MAR is down 0.9% on Monday morning, while H is down 0.5%.
Travel demand remains strong, especially outside the U.S., with Hilton Worldwide Holdings (HLT) and MAR posting mid-single digits beats, and every company able to upgrade some aspect of guidance, which in general still looks conservative, Bernstein analysts led by Richard J. Clarke wrote in a note.
“Global hotel stocks are showing themselves well hedged against the shifting sands of travel, with a U.S. traveler just as likely to stay in a Marriott in Florence as they are in Florida,” the analysts wrote.
But “hotels are, at best, fully valued and we downgrade Marriott to Market-Perform. Marriott’s multiple has rapidly converged with Hilton (HLT) and at 15x EBITDA we see limited shorter term upside, but it remains a great long term holding.
“We move Hyatt back to top pick,” the firm said. “Here we still see 26% upside — buy the dip.”
Europe and APAC demand has ruled, while business and group travel continue to stage a gradual comeback.
On MAR: “After a very strong run YTD (+42%) we take a pause on Marriott as an Outperform. The valuation gap has closed with Hilton (HLT) (our core thesis) and although we still like the mid-longer term outlook for Marriott as it enters mid-scale and continues to generate material cash — the shorter term upside is limited by valuation and the slowdown of U.S. Luxury.
On H: “Hyatt had a noisier Q2, missing EBITDA and not upgrading FY guidance — the stock dropped 8%. This is an entry point.”
Shares of MAR are up 28% over the past 12 months, while H is up 26% in that time. HLT has risen nearly 13% in the past year.