Stocks Poised to Outperform in 2009

Posted by

December 31, 2008

Just wanted to let everyone know my latest round of ’stock picks’ has been posted live at Investopedia.com’s Community site. None of these picks are going in the actual portfolio - they’re all bigger-picture, thematic ideas, based on the premise that hotel stocks (some, though not all) are likely to be pleasant surprises in 2009.

I know what you’re thinking… and I get it - the recession can’t be good for any type of lodging service. It hasn’t been great, but the numbers say it hasn’t been the disaster everyone assumed it would be… at least for some hotel chains. Marriott (MAR) and Starwood (HOT) suffered a little more than their fair share, but the likes of Wyndham (WYN) and Choice Hotels (CHH) actually improved their twelve month numbers. (And Wyndham was supposed to be a total train-wreck.)

As I acknowledge in the article, most of the major travel cuts didn’t start until fall of 2008, so the twelve-month numbers may not fully reflect the current scenario. On the flipside, the beating these stocks took is a bigger one than the companies took on the top and bottom lines. There’s the opportunity.

The bitter irony - though one I personally like - is that the link to the Investopedia article on Yahoo! Finance is sandwiched between two rather-pessimistic articles about hotel’s outlooks. Considering journalists are habitually late to the party - and considering analysts assume the status quo is indefinite - I actually feel even more confident in my mostly-bullish take. Call me contrarian I guess… I just know when the media and the analysts start to agree on the zig, their study subject usually starts to zag. (It’s worth mentioning that things are ’so bad’ for hotels right now that Hilton and Marriott are planning on building new ones.)

Like I said, none of these stocks are official stock picks yet, but they may be later in 2009.