Hotel Inventories: Why MAR, H, HLT, WH, CHH and IHG Are Gaining Today

Today, investors in hotel stocks breathe a sigh of relief. Hotel names like Marriott (NASDAQ:MAR), Hyatt (NYSE:H) and Hilton (NYSE:HLT) are on the rise after experiencing declines earlier this week. It is the same for Wyndham Hotels (NYSE:WH), Choice hotels (NYSE:CHH) and InterContinental Hotels (NYSE:IHG). The culprit of these drops? The omicron Covid-19 variant.

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With the threat of a new variant looming, potential customers may want (or have to) cancel their reservations, directly affecting the hospitality industry. Although the severity of the omicron variant is not yet fully known, there has also been reports that it may be more transmissible but less severe in terms of symptoms.

Here’s what you need to know about the omicron variant, and how news of Covid-19 could push hotel stocks up.

What is happening with the actions of the hotels?

Investors in hotel stocks received a reassuring message yesterday. The message came from Biotech (NASDAQ:BNTX) co-founder Ugur Sahin:

“Don’t panic, the plan remains the same: expedite the administration of a third booster. “

However, this message contrasted with what Modern (NASDAQ:MRNA) said CEO Stéphane Bancel. Moderna CEO scared investors when he noted that current vaccines could be less efficient against the omicron variant. Bancel added that, if needed, a new vaccine for the variant should be available by early 2022.

This may appear to be having a negative effect on hotel inventory. However, on the bright side, it looks like the United States won’t experience another lockdown. Recently, President Joe Biden reiterated his a message: “If people are vaccinated and wear their masks, there is no need for containment. “

Whether or not American citizens follow this message will be clearer in the months to come. At present, however, 59.5% of the U.S. population is fully vaccinated, while 70% of the population received at least one dose of the vaccine. The Biden administration has set a target for 80% of the population to be fully immunized.

In general, hotel stocks have not had a good year. The AdvisorShares hotel ETFs (NYSEARCA:BEDZ) is down 1.6% year-to-date (YTD). The BEDZ exchange-traded fund focuses on the hospitality industry, as well as cruise lines and other hospitality-related sectors. With hindsight, investors would have done better to put their money in the SPDR S&P 500 Trust ETF (NYSEARCA:TO SPY), as it has returned around 23% since the start of the year.

The result on hotel stocks

Investors will want to keep abreast of news relating to the omicron variant and how it may affect hotel stocks as well as the broader travel and entertainment industry.

Closures after the initial Covid-19 pandemic in early 2020 have completely destroyed hotels. Customers have canceled their reservations en masse. Another lockdown would likely have a similar effect. However, it looks like we won’t experience yet another mass arrest.

Still, hospitality investors should stay tuned for any updates.

At the time of publication, Eddie Pan had (directly or indirectly) no position in any of the stocks mentioned in this article. The opinions expressed in this article are those of the author, subject to the Publication guidelines.

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