5 Hotel Stocks to Buy for a Summer Travel Boom

COVID-19 cases are well off their highs, and vacation demand is ramping up. Here are five top-rated hotel stocks that could benefit.

suitcase next to a hotel bed
(Image credit: Getty Images)

It's a volatile stock market out there right now as investors eye the start of the Federal Reserve's first rate-hike cycle in years and geopolitical uncertainty stemming from the war in Ukraine.

With so much attention focused on these two issues, many investors might be missing opportunities available in a recovering travel industry, particularly among hotel stocks.

Since mid-January, new COVID-19 cases in the U.S. are down nearly 98% from their mid-January high, according to data from the Centers for Disease Control and Prevention.

And while TSA data shows that current travel volumes are running about 10% or so below 2019 levels, recently upgraded forecasts from airlines suggest a vigorous rebound later this year.

Airlines certainly give us insight into current and future travel demand, but they might not be the best investment option at the moment given their exposure to oil prices and high levels of debt. Hotel stocks, on the other hand, have much better economics and pricing power. Further, hotels didn't have to dilute shares and borrow money as excessively as airlines during the pandemic. And many were able to use the downturn to improve operating margins.

With this in mind, here are five hotel stocks to buy amid a summer travel boom. To create the list, we examined only top-rated stocks in the Stock News POWR Ratings (opens in new tab) universe. The stock-rating tool measures more than a hundred different factors – from balance-sheet strength to analyst sentiment to momentum – to find which names are poised to outperform the market. All of the hotel stocks listed here have Buy or Strong Buy ratings.

Data is as of March 27. Dividend yields are calculated by annualizing the most recent payout and dividing by the share price.

Jaimini Desai
Contributing Writer, Kiplinger.com

Jaimini Desai has been a financial writer and reporter for nearly a decade. He has helped countless investors take profitable rides on some of the hottest growth trends. His previous experience includes writing for Investopedia, Seeking Alpha and MT Newswires.

He is the Chief Growth Strategist for StockNews.com and the editor of the POWR Growth and POWR Stocks Under $10 newsletters.