Almost every sub-sector of REITs has been hit hard in 2022 as inflation and recession worries have taken their toll on markets.
Hotel REITs have been one of the worst REIT performers during this time. Many in the group are down 40% or more and several of these hotel REITs have recently touched 52-week lows.
Yet, analysts continue to have faith in the group as a whole and have set price targets well above the current prices of these stocks.
Here are three hotel REITs analysts recently noted that have the highest upsides among the group:
Park Hotels & Resorts Inc (NYSE: PK) is a Tysons, Virginia-based hotel REIT with 49 premium brand hotels and resorts across 14 of the top 25 markets in the U.S. affiliates include Hilton, Marriott and Hyatt.
The 52-week range for Park Hotels & Resorts is $11.04 to $21.62, and the stock was recently close to its low.
Wells Fargo (NYSE:WFC) analyst Dori Kesten upgraded Park Hotels & Resorts from Equal-Weight to Overweight and announced a $17 price target. That translates to a 47% increase from its recent price.
Park Hotels & Resorts is clearly not a stock for income investors, as its dividend is only $.04 per year. But with the huge upside target, growth investors may find this REIT to be quite rewarding in the years ahead.
Summit Hotel Properties Inc (NYSE: INN) is a geographically diversified hotel REIT with a portfolio of 102 hotels across the U.S. The Austin, Texas-based Summit Hotel Properties is affiliated with several major hotel companies, including Hilton, Marriott, Hyatt, Holiday Inn and Sheraton.
The 52-week range for Summit Hotel Properties is $6.68 to $10.94. It has a modest dividend yield of 2.2%.
Capital One analyst Neil Malkin downgraded Summit Hotel Properties from Overweight to Equal-Weight and lowered his price target from $14 to $10.
However, this still yields a potential upside of over 46% from its recent price of $6.82. That along with a bit of dividend yield means Summit Hotel Properties could be quite attractive at this level.
Xenia Hotels & Resorts Inc (NYSE: XHR) is an Orlando, Florida-based hotel REIT that owns and manages 34 hotels across 14 states. Its affiliates include Marriott, Hyatt, Hilton and Lowe's.
The 52-week range for Xenia Hotels & Resorts is $13.18 to $20.41. Unlike many other hotel REITs, the low was reached in June rather than in September. The stock then rallied back to the mid-$18 range before suffering another recent decline.
The current dividend for Xenia Hotels & Resorts is $0.40, which yields 2.75% annually.
Wells Fargo's Kesten maintained an Overweight position on Xenia Hotels & Resorts but lowered the price target from $21 to $20. This represents an upside potential of over 41%.
Like Summit Hotel Properties, Xenia Hotels & Resorts could see some solid appreciation and modest dividends in the coming years.
Please remember these target prices are simply guides and should not be taken as absolutes. The best analysts are only correct about 50% of the time, so investors should do their own research and make independent decisions before making any stock purchases.
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