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Should Investors Check in to Hotel Stocks?

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    JMP Senior Analyst Will Marks on the growth in the hotel sector.

  • Duration 3:25
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Been pumping out some very positive earnings this week and -- next guest says that as the hotel sector recovers there have been some great buys out there.

Joining us now will -- senior analyst for.

Thank you so much for joining -- so.

Does this suggest that the economy is gaining enough fraction of the hotels -- picking up business -- -- -- or is it somewhere else around the world.

Hope for a first thanks thank you very much for having me on this on the show.

It's really happening all over the world domestically in particular that growth is very strong in Asia despite any.

Kind of slow -- in China there's plenty of growth across Asia and China and other countries.

And in Europe.

There is even a little bit of growth Starwood noted yesterday that there was about they they generated about 2% revenue growth from -- European hotels.

-- by the way that's the W the share continue to like that one don't you.

What exactly where where's the growth potential here you -- the emerging markets but there's not a whole lot of hotel building going on here in the US.

What does that do to the stock and two business.

Sure then India actual -- that the limited amount of supply growth is is very much a positive for Starwood and other hotel companies historically.

Either about 2%.

There's about a 2% increase in in the room count every year due to new construction of hotels in the US it's running about a half a percent right now.

So that means existing hotels.

Better chance to grow.

So we're seeing that's part of the reason for the growth the other is just we do have some it may not be as much as people expected but some GDP growth.

And so that's driving growth domestically in revenues for hotels and overseas.

Also just changes trends in in global travel there's more more people in China for example are traveling.

I across Europe there is some travel.

Are we -- You're real you're looking about you know your picks -- luxury and are we seeing at this family vacations -- -- are we talking business more business travel.

Well I mean like Syria is is part of the pitch it did the luxury hotels are doing better then then.

The average US hotel and it's a combination of leisure and business travel business travel really has picked up quite a bit leisure travel as well.

-- -- interest it's a lot of people now used to cut rate deals.

Italy online service is always looking for -- -- how harvested for hotels to bring their margins up.

Well you really you're really not seeing the hotels giveaway as much of that margin or give his would give away as much of that revenue the online.

The the online providers I wouldn't say are struggling but aren't.

Aren't getting as much of that business from hotel companies to the hotel companies will sell themselves on their own web sites.

So it's it it's -- it's much better margin for these hotel coming you're seeing in the quarterly results from -- would -- out and others that they are expanding their margins.

So then raising a good two dozen twelve as far as the travel season goes in the hotel business for the boutiques.

And the luxury hands.

It's really -- it's across the board I -- I would say where you are seeing it is is that the lower segment the economy hotels are not seeing isn't as strong of a performance.

But aid from from the mid scale for example let's say -- courtyard by Mary mop up to an upper scale till lasted up to -- Regis or Ritz in four seasons all those brands.

Although segments of lodging.

Are seeing really good growth.

It's good way to end it alright well -- --

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