Marriott gets downgrade at Bernstein; Hyatt named top pick
blightylad-infocus
Hotels had a strong second-quarter, but Bernstein prefers Hyatt Hotels Corporation (NYSE:H) over Marriott International (NASDAQ:MAR), telling investors to buy the dip.
Bernstein downgraded Marriott International (MAR) to Market-Perform from Outperform, and moved Hyatt Hotels Corporation (H) to its top pick.
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.
âGlobal 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,â the analysts wrote.
But âhotels 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.
âWe move Hyatt back to top pick,â the firm said. âHere we still see 26% upside â buy the dip.â
International rules
Europe and APAC demand has ruled, while business and group travel continue to stage a gradual comeback.
On MAR: âAfter 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 â the shorter term upside is limited by valuation and the slowdown of U.S. Luxury.
On H: âHyatt had a noisier Q2, missing EBITDA and not upgrading FY guidance â the stock dropped 8%. This is an entry point.â
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.
More on hoteliers:

Marriott declares $0.52 dividend

Hyatt Hotels Corporation (H) Q2 2023 Earnings Call Transcript

 Hilton Worldwide Holdings Inc. (HLT) Q2 2023 Earnings Call Transcript