We already talked about travel stocks taking a hit, but what about the places where you stay on a vacation?
Over the past few months, consumers have been wary of splashing out on big discretionary expenses—like trips—due to fear of a recession and a tariff-induced economic slowdown.
Last month, Goldman Sachs officially noted that the broad consumer downturn had made its way to hotels, lowering its outlook for the entire industry. Analyst Lizzie Dove downgraded Hyatt Hotels from “neutral” to “sell” and lowered both Hilton Worldwide and Marriott International from “buy” to “neutral.”
Dove explained she now expects hotels’ average revenue per available room to only grow 0.4% in 2025, compared to her previous expectation of 1.4%. However, Goldman upgraded Choice Hotels from “sell” to “buy” in the same note, due to the company’s resilient business model and healthy balance sheet.
Yet not all analysts are as pessimistic about the industry. In fact, last week, Jefferies upgraded Marriott and Hilton, arguing that asset-light businesses are set to fare better during an economic downturn.
In an overview of all analysts covering the stock provided by the Wall Street Journal, Marriott has an “overweight” rating, Hilton has an “overweight” rating, and Hyatt has an “overweight” rating.
If you’d rather not invest in boring old hotels and focus your attention on casinos, proceed with caution. While a tariff ceasefire between the US and China is good news, Asian gambling hot spot Macau has been caught in the crossfire. Many major American casino operators have a presence in the special administrative region that once boosted their bottom lines but now might weigh them down.
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That’s likely why Bank of America analysts are so bullish on Wynn Resorts. They upgraded the casino stock from “neutral” to “buy” earlier this month and raised its price target up to $100 on the news that Wynn is moving to the United Arab Emirates and opening Wynn Al Marjan Island, which would be the first major casino resort in the Middle East. Geographic diversification is an asset that can’t be ignored these days.
A turnaround on the horizon?
The entire hotel industry got a major boost when the US and China worked out a tariff deal, signaling that the industry may fare better as Americans get some of their economic optimism back.
However, the steep drop in US tourism could be a strong headwind: The US is on its way to losing $12 billion in travel revenue this year, according to data from the World Travel & Tourism Council (WTTC).
Maybe this is a good year to go camping instead.—LB