Hyatt (H) currently trades at a forward EV-to-EBITDA[1. enterprise value to earnings before interest, tax, depreciation, and amortization] multiple of 10.2x. Hyatt’s valuation is significantly higher than its average valuation of 12.3x since January 2010.
The market is expecting Hilton’s EBITDA to decline 36.1%. Rival Marriott’s EBITDA is expected to grow 40% in 2017, mostly accounting for Marriott’s Starwood acquisition, which was completed in December 2016.
In 2017, Hyatt’s EBITDA is expected to grow 4%, InterContinental’s EBITDA is expected to grow 7%, and Wyndham’s EBITDA is expected to grow 4%.
The lodging industry has a lot of things going against it currently, including slowing GDP growth. Slow GDP growth means less corporate travel and the resulting bad news for hotels, especially big ones like Marriott. Other headwinds for the industry include increased geopolitical and terrorist concerns, the strengthening US dollar, and increasing competition.
However, with travel demand across the globe increasing, Marriott’s long-term growth seems to have potential. This demand—and Marriott’s ability to capitalize on it—could be a major valuation driver in the long term, while short-term multiples could be impacted by merger-related news.
You can gain exposure to the consumer discretionary sector by investing in the iShares Russell 1000 Growth ETF (IWF), which invests ~20.7% in the sector and 0.36% in the hotel industry. Its holdings include 0.08% in Wyndham Worldwide (WYN), 0.19% in Marriott International (MAR), 0.08% in Hilton Worldwide Holdings (HLT), and 0.01% in Hyatt Hotels (H).