Tuesday, July 10, 2012

What Hospitality Company to Invest Money In

In the afternoon, Bob LaFleur, a stock market analyst, spoke to our class via Skype about the hospitality industry. Mr. LaFleur reported that the recovery of the hospitality industry is not robust and that the growth is lackluster. After explaining how supply is the total amount of rooms available on any particular night, demand is the people wanting a hotel room, and speaking about the macroeconomics of   vvvthe hotel industry, Mr. LaFleur began to speak about specific companies he follows.

Marriott: Marriott is trading at about $39.00 and Mr. LaFleur says this stock has a "Buy" rating because it should be traded at about $43.00. It is a good buy because Marriott has products from all parts of the hotel industry and is mirroring the current growth of the industry which is 8% over the last 6 quarters.

Wyndam: According to Mr. LaFleur, Wyndam is a stock that has a "Buy" rating. In previous classes, Reneta has raved about how well Wyndam has done and how happy she is that she followed Mr. LaFleur's advice to buy Wyndam which has done wonders for her portfolio.

Hyatt: Currently, Hyatt has a "Hold" rating meaning that it is currently performing at about as well as it can be expected to be performing during this market.

Starwood: Like Hyatt, Starwood is currently assigned the "Hold" rating.

Host Hotels and Resorts: This is the REIT I did my presentation on. Mr. LaFleur explained that despite the fact that he does not think any REIT has a portfolio better than Host's and loves Host's management team he still thinks Host deserves a "Hold" rating because he thinks that the company stock is fairly valued.

In addition, Mr. LaFleur spoke about how the hospitality industry recovers from a recession. He said there are two stages. In the first stage, it is wiser to invest in more upscale hotel brands while in the latter stage it is wise to invest in hotel company's that feature midsize hotels. Currently, Mr. LaFleur believes that the market is in a transition period between the two stages. To throw in my own conclusion, I think it would probably be a good idea to invest in a company like Choice Hotels which franchises midsize hotels. Not only does the fact that it features midsize hotels look like it will produce well in the future, Choice Hotels franchises which means regardless how bad the economy is, the franchiser makes money because it will always get a split of the profit. The expenses of each individual hotel doesn't affect Choice as directly as it affects the owner of that hotel.


  1. So, are you recommending that we buy, sell or hold? You're becoming the expert now so we're hanging on your every word.

  2. I wouldn't call myself an expert by any means. I think investing in hotel companies that feature midsize hotels wouldn't be a bad idea. That being said, Mr.LaFleur suggests that for the next five years, investing in timeshare companies such as the Marriott timeshare company that just got spun off of the mother Marriott company. Mr. LaFleur is very optimistic that timeshares will perform well.