By Paul R. La Monica
Little things like room service and housekeeping have people returning to hotels after a brief flirtation with homestays, and shares of Hilton Worldwide Holdings, Marriott International, and Hyatt Hotels are now near record highs. Wyndham Hotels & Resorts and Choice Hotels International, however, may be better bets.
Sure, analysts are predicting that profits will increase in the midteen percentage range for Hilton and Marriott this year, while Wall Street has a long-term earnings-per-share growth forecast of more than 25% for Hyatt. Shaun Kelley, an analyst at BofA Securities, has Buy ratings on all three stocks, praising their "compounding earnings growth and high visibility" in a report in early January.
The problem is that this trio now sports premium valuations as a result of these lofty expectations. Marriott and Hilton trade at 29 and 33 times 2026 earnings estimates respectively, while Hyatt, the luxury pick of the sector, trades at an eye-popping 46 times.
Luckily for investors, there are more affordable ways to play the boom in lodging. Wyndham Hotels & Resorts, a so-called limited-service hotel company that caters to more budget-conscious travelers, trades at a fraction of the price of the higher-end hotel stocks. It has a price/earnings ratio of just under 16 based on 2026 forecasts.
Wyndham looks like a particularly compelling bargain, according to Mizuho analyst Ben Chaiken. He concedes that the stock does historically trade at a discount to Marriott, Hilton, and Hyatt. But the gap now seems way too wide. Wyndham is now trading at about 11 times estimated earnings before interest, taxes, depreciation, and amortization, or Ebitda, and that Marriott and Hilton trade at multiples of 18 and 20 respectively, he points out, adding that Wyndham's price/Ebitda multiple is usually only about two to four points lower than Marriott's and three to six points below Hilton's.
In other words, a more reasonable valuation for Wyndham would probably be closer to 15 times Ebitda. Chaiken has an Outperform rating and $97 target on Wyndham, more than 20% above its current price of $80.46.
Patrick Scholes, a leisure and lodging analyst at Truist, also is recommending Wyndham as well as Choice Hotels, which has a forward P/E of about 15.
"Choice Hotels and Wyndham Hotels, which have been extremely out of investor/sell-side favor, should get some investor love," Scholes writes. He has Buy ratings on both stocks and thinks that the two companies should report an increase in revenue per available room this year, a key metric for the hotel industry.
The 250th anniversary of the Declaration of Independence, along with the men's soccer World Cup, which will be held in North America this summer, could lead to a big boost in bookings for Choice and Wyndham. The entire industry suffered from a drop in foreign travelers in 2025, partly due to concerns about tariffs and other U.S. government policies.
"Hotel management teams we met with over the past several months really hope a well-received World Cup will help turn around international visitation," Scholes writes. "This may be a boost to inbound tourism for 2027."
That should be good news for the entire lodging industry. But considering how much cheaper the stocks of Wyndham and Choice are relative to higher-end peers, it seems like investors would be better off checking in to the discount hotel chains.
Write to Paul R. La Monica at paul.lamonica@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
January 16, 2026 03:00 ET (08:00 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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