Hospitality Stockwatch – March 2024
Authors
Arun Upneja, Ph.D. MBA, Dean, Boston University School of Hospitality Administration
Steve Kent, Ph.D., CFA, Assistant Professor, Molloy University-School of Business
Winners and Losers
The broader stock market is high-fiving, chest-bumping, and enjoying a hullabaloo with the S&P 500 up over 7.5% year-to-date. Sure, most of the performance is driven by five to seven mega cap tech stocks on average up over 10% in February 2024 alone but still if you are invested in the broader stock market you are having a very good start to 2024.
On the other hand, the Hospitality Stockwatchers are starting to cry in our perfectly folded napkins and crawl under the covers of our perfectly made beds. Of the 110 stocks (market cap over $500 million) that we review, only about 30 have outperformed the S&P 500 year-to-date. Why are we seeing this dislocation between the rest of the market and the fun world of hospitality, travel, and leisure?
Well first off, it really is not as bad as it looks. Some market leaders have done quite well, reporting strong fourth-quarter results and pointing to a solid 2024. The biggest players in lodging (Marriott, Hilton, Hyatt, and Airbnb) and airlines (United, American, JetBlue, and Southwest) are off to a very good start. However, car rental (used cars priced lower), cruise (financial leverage) and the REITS (interest rates high for longer) have generally underperformed.
Furthermore, the economy does not seem to be slowing down as much as expected, which is pushing investors into other economically sensitive sectors, notably industrial and the aforementioned technology stocks. If the economy does continue to strengthen the consumer facing (restaurants, assisted living, amusement parks, and entertainment) should start to catch up. To illustrate how quickly sentiment can change, check DraftKings shares which have almost quadrupled in the past year.
Click here to download Hospitality Stockwatch – Current as of March 1, 2024
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One comment
The contrast between the soaring S&P 500 and the lagging hospitality sector is striking, but it’s reassuring to see that major players in lodging and Buildnow GG airlines are performing well.