Among the five major hotels, most analysts seem to favor Hilton Worldwide (HLT). However, Marriott International (MAR) has the highest following, with 29 analysts tracking the company after its 4Q16 results. For a detailed 4Q16 earnings analysis on the company, read Why the Optimism for Marriott in 2017?
Compared to Marriott, 26 analysts are tracking Hilton, 22 analysts are tracking Hyatt Hotels (H), 21 analysts are tracking Intercontinental Hotels Group (IHG), and only 11 analysts are tracking Wyndham Worldwide (WYN).
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Hilton Worldwide has a “buy” rating from 84.6% of analysts. 7.7% of analysts recommend “holds” on the stock, while the remaining 7.7% recommend “sells.” Of those tracking Wyndham Worldwide, 54.5% recommend “buys,” and 45.5% recommend “holds.” There are no “sell” recommendations on Wyndham. Marriott International has 48.3% “buy” recommendations, 41.4% “hold” recommendations, and 10.3% “sell” recommendations.
Hyatt has 22.7% of analysts recommending “buys” and 59.1% recommending “holds.” The remaining 18.2% recommend “sells.” Intercontinental Hotels has only 14.3% analysts recommending “buys” and 57.1% recommending “holds.” The remaining 28.6% recommend “sells.”
According to its Reuters consensus 12-month target price, Hilton Worldwide currently has the highest return potential of 14.0%. It’s followed by Wyndham Worldwide at 9.2%. Next in line are Hyatt Hotels with a 9.0% return potential and Marriott International with a ~7.4% return potential. Intercontinental Hotels, on the other hand, has a -3.2% return potential.
You can gain exposure to the hotel sector by investing in the First Trust Consumer Discretionary AlphaDEX ETF (FXD), which invests ~14.8% in the hotels, restaurants, and leisure sector. FXD holds 0.58% in Wyndham Worldwide, 0.87% in Hyatt Hotels, 0.90% in Hilton Worldwide Holdings, and 1.2% in Marriott International.