Morgan Stanley Prefers C-Corps Over Hotel REITs for Strong Growth Outlook
Skift Take
- Morgan Stanley favors C-Corps over hotel REITs for their growth potential and downside protection, while Barclays upgraded Park Hotels and Resorts due to its high dividend yield.
- Choice Hotels missed estimates, and the potential acquisition by Wyndham remains uncertain, with suggestions for possible negotiation tactics.
- Various hotels reported earnings and developments, with openings, auctions, and construction plans in different regions, including California, Texas, and North Carolina.
The DJIA rose 57 points while Nasdaq was up 121, the S&P 500 rose 12 points and the 10 year treasury yield was down .09 to 4.57%. Lodging stocks were kind of all over the place. SHCO traded up to a new high with a 6% rise on the day. SOND was the big percentage winner, up 12% while VCSA rose 6%.
Morgan Stanley said they remain more constructive on the C-Corps over the hotel REITs, viewing the C-Corps’ embedded growth and asset light model offering more downside protection should the macro erode. They do see a potential for re-accelerating US RevPAR in lodging into 2024 barring no outright recession. They reiterated their Overweight ratings on Marriott, Hilton, Hyatt and Wyndham with each trading below historical multiples on P/E.
Barclays upgraded their rating on Park Hotels and Resorts to Overweight from Equal Weight. They believe PK has turned the corner with the added bonus of a dividend yield that is one of the
